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What is your perceive our political system operates? Perhaps along the lines of this. Citizens choose MPs. They debate and pass bills. If a majority is secured, the bills pass into law. Statutes are enforced by the courts. End of story. Yet, that used to be how it used to work. Those days are over.

The Rise of Offshore Tribunals

Today, international firms, or the wealthy individuals behind them, have the power to sue governments for the policies they pass, at offshore tribunals made up of corporate lawyers. The cases take place in secret. In contrast to domestic courts, these bodies grant no avenue for appeal or oversight by judges. The general public cannot take a case to them, nor can our government, or even companies operating from this country. They are open exclusively to entities based overseas.

When a secret court rules that a law or policy could harm the corporation’s expected profits, it may order damages of vast sums, even billions.

These awards constitute not real financial harm but compensation the panel members conclude the company might otherwise have made. The administration could be forced to drop the legislation. It is discouraged from introducing similar legislation in that area, worried about facing litigation.

A System Growing Exponentially

Historically high figures of disputes are being initiated, as companies observe each other, and hedge funds bankroll lawsuits for a share of a cut of the takings. The result? National sovereignty and popular rule are turning into prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it can trump national legislation and the decisions taken by elected bodies is that this provision has been inserted – without democratic mandate, and typically amid a climate of extreme secrecy – inside international trade agreements.

A Specific Case: The Cumbrian Coalmine

Last year, a conservation group won a great victory at the senior court. The judge found that schemes to excavate the first major coal mine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the Conservative government, which had endorsed the bizarre claim that the mine could have zero effect on our carbon budgets. The new government then withdrew the licence the Tories had issued. Today, this victory faces being overturned by an foreign court answering to exclusively the corporations filing the suit.

During August, a corporate entity whose final controllers are based in the offshore financial centre initiated proceedings versus the UK government. Last week a arbitration panel in the United States was established to consider the case.

The company is seeking compensation from the UK for the profits it might have made if the mine had been permitted to proceed. We have no idea how much this sum represents. Which individual is representing it in opposition to the state? A member of parliament, and ex-law officer in the Conservative government, that great patriot Sir Geoffrey Cox. The state makes a decision, the high court supports it, then a overseas corporation contests it through an undemocratic offshore tribunal, and a elected official works for its behalf.

The Russian Lawsuit

On the same day that the tribunal on the coalmine case was appointed, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. We know little of the case to date, but it appears probable that he’ll use the ISDS mechanism to challenge the restrictions the UK imposed on him following the Russian aggression. He has initiated proceedings against Luxembourg for this reason, demanding a colossal sum: half that state's yearly income. Part of the lawyers acting for him in that case? a prominent lawyer, spouse of the ex-UK leader.

Legal experts argue that the EU’s hesitation in using frozen state funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over elected governments could be blocking the finance Ukraine critically depends on.

Misleading Claims and Growing Threats

We were assured that these events were not possible. Years ago, a government leader, advocating for the largest and riskiest of all such treaties, told us: “Britain has agreed to trade agreement after trade deal and there has never been a problem in the past.” An adviser on this topic accused campaigners of “alarmism … the fact is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that only poorer nations had to worry about these lawsuits. Warnings that “when companies begin to understand the power they’ve been granted, they will turn their attention from the weak nations to the developed economies” were dismissed with scepticism.

That warning has come to pass. In the current period, oil and gas and extraction companies have initiated a historic level of claims against nations across the economic spectrum, challenging – similar to the Whitehaven project – government attempts to stop climate breakdown. Companies have to date won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have secured the majority. That equates to the combined GDP