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What is your understand our political system functions? Maybe similar to this. Citizens choose MPs. They legislate on bills. If a majority is achieved, the bills become law. Legislation are enforced by the courts. End of story. Well, that was how it once functioned. No longer.

The Emergence of Offshore Courts

In the modern era, international firms, or the billionaires behind them, are able to litigate against elected administrations for the policies they pass, at offshore tribunals made up of commercial attorneys. The cases are held in secret. Differing from national judiciaries, these tribunals provide no opportunity to appeal or oversight by judges. The general public are unable to file a case to them, and neither can our government, or even businesses headquartered in this country. They are open exclusively to entities registered abroad.

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

These sums are based not on actual losses but money the tribunal officials decide the company could potentially have made. The administration might be compelled to drop the legislation. It is deterred from enacting future policies in that area, worried about being sued.

A Mechanism Running Rampant

Unprecedented levels of legal actions are being brought, as corporations learn from each other, and private equity finance suits in exchange for a cut of the takings. The result? National sovereignty and democratic governance are becoming prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The reason it can override domestic law and the decisions enacted by elected bodies is that this clause has been written – absent public approval, and typically amid an atmosphere of extreme secrecy – into international trade agreements.

A Specific Instance: The UK Coalmine

Last year, activists secured a significant win at the High Court. The justice found that proposals to open the first new deep coal mine in the UK for 30 years, in northwest England, were wrongly permitted by the outgoing administration, which had endorsed the bizarre claim that the mine would have had no impact on national carbon targets. The Labour government subsequently revoked the licence the previous administration had approved. Currently, this success could be compromised by an offshore tribunal reporting to no one but the corporations petitioning it.

During August, a firm whose final controllers are located in the Cayman Islands lodged a claim challenging the UK government. Recently a tribunal in the US capital was convened to adjudicate on it.

This firm is suing the UK for the revenue it could have earned if the mine had been permitted to commence operations. The public has little idea how much this sum represents. Which individual is serving as its counsel in opposition to the state? A sitting MP, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The state passes a law, the domestic court upholds it, then a international entity challenges it through an secretive arbitration panel, and a sitting MP acts on its behalf.

An Oligarch's Lawsuit

Concurrently that the panel on the mining lawsuit was established, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. We know little of the case to date, but it appears probable that he may employ the tribunal to contest the sanctions the UK levied against him subsequent to the invasion of Ukraine. He has already filed a claim against another European state with similar intent, seeking $16bn: half that nation's yearly income. Among the lawyers acting for him in that case? the wife of a former prime minister, wife of the ex-UK leader.

Trade specialists argue that the EU’s procrastination in leveraging immobilised oligarchs' funds as security for its financial support package arises from Belgium’s fear that it could be sued in the ISDS tribunals, under a investment pact. This extraordinary, unaccountable authority over democratic administrations might be preventing the money Ukraine desperately needs.

Empty Promises and Escalating Threats

We were assured that these scenarios could not occur. In 2014, a government leader, advocating for the largest and riskiest of all these agreements, told us: “Britain has agreed to trade agreement after trade deal and we have never seen a case in the past.” A consultant on this issue accused activists of “exaggeration … in reality, ISDS has little impact on the UK much”. The general impression appeared to be that only poorer nations should be concerned by ISDS claims. Warnings that “once firms grasp the power they’ve been granted, they will redirect their efforts from the poorer states to the wealthy nations” were dismissed with widespread derision.

That prediction has come to pass. This year, energy and resource corporations have lodged a record number of claims against nations rich and poor, challenging – like the example of the UK mine – official measures to halt global warming. Firms have so far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have secured the majority. That represents the combined GDP