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What is your reckon our political system operates? It could be something like this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. Legislation is upheld by the courts. That's it. However, that’s how it operated in the past. Not anymore.

The Emergence of Offshore Courts

In the modern era, foreign corporations, and the billionaires who own them, have the power to sue governments for the policies they pass, at offshore tribunals staffed by corporate lawyers. The cases take place in secret. Unlike our courts, these panels allow no avenue for appeal or judicial review. You or I are unable to file a case to them, nor can our government, or even companies operating from this country. Access is granted solely for businesses operating from foreign soil.

When a secret court rules that a government measure could harm the corporation’s projected profits, it may order compensation of vast sums, running into billions.

These sums are based not on actual losses but funds the panel members decide the company could potentially have made. The administration could be forced to rescind the measure. It becomes hesitant to enacting future policies in that area, for fear of facing litigation.

A Process Running Rampant

Historically high figures of cases are being initiated, as corporations learn from each other, and hedge funds finance suits in return for a share of the takings. The outcome? Sovereignty and democracy are turning into prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede national legislation and the choices taken by elected bodies is that this clause has been written – absent public approval, and frequently under an atmosphere of extreme secrecy – into bilateral investment treaties.

A Concrete Instance: The Cumbrian Coal Mine

A year ago, a conservation group secured a significant win at the high court. The justice found that plans to open the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be unlawfully approved by the Conservative government, which had agreed to the bizarre claim that the mine could have no impact on national carbon targets. The Labour government subsequently revoked the consent the previous administration had issued. Currently, this victory faces being overturned by an secret arbitration panel accountable to exclusively the corporations filing the suit.

Last August, a company whose final controllers are based in the Cayman Islands filed a lawsuit versus the UK government. The previous week a dispute settlement body in Washington DC was convened to hear it.

The company is litigating against the UK for the money it could have earned if the mine had been permitted to commence operations. Citizens have little idea how much this could amount to. What legal team is serving as its counsel in opposition to the state? An elected representative, and previous senior legal advisor in the Conservative government, the noted patriot the MP. The administration passes a law, the domestic court supports it, then a international entity contests it through an undemocratic arbitration panel, and a member of our parliament works for its behalf.

An Oligarch's Lawsuit

Concurrently that the tribunal on the mining lawsuit 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 scarce of the case to date, but it appears probable that he will utilise the arbitration process to contest the sanctions the UK levied against him following the Russian aggression. He has previously initiated proceedings against a small nation for this reason, demanding a colossal sum: an amount representing half government’s annual revenue. Among the lawyers on his side? the wife of a former prime minister, married to the ex-UK leader.

International law scholars contend that the EU’s hesitation in using frozen Russian assets as security for its financial support package stems from apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, unaccountable authority over sovereign states might be preventing the money Ukraine urgently requires.

False Assurances and Mounting Costs

Politicians promised that these scenarios wouldn’t happen. Years ago, a government leader, promoting the largest and riskiest of all investment pacts, stated: “We’ve signed trade agreement after trade deal and there has never been a case in the past.” An expert on this issue described critics of “exaggeration … in reality, ISDS does not affect the UK much”. The general impression appeared to be that exclusively weaker states should be concerned by ISDS claims. Warnings that “when companies begin to understand the influence they now possess, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with general mockery.

That warning has now materialised. This year, energy and extraction companies have filed a unprecedented number of cases against nations rich and poor, contesting – like the example of the UK mine – official measures to stop climate breakdown. Companies have to date won $114bn via ISDS, of which energy giants have secured the majority. That represents the combined GDP