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What is your perceive our political system works? It could be along the lines of this. We elect MPs. They vote on bills. When a majority is secured, the bills are enacted as law. Statutes is maintained by the courts. Simple as that. Yet, that used to be how it operated in the past. Those days are over.

The Rise of Offshore Courts

Nowadays, foreign corporations, and the wealthy individuals who own them, can sue elected administrations for the regulations they pass, at private courts made up of commercial attorneys. The cases are conducted in secret. Unlike our courts, these tribunals provide no right of appeal or legal review. Ordinary citizens are unable to file a case to them, nor can our government, or even enterprises based in this country. They are open exclusively to entities operating from foreign soil.

Should an arbitration panel determines that a government measure might diminish the corporation’s projected profits, it has the power to grant damages of hundreds of millions of pounds, running into billions.

These awards constitute not real financial harm but compensation the arbitrators conclude the company might otherwise have made. The administration could be forced to abandon its policy. It is hesitant to introducing similar legislation of a similar nature, for fear of being sued.

A Mechanism Spiralling Out of Control

Record numbers of disputes are being brought, as companies observe each other, and hedge funds finance suits in return for a share of the takings. The consequence? Sovereignty and democratic governance are now prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The explanation it is allowed to override national legislation and the rulings made by elected bodies is that this clause has been written – absent public approval, and typically amid a climate of extreme secrecy – inside bilateral investment treaties.

A Concrete Instance: The Cumbrian Coalmine

A year ago, activists won a great victory at the High Court. The judge found that plans to open the first new deep coal mine in the UK for 30 years, in northwest England, were unlawfully approved by the previous government, which had accepted the questionable argument that the mine would have had zero effect on climate commitments. The incoming administration later cancelled the permission the Tories had issued. Today, this victory is under threat by an foreign court reporting to no one but the companies bringing the case.

In August, a company whose ultimate owners are based in the offshore financial centre filed a lawsuit against the UK government. The previous week a tribunal in Washington DC was set up to hear it.

The company is litigating against the UK for the profits it would have generated if the mine had received permission to proceed. Citizens have little idea how much this sum represents. Which individual is acting on its behalf in opposition to the UK administration? A member of parliament, and former attorney-general in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the domestic court upholds it, then a overseas corporation challenges it through an undemocratic arbitration panel, and a elected official works for its behalf.

An Oligarch's Lawsuit

Concurrently that the court on the mining lawsuit was convened, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. Details are nothing of the case so far, but it seems likely that he may employ the tribunal to challenge the sanctions the UK levied against him subsequent to the war in Ukraine. He has already filed a claim against another European state for this reason, claiming sixteen billion dollars: an amount representing half government’s yearly budget. Among the lawyers representing him there? Cherie Blair, wife of the former British prime minister.

Legal experts argue that the EU’s delay in using frozen state funds as guarantee for its aid for Ukraine stems from concerns within Belgium that it could be sued in the secret arbitration panels, under a investment pact. This unprecedented, unaccountable authority over democratic administrations could be blocking the money Ukraine urgently requires.

Empty Promises and Mounting Costs

The public was told that these scenarios wouldn’t happen. Previously, a former prime minister, promoting the most significant and hazardous of all such treaties, declared: “Britain has agreed to trade deal after trade deal and there has never been a problem in the past.” A consultant on this issue accused activists of “scaremongering … the fact is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that solely developing countries needed to fear such legal actions. Cautionary notes that “once firms begin to understand the authority bestowed upon them, they will turn their attention from the poorer states to the wealthy nations” were greeted by general mockery.

That threat is now a reality. This year, oil and gas and resource corporations have initiated a record number of suits against nations both wealthy and developing, challenging – like the example of the Cumbrian coalmine – state efforts to stop global warming. Companies have so far won one hundred and fourteen billion dollars via ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP