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What is your understand our political system functions? It could be something like this. Citizens choose MPs. They vote on bills. Should a majority is obtained, the bills are enacted as law. Legislation are enforced by the courts. That's it. However, that’s how it once functioned. No longer.

The Rise of Offshore Tribunals

Nowadays, foreign corporations, along with the oligarchs that control them, have the power to sue nation states for the laws they pass, at private courts staffed by business advocates. These proceedings are conducted in secret. Unlike our courts, these tribunals grant no avenue for appeal or judicial review. The general public are unable to file a case to them, nor can our government, or even companies based in this country. They are open exclusively to entities based overseas.

If a tribunal finds that a law or policy could harm the corporation’s projected profits, it can award damages of vast sums, running into billions.

These awards are based not on tangible damages but compensation the tribunal officials conclude the company could potentially have made. The state may have to rescind the measure. It is deterred from enacting future policies in that area, for fear of being sued.

A Process Growing Exponentially

Historically high figures of legal actions are being brought, as companies learn from each other, and private equity finance suits for a share of a share of the settlements. The outcome? National sovereignty and popular rule are turning into unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it can supersede national legislation and the rulings taken by legislatures is that this clause has been written – absent public approval, and often in an atmosphere of profound opacity – into international trade agreements.

A Concrete Case: The Whitehaven Coal Mine

Twelve months ago, a conservation group won a great victory at the senior court. The justice determined that plans to open the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be illegally sanctioned by the previous government, which had agreed to the bizarre claim that the mine would have had no consequence on national carbon targets. The Labour government then withdrew the consent the former government had issued. Today, this success faces being overturned by an foreign court reporting to only the corporations filing the suit.

During August, a corporate entity whose beneficial owners reside in the offshore financial centre initiated proceedings against the UK government. The previous week a tribunal in Washington DC was convened to consider the case.

This firm is seeking compensation from the UK for the money it would have generated if the mine had been permitted to commence operations. The public has no clear indication how much this could amount to. Which individual is representing it in opposition to the state? An elected representative, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The government makes a decision, the domestic court supports it, then a overseas corporation contests it through an secretive private court, and a member of our parliament acts on its behalf.

A Sanctions Challenge

Concurrently that the panel on the coalmine case was convened, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows scarce of the case at present, but it appears probable that he’ll use the arbitration process to challenge the restrictions the UK levied against him subsequent to the Russian aggression. He has previously initiated proceedings against Luxembourg for this reason, seeking sixteen billion dollars: half that government’s yearly income. Among the lawyers acting for him in that case? a prominent lawyer, married to the ex-UK leader.

Legal experts contend that the EU’s procrastination in leveraging immobilised Russian assets as collateral for its aid for Ukraine is due to Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This remarkable, secretive influence over elected governments may be obstructing the funds Ukraine critically depends on.

False Assurances and Escalating Risks

The public was told that such things could not occur. Previously, a former prime minister, championing the largest and riskiest of all such treaties, told us: “We’ve signed trade deal after trade deal and there has never been a case in the past.” An expert on this issue accused activists of “exaggeration … the truth is, ISDS has little impact on the UK much”. The general impression appeared to be that only poorer nations had to worry about these lawsuits. Warnings that “when companies begin to understand the power bestowed upon them, they will shift their focus from the vulnerable countries to the developed economies” were dismissed with widespread derision.

That threat is now a reality. This year, oil and gas and mining firms have initiated a historic level of claims against nations rich and poor, opposing – like the example of the UK mine – official measures to prevent global warming. Firms have so far won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have secured the majority. That equates to the combined GDP