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What is your perceive our system of government operates? Maybe something like this. The public votes for MPs. They debate and pass bills. When a majority is obtained, the bills pass into law. Statutes is upheld by the courts. That's it. Yet, that used to be how it operated in the past. Those days are over.

The Advent of Offshore Courts

Today, foreign corporations, and the billionaires who own them, have the power to sue governments for the regulations they pass, at secret arbitration panels composed of corporate lawyers. The cases take place in secret. Differing from national judiciaries, these panels allow no avenue for appeal or oversight by judges. The general public are barred from bringing a case to them, and neither can our government, or even companies operating from this country. The door is open solely for entities based overseas.

If a tribunal finds that a legislative action may compromise the corporation’s projected profits, it has the power to grant compensation of vast sums, running into billions.

This compensation are based not on tangible damages but money the tribunal officials conclude the company might otherwise have made. The administration could be forced to rescind the measure. It becomes deterred from enacting future policies in that area, worried about being sued.

A Mechanism Spiralling Out of Control

Historically high figures of disputes are being filed, as companies learn from each other, and hedge funds finance suits for a share of a cut of the awards. The consequence? Democratic sovereignty and popular rule are turning into unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The reason it can supersede national legislation and the rulings taken by parliaments is that this clause has been inserted – absent public approval, and frequently under an atmosphere of extreme secrecy – into trade treaties.

A Real-World Example: The Whitehaven Coal Mine

A year ago, activists secured a significant win at the senior court. The judge ruled that proposals to excavate the first new deep coal mine in the UK for three decades, in Cumbria, were illegally sanctioned by the previous government, which had accepted the bizarre claim that the mine would have had no consequence on climate commitments. The Labour government then withdrew the licence the former government had issued. Now, this victory faces being overturned by an foreign court answering to exclusively the corporations petitioning it.

In August, a firm whose final controllers reside in the Cayman Islands filed a lawsuit challenging the UK government. Recently a arbitration panel in Washington DC was convened to consider the case.

The claimant is litigating against the UK for the revenue it would have generated if the mine had been allowed to commence operations. Citizens have no clear indication how much this sum represents. Who is representing it in opposition to the UK administration? An elected representative, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The state makes a decision, the domestic court validates it, then a overseas corporation challenges it through an unaccountable offshore tribunal, and a elected official works for its behalf.

An Oligarch's Lawsuit

Simultaneously that the tribunal on the coalmine case was convened, it was revealed from a government response that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. The public knows nothing of the case to date, but it appears probable that he may employ the arbitration process to challenge the restrictions the UK imposed on him following the Russian aggression. He has filed a claim against another European state for this reason, demanding sixteen billion dollars: an amount representing half government’s annual revenue. Part of the lawyers on his side? Cherie Blair, spouse of the ex-UK leader.

International law scholars contend that the EU’s hesitation in utilising seized Russian assets as security for its aid for Ukraine is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, unaccountable authority over sovereign states may be obstructing the finance Ukraine urgently requires.

Empty Promises and Escalating Costs

We were assured that these events wouldn’t happen. Previously, a former prime minister, championing the largest and riskiest of all investment pacts, told us: “Britain has agreed to trade deal 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 barely touches the UK much”. The general impression appeared to be that exclusively weaker states should be concerned by such legal actions. Warnings that “once firms begin to understand the influence bestowed upon them, they will shift their focus from the vulnerable countries to the developed economies” were greeted by widespread derision.

That warning has come to pass. Recently, energy and mining firms have initiated a unprecedented number of suits against nations across the economic spectrum, opposing – as in the case of the Cumbrian coalmine – official measures to stop climate breakdown. Firms have to date won $114bn by using ISDS, of which energy giants have secured the majority. That represents the combined GDP