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What is your reckon our system of government operates? It could be similar to this. Citizens choose MPs. They legislate on bills. If a majority is obtained, the bills become law. Statutes is maintained by the courts. End of story. Well, that was how it used to work. Not anymore.

The Rise of Offshore Courts

Today, foreign corporations, and the billionaires behind them, are able to litigate against governments for the regulations they pass, at private courts made up of corporate lawyers. The cases are held in secret. Unlike our courts, these tribunals provide no opportunity to appeal or legal review. The general public are unable to file a case to them, nor can our government, or even enterprises headquartered in this country. Access is granted only to corporations operating from foreign soil.

When a secret court determines that a legislative action could harm the corporation’s anticipated profits, it may order compensation of vast sums, running into billions.

These awards are based not on tangible damages but compensation the panel members conclude the company might otherwise have made. The administration could be forced to rescind the measure. It is hesitant to introducing similar legislation along the same lines, due to the risk of incurring a lawsuit.

A Process Spiralling Out of Control

Record numbers of disputes are being initiated, as companies learn from each other, and hedge funds fund legal actions in exchange for a cut of the takings. The outcome? Sovereignty and democracy are now unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump domestic law and the rulings taken by legislatures is that this clause has been inserted – without public consent, and frequently under an atmosphere of profound opacity – inside international trade agreements.

A Concrete Case: The Cumbrian Coal Mine

A year ago, activists achieved a major legal triumph at the High Court. The judge determined that proposals to open the first new deep coal mine in the UK for three decades, in Cumbria, were found to be unlawfully approved by the previous government, which had endorsed the extraordinary assertion that the mine could have no consequence on national carbon targets. The Labour government later cancelled the consent the former government had approved. Today, this legal outcome faces being overturned by an secret arbitration panel reporting to exclusively the entities bringing the case.

In August, a corporate entity whose final controllers are located in the tax haven initiated proceedings against the UK government. The previous week a dispute settlement body in the United States was set up to adjudicate on it.

The claimant is suing the UK for the revenue it might have made if the mine had been permitted to commence operations. We have little idea how much this sum represents. Who is serving as its counsel against the state? A member of parliament, and previous senior legal advisor in the Conservative government, that great patriot Geoffrey Cox. The government enacts a policy, the national judiciary upholds it, then a international entity disputes it through an undemocratic arbitration panel, and a member of our parliament acts on its behalf.

The Russian Lawsuit

Concurrently that the court on the mining lawsuit was appointed, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. We know little of the case so far, but it seems likely that he may employ the arbitration process to contest the restrictions the UK imposed on him subsequent to the war in Ukraine. He has filed a claim against a small nation for this reason, seeking a colossal sum: equivalent to half of nation's yearly income. Part of the counsel acting for him in that case? Cherie Blair, spouse of the former British prime minister.

International law scholars contend that the EU’s procrastination in leveraging immobilised oligarchs' funds as guarantee for its aid for Ukraine is due to concerns within Belgium that it could be taken to court in the ISDS tribunals, under a trade agreement. This extraordinary, secretive influence over elected governments might be preventing the finance Ukraine urgently requires.

Misleading Claims and Growing Costs

We were assured that such things wouldn’t happen. Previously, a senior politician, promoting the most significant and hazardous of all such treaties, declared: “Britain has agreed to trade agreement after trade deal and we have never seen a issue in the past.” An adviser on this topic accused campaigners of “exaggeration … the fact is, ISDS has little impact on the UK much”. The overall message was crafted to be that only poorer nations had to worry about these lawsuits. Cautionary notes that “when companies grasp the power they now possess, they will shift their focus from the poorer states to the developed economies” were dismissed with widespread derision.

That threat has come to pass. In the current period, fossil fuel and resource corporations have initiated a unprecedented number of cases against nations both wealthy and developing, contesting – like the example of the Whitehaven project – state efforts to halt global warming. Companies have so far won vast sums through ISDS, of which oil majors have been awarded eighty-four billion dollars. That is equivalent to the combined GDP