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Can you understand our political system works? Perhaps similar to this. The public votes for MPs. They legislate on bills. Should a majority is achieved, the bills become law. The law is maintained by the courts. Simple as that. Yet, that was how it used to work. Not anymore.

The Advent of Offshore Courts

Nowadays, foreign corporations, along with the wealthy individuals that control them, have the power to sue nation states for the regulations they pass, at private courts staffed by commercial attorneys. Such disputes take place behind closed doors. Unlike our courts, these panels allow no opportunity to appeal or oversight by judges. You or I cannot take a case to them, nor can our government, including businesses headquartered in this country. Access is granted solely for businesses based overseas.

Should an arbitration panel determines that a government measure could harm the corporation’s projected profits, it can award compensation of hundreds of millions of pounds, even billions.

These sums represent not actual losses but funds the tribunal officials determine the company might otherwise have made. The government could be forced to abandon its policy. It becomes hesitant to passing future laws in that area, worried about incurring a lawsuit.

A Mechanism Running Rampant

Record numbers of legal actions are being initiated, as companies learn from each other, and investment funds bankroll lawsuits for a share of a cut of the settlements. The consequence? National sovereignty and democratic governance are becoming too costly.

The system is called “investor-state dispute settlement” (ISDS). The explanation it is allowed to override a country's own laws and the decisions made by parliaments is that this stipulation has been incorporated – without democratic mandate, and frequently under an atmosphere of total confidentiality – inside international trade agreements.

A Concrete Case: The Cumbrian Coalmine

A year ago, activists won a great victory at the senior court. The justice found that plans to open the first deep coalmine in the UK for a generation, in Cumbria, were found to be wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine could have zero effect on climate commitments. The incoming administration later cancelled the permission the previous administration had approved. Currently, this legal outcome is under threat by an foreign court accountable to exclusively the entities petitioning it.

In August, a company whose beneficial owners are based in the Cayman Islands lodged a claim challenging the UK government. Last week a tribunal in the US capital was set up to adjudicate on it.

The claimant is litigating against the UK for the revenue it would have generated if the mine had been allowed to proceed. Citizens have no idea how much this sum represents. What legal team is acting on its behalf challenging the state? An elected representative, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The state makes a decision, the national judiciary supports it, then a foreign company challenges it through an unaccountable offshore tribunal, and a elected official acts on its behalf.

The Russian Lawsuit

Simultaneously 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 billionaire, an oligarch. Details are scarce of the case so far, but it seems likely that he will utilise the tribunal to contest the penalties the UK imposed on him following the Russian aggression. He has already initiated proceedings against Luxembourg with similar intent, demanding $16bn: half that state's yearly income. Part of the legal team representing him there? a prominent lawyer, married to the previous PM.

Legal experts argue that the EU’s procrastination in using frozen oligarchs' funds as security for its financial support package arises from apprehension in Brussels that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, unaccountable authority over elected governments could be blocking the money Ukraine urgently requires.

False Assurances and Escalating Costs

The public was told that these events were not possible. Previously, a senior politician, promoting the most significant and hazardous of all such treaties, stated: “Britain has agreed to investment treaty upon trade deal and we have never seen a issue in the past.” A consultant on this issue accused activists of “alarmism … the truth is, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that only poorer nations needed to fear ISDS claims. Warnings that “as corporations grasp the power they’ve been granted, they will shift their focus from the vulnerable countries to the wealthy nations” were met with scepticism.

That warning has now materialised. Recently, energy and resource corporations have lodged a record number of cases against nations rich and poor, opposing – like the example of the Whitehaven project – state efforts to halt environmental catastrophe. Corporations have to date won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have been awarded the majority. That equates to the combined GDP