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What is your understand our system of government operates? It could be similar to this. The public votes for MPs. They legislate on bills. Should a majority is obtained, the bills are enacted as law. The law is maintained by the courts. That's it. Yet, that used to be how it once functioned. Not anymore.

The Rise of Offshore Courts

In the modern era, overseas companies, and the wealthy individuals behind them, have the power to sue nation states for the laws they pass, at private courts made up of commercial attorneys. These proceedings are conducted behind closed doors. Unlike our courts, these panels provide no avenue for appeal or judicial review. You or I are barred from bringing a case to them, nor can our government, or even enterprises operating from this country. The door is open only to corporations based overseas.

If a tribunal determines that a law or policy could harm the corporation’s expected profits, it may order compensation of vast sums, even billions.

These sums represent not actual losses but compensation the arbitrators determine the company might otherwise have made. The state may have to abandon its policy. It will be deterred from enacting future policies along the same lines, for fear of facing litigation.

A Mechanism Spiralling Out of Control

Record numbers of disputes are being filed, as corporations observe each other, and private equity bankroll lawsuits in exchange for a cut of the awards. The result? Sovereignty and popular rule are now too costly.

The process is known as “investor-state dispute settlement” (ISDS). The reason it can supersede national legislation and the decisions enacted by parliaments is that this stipulation has been inserted – without democratic mandate, and typically amid an atmosphere of extreme secrecy – into trade treaties.

A Concrete Case: The Whitehaven Coal Mine

Twelve months ago, activists won a great victory at the high court. The presiding officer ruled that proposals to excavate the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were unlawfully approved by the Conservative government, which had endorsed the bizarre claim that the mine could have no consequence on our carbon budgets. The incoming administration subsequently revoked the consent the previous administration had granted. Today, this success could be compromised by an secret arbitration panel reporting to no one but the corporations filing the suit.

Last August, a company whose final controllers reside in the offshore financial centre filed a lawsuit challenging the UK government. Recently a tribunal in the United States was established to consider the case.

This firm is suing the UK for the profits it could have earned if the mine had been permitted to proceed. Citizens have no clear indication how much this could amount to. Who is acting on its behalf against the UK administration? A sitting MP, and previous senior legal advisor in the Conservative government, the noted patriot Geoffrey Cox. The administration enacts a policy, the national judiciary upholds it, then a foreign company contests it through an unaccountable private court, and a sitting MP works for its behalf.

The Russian Case

Concurrently that the tribunal on the coal mine dispute was appointed, we learned from a government response that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows nothing of the case to date, but it appears probable that he will utilise the arbitration process to fight the sanctions the UK imposed on him following the invasion of Ukraine. He has already initiated proceedings against another European state with similar intent, claiming $16bn: an amount representing half state's annual revenue. Among the legal team on his side? Cherie Blair, wife of the ex-UK leader.

International law scholars believe that the EU’s delay in utilising seized state funds as security for its aid for Ukraine arises from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a investment pact. This remarkable, secretive influence over democratic administrations might be preventing the funds Ukraine desperately needs.

Misleading Claims and Escalating Threats

We were assured that such things could not occur. Years ago, a government leader, championing the biggest and most dangerous of all such treaties, stated: “We’ve signed investment treaty upon trade deal and we have never seen a case in the past.” An expert on this issue labelled critics of “alarmism … the fact is, ISDS barely touches the UK much”. The general impression was crafted to be that exclusively weaker states had to worry about such legal actions. Predictions that “as corporations start to realise the influence bestowed upon them, they will redirect their efforts from the weak nations to the wealthy nations” were greeted by scepticism.

That prediction has now materialised. This year, fossil fuel and mining firms have initiated a unprecedented number of claims against nations rich and poor, contesting – like the example of the UK mine – state efforts to stop global warming. Corporations have thus far won one hundred and fourteen billion dollars by using ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP