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How do you understand our system of government works? Perhaps similar to this. Citizens choose MPs. They legislate on bills. When a majority is secured, the bills are enacted as law. Statutes is upheld by the courts. That's it. However, that was how it once functioned. Those days are over.

The Advent of Offshore Tribunals

Today, overseas companies, and the oligarchs that control them, are able to litigate against elected administrations for the regulations they pass, at secret arbitration panels composed of commercial attorneys. Such disputes are held away from public scrutiny. Differing from national judiciaries, these panels provide no avenue for appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, and neither can our government, including businesses based in this country. They are open only to corporations based overseas.

When a secret court finds that a government measure may compromise the corporation’s expected profits, it may order damages of hundreds of millions of pounds, potentially billions.

These sums represent not real financial harm but compensation the arbitrators determine the company might otherwise have made. The state could be forced to drop the legislation. It is hesitant to passing future laws along the same lines, worried about incurring a lawsuit.

A System Running Rampant

Record numbers of cases are being filed, as companies take cues from each other, and investment funds bankroll lawsuits in exchange for a portion of the awards. The result? Sovereignty and popular rule are now prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the choices taken by elected bodies is that this clause has been written – without public consent, and often in conditions of profound opacity – within trade treaties.

A Specific Instance: The Whitehaven Coal Mine

A year ago, a conservation group achieved a major legal triumph at the High Court. The presiding officer ruled that proposals to open the first deep coalmine in the UK for a generation, in northwest England, were unlawfully approved by the outgoing administration, which had accepted the questionable argument that the mine would have no consequence on our carbon budgets. The new government subsequently revoked the permission the Tories had approved. Today, this legal outcome faces being overturned by an offshore tribunal accountable to no one but the companies filing the suit.

During August, a company whose ultimate owners reside in the Cayman Islands lodged a claim versus the UK government. Recently a tribunal in Washington DC was established to adjudicate on it.

The company is litigating against the UK for the profits it would have generated if the mine had been permitted to commence operations. The public has no clear indication how much this could amount to. Which individual is acting on its behalf challenging the UK administration? A member of parliament, and ex-law officer in the previous government, the self-proclaimed patriot the MP. The government makes a decision, the high court validates it, then a international entity challenges it through an secretive offshore tribunal, and a elected official works for its behalf.

An Oligarch's Challenge

Simultaneously that the court on the coal mine dispute was established, information emerged from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. We know little of the case to date, but it appears probable that he’ll use the ISDS mechanism to contest the penalties the UK enacted against him following the Russian aggression. He has already filed a claim against Luxembourg on these grounds, demanding sixteen billion dollars: equivalent to half of state's yearly budget. Part of the legal team on his side? the wife of a former prime minister, married to the previous PM.

International law scholars believe that the EU’s procrastination in utilising seized Russian assets as collateral for its financial support package stems from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a investment pact. This remarkable, unaccountable authority over democratic administrations could be blocking the finance Ukraine desperately needs.

Misleading Claims and Growing Costs

Politicians promised that such things wouldn’t happen. Previously, a government leader, advocating for the largest and riskiest of all investment pacts, declared: “The UK has signed investment treaty after trade deal and we have never seen a problem in the past.” An adviser on this topic accused activists of “scaremongering … the fact is, ISDS does not affect the UK much”. The general impression appeared to be that only poorer nations should be concerned by these lawsuits. Warnings that “once firms grasp the influence they’ve been granted, they will redirect their efforts from the weak nations to the wealthy nations” were greeted by scepticism.

That warning has now materialised. In the current period, oil and gas and mining firms have filed a record number of suits against nations across the economic spectrum, contesting – similar to the Whitehaven project – state efforts to stop environmental catastrophe. Firms have so far won one hundred and fourteen billion dollars via ISDS, of which oil majors have obtained eighty-four billion dollars. That equates to the combined GDP