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What is your reckon our political system functions? It could be something like this. Citizens choose MPs. They debate and pass bills. If a majority is achieved, the bills are enacted as law. The law is upheld by the courts. That's it. Yet, that’s how it used to work. Those days are over.

The Advent of Offshore Tribunals

Today, foreign corporations, along with the billionaires who own them, can sue elected administrations for the laws they pass, at secret arbitration panels staffed by business advocates. These proceedings take place behind closed doors. Unlike our courts, these tribunals allow no right of appeal or legal review. Ordinary citizens are unable to file a case to them, nor can our government, or even enterprises operating from this country. The door is open only to businesses operating from foreign soil.

If a tribunal determines that a government measure might diminish the corporation’s projected profits, it has the power to grant compensation of hundreds of millions, even billions.

These sums constitute not actual losses but compensation the panel members conclude the company would perhaps have made. The state might be compelled to abandon its policy. It becomes hesitant to introducing similar legislation along the same lines, for fear of facing litigation.

A System Growing Exponentially

Historically high figures of cases are being filed, as firms take cues from each other, and private equity fund legal actions for a share of a portion of the takings. The consequence? National sovereignty and democratic governance are now unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede national legislation and the rulings taken by elected bodies is that this provision has been incorporated – without public consent, and often in conditions of extreme secrecy – within international trade agreements.

A Concrete Case: The Whitehaven Coal Mine

A year ago, activists achieved a major legal triumph at the senior court. The judge ruled that proposals to open the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, were wrongly permitted by the outgoing administration, which had accepted the questionable argument that the mine could have zero effect on national carbon targets. The new government subsequently revoked the consent the Tories had approved. Today, this legal outcome could be compromised by an foreign court reporting to exclusively the companies filing the suit.

During August, a corporate entity whose final controllers are located in the offshore financial centre initiated proceedings challenging the UK government. Recently a dispute settlement body in the US capital was established to adjudicate on it.

The company is litigating against the UK for the revenue it would have generated if the mine had received permission to go ahead. The public has no clear indication how much this might be. What legal team is serving as its counsel challenging the British government? A member of parliament, and former attorney-general in the Conservative government, that great patriot Geoffrey Cox. The administration makes a decision, the national judiciary validates it, then a overseas corporation challenges it through an unaccountable offshore tribunal, and a sitting MP works for its behalf.

An Oligarch's Lawsuit

On the same day that the panel on the mining lawsuit was appointed, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. The public knows little of the case at present, but it is highly possible that he will utilise the tribunal to fight the restrictions the UK levied against him subsequent to the invasion of Ukraine. He has previously started suing a small nation for this reason, seeking $16bn: half that nation's yearly income. Among the legal team representing him there? Cherie Blair, married to the former British prime minister.

Trade specialists believe that the EU’s hesitation in using frozen Russian assets as security for its loan to Ukraine arises from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a investment pact. This unprecedented, secretive influence over democratic administrations might be preventing the finance Ukraine desperately needs.

Misleading Claims and Escalating Costs

The public was told that these scenarios were not possible. 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 case in the past.” An adviser on this issue described critics of “exaggeration … the fact is, ISDS barely touches the UK much”. The prevailing narrative seemed to be that solely developing countries had to worry about ISDS claims. Cautionary notes that “as corporations start to realise the authority bestowed upon them, they will redirect their efforts from the vulnerable countries to the strong ones” were greeted by widespread derision.

That warning has now materialised. This year, fossil fuel and resource corporations have lodged a historic level of claims against nations both wealthy and developing, challenging – as in the case of the UK mine – government attempts to stop global warming. Firms have so far won one hundred and fourteen billion dollars via ISDS, of which energy giants have obtained eighty-four billion dollars. That equates to the combined GDP