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What is your perceive our political system functions? Perhaps along the lines of this. Citizens choose MPs. They legislate on bills. Should a majority is secured, the bills are enacted as law. Statutes is upheld by the courts. Simple as that. Yet, that used to be how it once functioned. No longer.

The Advent of Offshore Tribunals

Today, international firms, or the oligarchs that control them, can sue governments for the policies they pass, at secret arbitration panels staffed by business advocates. Such disputes take place in secret. In contrast to domestic courts, these panels provide no right of appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, including companies based in this country. They are open only to corporations registered abroad.

When a secret court determines that a legislative action might diminish the corporation’s expected profits, it has the power to grant damages of vast sums, even billions.

These awards are based not on tangible damages but money the tribunal officials determine the company could potentially have made. The government could be forced to rescind the measure. It becomes deterred from passing future laws along the same lines, for fear of being sued.

A Mechanism Running Rampant

Historically high figures of cases are being filed, as corporations observe each other, and hedge funds bankroll lawsuits for a share of a portion of the settlements. The outcome? Sovereignty and democratic governance are becoming too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump national legislation and the decisions made by elected bodies is that this stipulation has been written – without democratic mandate, and typically amid a climate of profound opacity – inside bilateral investment treaties.

A Concrete Example: The Cumbrian Coal Mine

Twelve months ago, environmental campaigners won a great victory at the high court. The presiding officer ruled that proposals to excavate the first deep coalmine in the UK for three decades, in Cumbria, had been wrongly permitted by the previous government, which had accepted the questionable argument that the mine could have no impact on our carbon budgets. The Labour government subsequently revoked the licence the former government had granted. Today, this legal outcome faces being overturned by an foreign court accountable to no one but the corporations petitioning it.

In August, a firm whose ultimate owners are based in the offshore financial centre lodged a claim versus the UK government. Last week a dispute settlement body in the US capital was convened to hear it.

The claimant is suing the UK for the profits it could have earned if the mine had been permitted to commence operations. The public has little idea how much this might be. What legal team is representing it in opposition to the British government? An elected representative, and previous senior legal advisor in the Conservative government, the noted patriot Geoffrey Cox. The administration enacts a policy, the national judiciary supports it, then a overseas corporation disputes it through an undemocratic private court, and a member of our parliament acts on its behalf.

The Russian Challenge

On the same day that the panel on the coalmine case was established, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. Details are little of the case at present, but it appears probable that he may employ the tribunal to challenge the sanctions the UK levied against him subsequent to the invasion of Ukraine. He has previously filed a claim against Luxembourg for this reason, demanding sixteen billion dollars: an amount representing half nation's yearly budget. Among the legal team representing him there? Cherie Blair, wife of the previous PM.

Legal experts believe that the EU’s delay in utilising seized state funds as guarantee for its financial support package stems from apprehension in Brussels that it could be sued in the secret arbitration panels, under a investment pact. This extraordinary, undemocratic power over sovereign states may be obstructing the funds Ukraine desperately needs.

Empty Promises and Escalating Threats

The public was told that such things were not possible. In 2014, a government leader, promoting the largest and riskiest of all these agreements, declared: “Britain has agreed to investment treaty after trade deal and there has not been a issue in the past.” An expert on this matter labelled campaigners of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that exclusively weaker states had to worry about these lawsuits. Predictions that “once firms grasp the power bestowed upon them, they will turn their attention from the vulnerable countries to the developed economies” were dismissed with scepticism.

That prediction is now a reality. In the current period, fossil fuel and resource corporations have filed a unprecedented number of cases against nations rich and poor, contesting – as in the case of the Cumbrian coalmine – official measures to halt global warming. Corporations have thus far won one hundred and fourteen billion dollars through ISDS, of which oil majors have secured $84bn. That equates to the combined GDP