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How do you reckon our system of government operates? It could be something like this. Citizens choose MPs. They debate and pass bills. If a majority is obtained, the bills are enacted as law. The law is maintained by the courts. That's it. However, that was how it used to work. No longer.

The Advent of Offshore Courts

Today, foreign corporations, and the wealthy individuals that control them, are able to litigate against elected administrations for the laws they pass, at private courts composed of corporate lawyers. These proceedings are conducted behind closed doors. Differing from national judiciaries, these tribunals provide no avenue for appeal or judicial review. Ordinary citizens are unable to file a case to them, and neither can our government, or even businesses based in this country. The door is open exclusively to entities based overseas.

If a tribunal determines that a law or policy could harm the corporation’s expected profits, it has the power to grant compensation of hundreds of millions, potentially billions.

This compensation are based not on tangible damages but money the tribunal officials determine the company might otherwise have made. The government could be forced to abandon its policy. It becomes deterred from passing future laws of a similar nature, for fear of being sued.

A Mechanism Growing Exponentially

Unprecedented levels of legal actions are being initiated, as companies observe each other, and investment funds finance suits in return for a cut of the takings. The consequence? National sovereignty and democratic governance are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede domestic law and the decisions made by parliaments is that this provision has been inserted – absent public approval, and often in an atmosphere of total confidentiality – into bilateral investment treaties.

A Real-World Instance: The UK Coal Mine

A year ago, a conservation group won a great victory at the High Court. The judge found that schemes to open the first new deep coal mine in the UK for three decades, in northwest England, had been wrongly permitted by the previous government, which had endorsed the bizarre claim that the mine would have had no consequence on our carbon budgets. The new government subsequently revoked the licence the Tories had approved. Currently, this success faces being overturned by an foreign court answering to only the corporations petitioning it.

Last August, a corporate entity whose ultimate owners are located in the offshore financial centre lodged a claim 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 money it might have made if the mine had been allowed to proceed. The public has little idea how much this might be. Who is acting on its behalf challenging the UK administration? A sitting MP, and previous senior legal advisor in the Conservative government, the noted patriot Geoffrey Cox. The government enacts a policy, the domestic court validates it, then a foreign company contests it through an secretive private court, and a sitting MP works for its behalf.

The Russian Lawsuit

On the same day that the court on the mining lawsuit was convened, information emerged from a government response that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows little of the case to date, but it seems likely that he may employ the tribunal to challenge the penalties the UK enacted against him subsequent to the invasion of Ukraine. He has started suing a small nation with similar intent, seeking $16bn: equivalent to half of state's yearly budget. Part of the counsel acting for him in that case? a prominent lawyer, wife of the ex-UK leader.

Trade specialists contend that the EU’s delay in leveraging immobilised oligarchs' funds as collateral for its loan to Ukraine is due to Belgium’s fear that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, unaccountable authority over elected governments might be preventing the money Ukraine critically depends on.

Misleading Claims and Escalating Threats

The public was told that these events were not possible. Previously, a senior politician, advocating for the biggest and most dangerous of all such treaties, declared: “The UK has signed trade deal after trade deal and there has never been a issue in the past.” A consultant on this matter labelled campaigners of “alarmism … in reality, ISDS does not affect the UK much”. The overall message appeared to be that exclusively weaker states had to worry about these lawsuits. Cautionary notes that “once firms begin to understand the authority bestowed upon them, they will shift their focus from the weak nations to the developed economies” were greeted by widespread derision.

That threat has now materialised. Recently, fossil fuel and extraction companies have initiated a unprecedented number of cases against nations across the economic spectrum, opposing – similar to the UK mine – official measures to halt global warming. Companies have to date won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have secured the majority. That is equivalent to the combined GDP