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What is your understand our system of government operates? Maybe something like this. Citizens choose MPs. They legislate on bills. When a majority is secured, the bills become law. Legislation is maintained by the courts. That's it. Yet, that’s how it used to work. No longer.

The Emergence of Offshore Tribunals

In the modern era, international firms, and the billionaires who own them, have the power to sue nation states for the regulations they pass, at private courts staffed by business advocates. These proceedings are held behind closed doors. Differing from national judiciaries, these bodies allow no opportunity to appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, including enterprises based in this country. They are open only to corporations registered abroad.

Should an arbitration panel determines that a government measure could harm the corporation’s expected profits, it may order compensation of hundreds of millions of pounds, even billions.

These sums constitute not actual losses but compensation the panel members conclude the company could potentially have made. The administration might be compelled to rescind the measure. It becomes discouraged from introducing similar legislation in that area, worried about incurring a lawsuit.

A Process Spiralling Out of Control

Historically high figures of legal actions are being initiated, as corporations learn from each other, and hedge funds finance suits for a share of a portion of the awards. The consequence? Sovereignty and popular rule are now too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to override a country's own laws and the rulings enacted by elected bodies is that this clause has been inserted – without democratic mandate, and frequently under an atmosphere of total confidentiality – inside bilateral investment treaties.

A Concrete Case: The UK Coalmine

Twelve months ago, activists achieved a major legal triumph at the high court. The justice ruled that plans to open the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, were illegally sanctioned by the outgoing administration, which had endorsed the bizarre claim that the mine would have no consequence on national carbon targets. The Labour government later cancelled the licence the Tories had issued. Now, this legal outcome is under threat by an foreign court answering to exclusively the corporations petitioning it.

Last August, a corporate entity whose beneficial owners are located in the tax haven initiated proceedings challenging the UK government. Last week a dispute settlement body in Washington DC was established to consider the case.

The claimant is suing the UK for the money it might have made if the mine had been permitted to proceed. Citizens have little idea how much this could amount to. What legal team is serving as its counsel against the state? An elected representative, and ex-law officer in the Conservative government, that great patriot Sir Geoffrey Cox. The government makes a decision, the domestic court upholds it, then a international entity challenges it through an unaccountable offshore tribunal, and a sitting MP works for its behalf.

A Sanctions Lawsuit

On the same day that the court on the coalmine case was convened, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. The public knows scarce of the case so far, but it appears probable that he’ll use the tribunal to contest the sanctions the UK levied against him following the Russian aggression. He has already started suing another European state with similar intent, claiming a colossal sum: an amount representing half government’s yearly budget. Included in the counsel on his side? Cherie Blair, wife of the ex-UK leader.

International law scholars believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as security for its loan to Ukraine arises from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a trade agreement. This unprecedented, undemocratic power over elected governments may be obstructing the money Ukraine urgently requires.

Empty Promises and Mounting Threats

We were assured that these scenarios could not occur. Years ago, a former prime minister, championing the most significant and hazardous of all these agreements, told us: “We’ve signed trade deal upon trade deal and we have never seen a case in the past.” A consultant on this issue accused critics of “exaggeration … the truth is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that only poorer nations should be concerned by ISDS claims. Cautionary notes that “when companies begin to understand the authority bestowed upon them, they will turn their attention from the poorer states to the wealthy nations” were dismissed with general mockery.

That prediction is now a reality. In the current period, oil and gas and extraction companies have filed a record number of suits against nations across the economic spectrum, contesting – like the example of the Whitehaven project – government attempts to stop global warming. Firms have so far won vast sums via ISDS, of which fossil fuel companies have obtained the majority. That is equivalent to the combined GDP