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What is your perceive our democratic process functions? Maybe similar to this. The public votes for MPs. They vote on bills. Should a majority is obtained, the bills pass into law. Statutes is upheld by the courts. Simple as that. Yet, that’s how it operated in the past. No longer.

The Rise of Shadow Arbitration Panels

Nowadays, overseas companies, and the billionaires that control them, are able to litigate against nation states for the laws they pass, at offshore tribunals staffed by commercial attorneys. These proceedings take place away from public scrutiny. Differing from national judiciaries, these bodies grant no opportunity to appeal or judicial review. Ordinary citizens are barred from bringing a case to them, and neither can our government, or even companies based in this country. The door is open only to businesses operating from foreign soil.

If a tribunal finds that a legislative action may compromise the corporation’s projected profits, it can award damages of hundreds of millions of pounds, potentially billions.

This compensation represent not actual losses but money the tribunal officials decide the company would perhaps have made. The government may have to drop the legislation. It becomes hesitant to introducing similar legislation of a similar nature, worried about incurring a lawsuit.

A Process Running Rampant

Historically high figures of legal actions are being initiated, as firms observe each other, and investment funds fund legal actions in exchange for a share of the takings. The outcome? Democratic sovereignty and democracy are now unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override a country's own laws and the decisions enacted by parliaments is that this clause has been inserted – without public consent, and often in a climate of extreme secrecy – within bilateral investment treaties.

A Real-World Instance: The Cumbrian Coalmine

Last year, environmental campaigners secured a significant win at the high court. The judge ruled that proposals to dig the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be wrongly permitted by the Conservative government, which had endorsed the extraordinary assertion that the mine would have zero effect on national carbon targets. The Labour government later cancelled the licence the Tories had granted. Currently, this victory is under threat by an secret arbitration panel accountable to exclusively the companies bringing the case.

Last August, a firm whose final controllers are based in the offshore financial centre initiated proceedings against the UK government. The previous week a tribunal in Washington DC was established to adjudicate on it.

This firm is seeking compensation from the UK for the money it could have earned if the mine had been allowed to proceed. We have little idea how much this sum represents. What legal team is representing it against the UK administration? A member of parliament, and former attorney-general in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The government passes a law, the national judiciary supports it, then a foreign company disputes it through an undemocratic private court, and a member of our parliament represents its behalf.

A Sanctions Case

On the same day that the tribunal on the mining lawsuit was established, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. We know scarce of the case at present, but it seems likely that he’ll use the arbitration process to challenge the penalties the UK levied against him following the Russian aggression. He has already filed a claim against Luxembourg for this reason, demanding sixteen billion dollars: equivalent to half of state's yearly budget. Among the lawyers representing him there? the wife of a former prime minister, spouse of the previous PM.

Legal experts believe that the EU’s delay in utilising seized Russian assets as guarantee for its loan to Ukraine stems from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over democratic administrations could be blocking the funds Ukraine critically depends on.

False Assurances and Mounting Costs

The public was told that such things were not possible. Years ago, a senior politician, promoting the largest and riskiest of all such treaties, told us: “We’ve signed investment treaty upon trade deal and we have never seen a problem in the past.” An adviser on this topic described critics of “scaremongering … in reality, ISDS barely touches the UK much”. The general impression appeared to be that exclusively weaker states had to worry about such legal actions. Warnings that “as corporations start to realise the influence they’ve been granted, they will turn their attention from the vulnerable countries to the wealthy nations” were met with widespread derision.

That warning has now materialised. This year, oil and gas and mining firms have lodged a unprecedented number of suits against nations across the economic spectrum, contesting – as in the case of the UK mine – official measures to halt global warming. Companies have thus far won vast sums by using ISDS, of which energy giants have secured $84bn. That equates to the combined GDP