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What is your perceive our political system operates? Perhaps similar to this. We elect MPs. They vote on bills. When a majority is secured, the bills are enacted as law. The law are enforced by the courts. Simple as that. Yet, that’s how it operated in the past. No longer.

The Rise of Offshore Courts

Today, international firms, and the wealthy individuals that control them, have the power to sue elected administrations for the policies they pass, at offshore tribunals composed of business advocates. The cases are held behind closed doors. Unlike our courts, these tribunals grant no opportunity to appeal or oversight by judges. You or I are unable to file a case to them, just as our government, including enterprises based in this country. Access is granted exclusively to entities operating from foreign soil.

When a secret court determines that a government measure might diminish the corporation’s expected profits, it can award financial penalties of vast sums, even billions.

This compensation constitute not tangible damages but compensation the panel members decide the company might otherwise have made. The government could be forced to rescind the measure. It becomes deterred from enacting future policies along the same lines, for fear of facing litigation.

A Mechanism Growing Exponentially

Record numbers of cases are being brought, as companies observe each other, and investment funds finance suits in exchange for a share of the awards. The consequence? Sovereignty and popular rule are now prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the rulings enacted by parliaments is that this stipulation has been inserted – without public consent, and typically amid conditions of total confidentiality – inside bilateral investment treaties.

A Specific Example: The Whitehaven Coal Mine

Twelve months ago, a conservation group secured a significant win at the high court. The judge found that plans to open the first major coal mine in the UK for a generation, in northwest England, had been unlawfully approved by the Conservative government, which had agreed to the bizarre claim that the mine would have had no impact on climate commitments. The incoming administration subsequently revoked the permission the former government had approved. Now, this victory is under threat by an secret arbitration panel reporting to no one but the corporations petitioning it.

During August, a company whose ultimate owners are based in the offshore financial centre filed a lawsuit challenging the UK government. Last week a dispute settlement body in the United States was set up to consider the case.

The claimant is suing the UK for the money it would have generated if the mine had been permitted to proceed. The public has no clear indication how much this sum represents. Which individual is acting on its behalf in opposition to the state? A member of parliament, and ex-law officer in the Conservative government, the noted patriot Geoffrey Cox. The administration enacts a policy, the domestic court upholds it, then a foreign company contests it through an undemocratic offshore tribunal, and a elected official represents its behalf.

The Russian Lawsuit

On the same day that the court on the mining lawsuit was convened, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. The public knows little of the case so far, but it is highly possible that he’ll use the tribunal to challenge the sanctions the UK levied against him after the Russian aggression. He has already initiated proceedings against Luxembourg for this reason, claiming $16bn: equivalent to half of state's yearly budget. Included in the counsel representing him there? the wife of a former prime minister, married to the former British prime minister.

Trade specialists believe that the EU’s delay in leveraging immobilised Russian assets as security for its aid for Ukraine stems from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, secretive influence over sovereign states might be preventing the money Ukraine critically depends on.

False Assurances and Mounting Costs

We were assured that such things could not occur. In 2014, a former prime minister, championing 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 expert on this topic described critics of “scaremongering … the fact is, ISDS barely touches the UK much”. The general impression seemed to be that solely developing countries should be concerned by ISDS claims. Warnings that “when companies begin to understand the authority they’ve been granted, they will shift their focus from the vulnerable countries to the wealthy nations” were greeted by widespread derision.

That prediction has now materialised. Recently, fossil fuel and resource corporations have initiated a historic level of claims against nations across the economic spectrum, challenging – like the example of the UK mine – government attempts to halt environmental catastrophe. Companies have to date won one hundred and fourteen billion dollars by using ISDS, of which energy giants have secured eighty-four billion dollars. That equates to the combined GDP