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Can you understand our system of government works? It could be along the lines of this. The public votes for MPs. They vote on bills. If a majority is secured, the bills pass into law. Legislation is upheld by the courts. That's it. However, that’s how it operated in the past. Not anymore.

The Rise of Offshore Courts

In the modern era, foreign corporations, along with the oligarchs who own them, have the power to sue nation states for the policies they pass, at offshore tribunals made up of commercial attorneys. These proceedings take place in secret. Unlike our courts, these panels allow no right of appeal or legal review. The general public are unable to file a case to them, and neither can our government, or even companies headquartered in this country. The door is open exclusively to corporations operating from foreign soil.

Should an arbitration panel determines that a legislative action may compromise the corporation’s expected profits, it can award financial penalties of vast sums, running into billions.

This compensation represent not real financial harm but funds the panel members decide the company would perhaps have made. The administration may have to drop the legislation. It becomes deterred from introducing similar legislation along the same lines, for fear of being sued.

A Mechanism Spiralling Out of Control

Historically high figures of legal actions are being initiated, as companies observe each other, and hedge funds finance suits in exchange for a portion of the awards. The result? Sovereignty and democracy are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump national legislation and the choices enacted by parliaments is that this stipulation has been incorporated – absent public approval, and typically amid an atmosphere of total confidentiality – within bilateral investment treaties.

A Specific Instance: The Cumbrian Coalmine

Last year, environmental campaigners achieved a major legal triumph at the high court. The justice determined that plans to open the first major coal mine in the UK for three decades, in northwest England, had been illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine would have zero effect on our carbon budgets. The Labour government then withdrew the consent the previous administration had issued. Now, this legal outcome is under threat by an offshore tribunal reporting to exclusively the companies petitioning it.

Last August, a company whose ultimate owners reside in the offshore financial centre initiated proceedings challenging the UK government. Recently a dispute settlement body in the United States was established to adjudicate on it.

The company is suing the UK for the revenue it might have made if the mine had received permission to proceed. The public has no clear indication how much this might be. Who is serving as its counsel challenging the British government? A member of parliament, and former attorney-general in the Conservative government, the noted patriot Sir Geoffrey Cox. The state makes a decision, the national judiciary validates it, then a overseas corporation challenges it through an undemocratic offshore tribunal, and a member of our parliament acts on its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the coalmine case was appointed, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. Details are little of the case so far, but it is highly possible that he’ll use the tribunal to contest the restrictions the UK enacted against him after the invasion of Ukraine. He has previously initiated proceedings against another European state with similar intent, claiming sixteen billion dollars: an amount representing half government’s yearly income. Among the counsel acting for him in that case? Cherie Blair, wife of the previous PM.

Legal experts believe that the EU’s hesitation in leveraging immobilised state funds as security for its loan to Ukraine is due to Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, unaccountable authority over sovereign states might be preventing the money Ukraine urgently requires.

Empty Promises and Mounting Threats

The public was told that these events could not occur. Previously, a government leader, advocating for the most significant and hazardous of all investment pacts, stated: “We’ve signed trade agreement upon trade deal and there has never been a case in the past.” A consultant on this matter labelled campaigners of “alarmism … in reality, ISDS barely touches the UK much”. The overall message appeared to be that solely developing countries had to worry about such legal actions. Predictions that “as corporations begin to understand the influence they now possess, they will shift their focus from the weak nations to the strong ones” were met with general mockery.

That threat has now materialised. Recently, fossil fuel and extraction companies have initiated a unprecedented number of cases against nations across the economic spectrum, opposing – as in the case of the UK mine – government attempts to halt climate breakdown. Firms have so far won $114bn via ISDS, of which fossil fuel companies have been awarded $84bn. That is equivalent to the combined GDP