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What is your perceive our political system functions? It could be similar to this. We elect MPs. They debate and pass bills. If a majority is achieved, the bills become law. Statutes is maintained by the courts. End of story. However, that was how it used to work. No longer.

The Emergence of Offshore Tribunals

Today, international firms, or the wealthy individuals who own them, can sue nation states for the laws they pass, at secret arbitration panels made up of corporate lawyers. The cases take place away from public scrutiny. In contrast to domestic courts, these bodies allow no avenue for appeal or legal review. Ordinary citizens are unable to file a case to them, and neither can our government, or even enterprises based in this country. The door is open exclusively to corporations based overseas.

Should an arbitration panel rules that a law or policy could harm the corporation’s anticipated profits, it may order financial penalties of hundreds of millions of pounds, even billions.

These awards are based not on tangible damages but money the panel members decide the company could potentially have made. The administration might be compelled to rescind the measure. It becomes hesitant to enacting future policies along the same lines, worried about incurring a lawsuit.

A System Spiralling Out of Control

Record numbers of legal actions are being brought, as companies learn from each other, and private equity bankroll lawsuits for a share of a cut of the takings. The consequence? Sovereignty and democratic governance are turning into prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump national legislation and the choices made by elected bodies is that this provision has been inserted – absent public approval, and typically amid conditions of extreme secrecy – within trade treaties.

A Concrete Example: The Whitehaven Coalmine

Last year, activists achieved a major legal triumph at the High Court. The justice determined that plans to excavate the first major coal mine in the UK for a generation, in Cumbria, were unlawfully approved by the outgoing administration, which had agreed to the questionable argument that the mine could have no consequence on national carbon targets. The Labour government then withdrew the consent the previous administration had approved. Now, this success is under threat by an secret arbitration panel answering to no one but the entities bringing the case.

Last August, a firm whose beneficial owners are based in the Cayman Islands filed a lawsuit versus the UK government. Last week a tribunal in the United States was convened to adjudicate on it.

The claimant is suing the UK for the profits it could have earned if the mine had received permission to commence operations. Citizens have little idea how much this might be. What legal team is acting on its behalf against the state? A sitting MP, and former attorney-general in the Conservative government, that great patriot the MP. The administration makes a decision, the national judiciary validates it, then a foreign company challenges it through an undemocratic offshore tribunal, and a sitting MP acts on its behalf.

The Russian Case

On the same day that the tribunal on the coalmine case was appointed, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. Details are scarce of the case at present, but it seems likely that he may employ the tribunal to challenge the restrictions the UK imposed on him following the Russian aggression. He has previously initiated proceedings against a small nation for this reason, claiming a colossal sum: equivalent to half of nation's annual revenue. Part of the lawyers representing him there? a prominent lawyer, married to the previous PM.

Trade specialists contend that the EU’s delay in using frozen oligarchs' funds as collateral for its financial support package stems from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over democratic administrations might be preventing the funds Ukraine urgently requires.

False Assurances and Escalating Costs

The public was told that these scenarios could not occur. In 2014, a government leader, championing the largest and riskiest of all investment pacts, told us: “We’ve signed investment treaty after trade deal and there has never been a issue in the past.” An adviser on this topic described campaigners of “exaggeration … the truth is, ISDS does not affect the UK much”. The overall message was crafted to be that exclusively weaker states had to worry about such legal actions. Predictions that “when companies start to realise the influence they’ve been granted, they will turn their attention from the poorer states to the developed economies” were met with widespread derision.

That threat has now materialised. In the current period, fossil fuel and mining firms have initiated a record number of cases against nations both wealthy and developing, contesting – as in the case of the UK mine – state efforts to prevent climate breakdown. Firms have to date won vast sums via ISDS, of which oil majors have obtained $84bn. That represents the combined GDP