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Can you perceive our system of government operates? It could be along the lines of this. The public votes for MPs. They vote on bills. When a majority is achieved, the bills are enacted as law. The law are enforced by the courts. That's it. Yet, that was how it used to work. No longer.

The Rise of Offshore Courts

Nowadays, overseas companies, along with the oligarchs that control them, are able to litigate against governments for the regulations they pass, at offshore tribunals staffed by commercial attorneys. Such disputes are held away from public scrutiny. Unlike our courts, these panels provide no opportunity to appeal or legal review. You or I are barred from bringing a case to them, and neither can our government, or even companies headquartered in this country. The door is open solely for corporations operating from foreign soil.

Should an arbitration panel finds that a law or policy might diminish the corporation’s anticipated profits, it may order damages of hundreds of millions, running into billions.

This compensation constitute not real financial harm but compensation the tribunal officials decide the company might otherwise have made. The government might be compelled to abandon its policy. It will be discouraged from introducing similar legislation of a similar nature, due to the risk of being sued.

A Mechanism Running Rampant

Record numbers of legal actions are being initiated, as corporations learn from each other, and investment funds bankroll lawsuits for a share of a share of the awards. The outcome? Sovereignty and democratic governance are becoming too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it can override national legislation and the decisions taken by parliaments is that this stipulation has been inserted – absent public approval, and typically amid a climate of profound opacity – inside bilateral investment treaties.

A Concrete Instance: The Whitehaven Coalmine

A year ago, environmental campaigners achieved a major legal triumph at the high court. The justice ruled that proposals to excavate the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had accepted the questionable argument that the mine could have no consequence on national carbon targets. The Labour government then withdrew the permission the Tories had granted. Today, this victory could be compromised by an foreign court reporting to exclusively the companies petitioning it.

Last August, a corporate entity whose final controllers are based in the Cayman Islands initiated proceedings challenging the UK government. Recently a arbitration panel in Washington DC was established to adjudicate on it.

This firm is litigating against the UK for the revenue it might have made if the mine had received permission to proceed. The public has no clear indication how much this might be. What legal team is acting on its behalf in opposition to the British government? A sitting MP, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The government enacts a policy, the national judiciary validates it, then a overseas corporation disputes it through an secretive arbitration panel, and a member of our parliament acts on its behalf.

A Sanctions Challenge

Concurrently that the panel on the coalmine case was appointed, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. We know scarce of the case to date, but it appears probable that he may employ the ISDS mechanism to contest the penalties the UK levied against him subsequent to the Russian aggression. He has previously filed a claim against another European state for this reason, seeking a colossal sum: an amount representing half nation's annual revenue. Part of the counsel acting for him in that case? the wife of a former prime minister, wife of the ex-UK leader.

International law scholars argue that the EU’s hesitation in using frozen state funds as security for its financial support package stems from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a investment pact. This remarkable, unaccountable authority over democratic administrations may be obstructing the finance Ukraine desperately needs.

Empty Promises and Escalating Costs

We were assured that these scenarios could not occur. In 2014, a former prime minister, advocating for the largest and riskiest of all these agreements, stated: “We’ve signed investment treaty upon trade deal and there has never been a problem in the past.” An adviser on this matter labelled campaigners of “alarmism … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that solely developing countries had to worry about these lawsuits. Predictions that “as corporations begin to understand the power they now possess, they will shift their focus from the poorer states to the strong ones” were greeted by scepticism.

That warning has come to pass. In the current period, energy and extraction companies have filed a historic level of cases against nations both wealthy and developing, contesting – like the example of the UK mine – state efforts to prevent environmental catastrophe. Firms have thus far won $114bn by using ISDS, of which fossil fuel companies have obtained the majority. That equates to the combined GDP