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What is your understand our system of government operates? Maybe along the lines of this. The public votes for MPs. They legislate on bills. Should a majority is secured, the bills become law. Statutes is maintained by the courts. That's it. However, that’s how it operated in the past. No longer.

The Advent of Offshore Arbitration Panels

Nowadays, overseas companies, along with the billionaires behind them, are able to litigate against elected administrations for the regulations they pass, at private courts staffed by business advocates. These proceedings are conducted away from public scrutiny. In contrast to domestic courts, these tribunals grant no right of appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, or even businesses operating from this country. Access is granted exclusively to businesses operating from foreign soil.

When a secret court finds that a legislative action might diminish the corporation’s expected profits, it may order compensation of vast sums, running into billions.

These sums constitute not tangible damages but money the arbitrators determine the company could potentially have made. The administration might be compelled to drop the legislation. It becomes deterred from introducing similar legislation along the same lines, due to the risk of incurring a lawsuit.

A Process Spiralling Out of Control

Historically high figures of legal actions are being initiated, as companies observe each other, and hedge funds finance suits for a share of a share of the awards. The consequence? Democratic sovereignty and popular rule are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to override national legislation and the rulings made by legislatures is that this stipulation has been written – absent public approval, and frequently under an atmosphere of total confidentiality – within trade treaties.

A Concrete Case: The Whitehaven Coal Mine

A year ago, environmental campaigners secured a significant win at the high court. The presiding officer found that plans to excavate the first deep coalmine in the UK for a generation, in northwest England, were illegally sanctioned by the previous government, which had endorsed the questionable argument that the mine would have had no consequence on climate commitments. The incoming administration then withdrew the consent the previous administration had granted. Today, this victory faces being overturned by an foreign court answering to no one but the corporations filing the suit.

In August, a corporate entity whose ultimate owners are based in the offshore financial centre lodged a claim against the UK government. Recently a dispute settlement body in the US capital was established to hear it.

This firm is seeking compensation from the UK for the profits it would have generated if the mine had received permission to go ahead. We have no idea how much this sum represents. Which individual is serving as its counsel challenging the British government? A sitting MP, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The government makes a decision, the high court supports it, then a international entity challenges it through an undemocratic offshore tribunal, and a member of our parliament acts on its behalf.

An Oligarch's Case

Simultaneously that the panel on the coalmine case was convened, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, Mikhail Fridman. We know nothing of the case at present, but it seems likely that he will utilise the tribunal to fight the restrictions the UK levied against him after the war in Ukraine. He has initiated proceedings against a small nation with similar intent, claiming $16bn: half that government’s yearly budget. Included in the counsel acting for him in that case? the wife of a former prime minister, wife of the previous PM.

International law scholars believe that the EU’s delay in utilising seized Russian assets as security for its loan to Ukraine stems from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This remarkable, unaccountable authority over sovereign states might be preventing the funds Ukraine desperately needs.

False Assurances and Growing Threats

We were assured that such things wouldn’t happen. In 2014, a senior politician, championing the biggest and most dangerous of all such treaties, stated: “Britain has agreed to investment treaty after trade deal and we have never seen a case in the past.” An adviser on this matter described critics of “exaggeration … the fact is, ISDS has little impact on the UK much”. The general impression appeared to be that solely developing countries needed to fear ISDS claims. Predictions that “when companies grasp the influence they now possess, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with scepticism.

That warning has come to pass. Recently, energy and extraction companies have initiated a record number of cases against nations across the economic spectrum, opposing – similar to the Cumbrian coalmine – official measures to halt environmental catastrophe. Corporations have to date won $114bn via ISDS, of which energy giants have obtained $84bn. That is equivalent to the combined GDP