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Can you understand our political system operates? It could be along the lines of this. We elect MPs. They legislate on bills. When a majority is obtained, the bills become law. Statutes is maintained by the courts. Simple as that. However, that’s how it used to work. Those days are over.

The Rise of Offshore Courts

Nowadays, overseas companies, and the billionaires behind them, can sue governments for the regulations they pass, at secret arbitration panels made up of commercial attorneys. These proceedings are conducted away from public scrutiny. Unlike our courts, these tribunals grant no avenue for appeal or oversight by judges. The general public cannot take a case to them, and neither can our government, or even businesses headquartered in this country. The door is open solely for corporations based overseas.

Should an arbitration panel determines that a government measure may compromise the corporation’s anticipated profits, it can award compensation of hundreds of millions, even billions.

This compensation constitute not actual losses but funds the tribunal officials decide the company would perhaps have made. The administration may have to abandon its policy. It will be hesitant to passing future laws along the same lines, for fear of facing litigation.

A Mechanism Running Rampant

Historically high figures of cases are being initiated, as companies observe each other, and investment funds bankroll lawsuits in exchange for a portion of the awards. The result? Sovereignty and popular rule are becoming prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump a country's own laws and the rulings enacted by elected bodies is that this stipulation has been inserted – absent public approval, and often in a climate of profound opacity – inside bilateral investment treaties.

A Concrete Example: The UK Coal Mine

A year ago, a conservation group won a great victory at the senior court. The presiding officer found that proposals to excavate the first new deep coal mine in the UK for three decades, in Cumbria, had been unlawfully approved by the previous government, which had accepted the questionable argument that the mine would have had no consequence on climate commitments. The Labour government then withdrew the licence the former government had approved. Currently, this legal outcome faces being overturned by an foreign court reporting to no one but the entities bringing the case.

During August, a corporate entity whose final controllers are located in the Cayman Islands initiated proceedings versus the UK government. The previous week a tribunal in Washington DC was set up to hear it.

The claimant is seeking compensation from the UK for the profits it might have made if the mine had been permitted to commence operations. Citizens have no clear indication how much this sum represents. Who is representing it against the state? A member of parliament, and ex-law officer in the outgoing administration, the noted patriot the MP. The state makes a decision, the national judiciary supports it, then a overseas corporation disputes it through an undemocratic offshore tribunal, and a elected official represents its behalf.

An Oligarch's Challenge

Simultaneously that the court on the coalmine case was established, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. We know nothing of the case to date, but it seems likely that he’ll use the tribunal to challenge the restrictions the UK imposed on him after the war in Ukraine. He has previously initiated proceedings against a small nation with similar intent, claiming $16bn: equivalent to half of state's yearly income. Included in the lawyers acting for him in that case? a prominent lawyer, married to the former British prime minister.

International law scholars contend that the EU’s procrastination in leveraging immobilised Russian assets as guarantee for its aid for Ukraine stems from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This extraordinary, unaccountable authority over sovereign states could be blocking the funds Ukraine desperately needs.

False Assurances and Escalating Threats

We were assured that these events could not occur. In 2014, a government leader, advocating for the most significant and hazardous of all such treaties, declared: “We’ve signed trade deal after trade deal and there has never been a issue in the past.” An expert on this matter accused campaigners of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message was crafted to be that solely developing countries should be concerned by these lawsuits. Cautionary notes that “as corporations grasp the power bestowed upon them, they will redirect their efforts from the vulnerable countries to the developed economies” were met with scepticism.

That prediction is now a reality. Recently, oil and gas and mining firms have initiated a record number of claims against nations rich and poor, challenging – as in the case of the UK mine – state efforts to prevent climate breakdown. Corporations have thus far won one hundred and fourteen billion dollars through ISDS, of which energy giants have obtained the majority. That equates to the combined GDP