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What is your reckon our system of government functions? Maybe along the lines of this. Citizens choose MPs. They debate and pass bills. Should a majority is obtained, the bills are enacted as law. The law are enforced by the courts. That's it. Yet, that was how it used to work. Those days are over.

The Rise of Offshore Courts

Today, overseas companies, along with the oligarchs behind them, can sue governments for the regulations they pass, at secret arbitration panels staffed by corporate lawyers. Such disputes take place away from public scrutiny. Differing from national judiciaries, these panels provide no opportunity to appeal or oversight by judges. The general public cannot take a case to them, nor can our government, including companies operating from this country. They are open solely for corporations based overseas.

Should an arbitration panel determines that a law or policy might diminish the corporation’s projected profits, it has the power to grant financial penalties of hundreds of millions, even billions.

This compensation constitute not actual losses but money the panel members determine the company could potentially have made. The state might be compelled to drop the legislation. It is deterred from introducing similar legislation along the same lines, due to the risk of facing litigation.

A Process Running Rampant

Historically high figures of disputes are being initiated, as corporations observe each other, and private equity bankroll lawsuits in return for a portion of the settlements. The outcome? National sovereignty and popular rule are turning into too costly.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to override a country's own laws and the decisions made by parliaments is that this provision has been inserted – absent public approval, and typically amid a climate of total confidentiality – inside international trade agreements.

A Specific Case: The Cumbrian Coalmine

A year ago, activists won a great victory at the High Court. The presiding officer ruled that proposals to open the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were unlawfully approved by the outgoing administration, which had endorsed the bizarre claim that the mine could have zero effect on national carbon targets. The Labour government later cancelled the consent the previous administration had approved. Currently, this success is under threat by an offshore tribunal accountable to no one but the entities petitioning it.

Last August, a firm whose ultimate owners reside in the tax haven lodged a claim versus the UK government. Recently a tribunal in the US capital was established to consider the case.

The company is seeking compensation from the UK for the money it would have generated if the mine had been permitted to commence operations. We have no clear indication how much this might be. Which individual is acting on its behalf against the UK administration? An elected representative, and former attorney-general in the Conservative government, the self-proclaimed patriot the MP. The administration makes a decision, the national judiciary upholds it, then a foreign company disputes it through an undemocratic private court, and a elected official works for its behalf.

A Sanctions Lawsuit

On the same day that the panel on the mining lawsuit was established, we learned from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case so far, but it is highly possible that he’ll use the arbitration process to contest the sanctions the UK imposed on him subsequent to the war in Ukraine. He has already started suing Luxembourg with similar intent, demanding a colossal sum: half that state's annual revenue. Among the lawyers representing him there? Cherie Blair, spouse of the ex-UK leader.

Trade specialists believe that the EU’s delay in using frozen state funds as collateral for its loan to Ukraine stems from apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a investment pact. This remarkable, unaccountable authority over elected governments could be blocking the money Ukraine urgently requires.

Misleading Claims and Escalating Threats

We were assured that these scenarios wouldn’t happen. Years ago, a government leader, advocating for the most significant and hazardous of all these agreements, told us: “We’ve signed trade agreement after trade deal and there has never been a case in the past.” An adviser on this issue described campaigners of “scaremongering … the fact is, ISDS does not affect the UK much”. The general impression was crafted to be that only poorer nations had to worry about such legal actions. Cautionary notes that “once firms grasp the authority bestowed upon them, they will redirect their efforts from the vulnerable countries to the strong ones” were dismissed with widespread derision.

That threat has now materialised. Recently, oil and gas and mining firms have filed a historic level of claims against nations rich and poor, challenging – similar to the Cumbrian coalmine – state efforts to stop climate breakdown. Companies have so far won one hundred and fourteen billion dollars via ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP