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What is your perceive our system of government operates? Perhaps similar to this. The public votes for MPs. They debate and pass bills. Should a majority is obtained, the bills are enacted as law. Legislation is upheld by the courts. End of story. However, that was how it used to work. Those days are over.

The Advent of Offshore Tribunals

In the modern era, international firms, and the billionaires behind them, can sue governments for the laws they pass, at offshore tribunals staffed by commercial attorneys. Such disputes take place behind closed doors. Differing from national judiciaries, these bodies allow no opportunity to appeal or judicial review. You or I are unable to file a case to them, nor can our government, including enterprises headquartered in this country. Access is granted solely for businesses operating from foreign soil.

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

These awards represent not real financial harm but compensation the arbitrators decide the company would perhaps have made. The administration might be compelled to drop the legislation. It is deterred from enacting future policies in that area, for fear of facing litigation.

A Mechanism Running Rampant

Unprecedented levels of disputes are being brought, as corporations learn from each other, and investment funds finance suits in return for a cut of the takings. The consequence? National sovereignty and democratic governance are becoming prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it can supersede a country's own laws and the rulings taken by parliaments is that this provision has been inserted – absent public approval, and often in an atmosphere of total confidentiality – into bilateral investment treaties.

A Concrete Instance: The UK Coal Mine

Twelve months ago, a conservation group secured a significant win at the high court. The justice determined that plans to open the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were wrongly permitted by the outgoing administration, which had endorsed the questionable argument that the mine would have zero effect on our carbon budgets. The new government later cancelled the licence the former government had issued. Today, this success faces being overturned by an foreign court reporting to exclusively the entities petitioning it.

In August, a company whose final controllers reside in the offshore financial centre initiated proceedings challenging the UK government. Recently a arbitration panel in the US capital was convened 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. Citizens have little idea how much this could amount to. What legal team is acting on its behalf challenging the state? A member of parliament, and ex-law officer in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The administration makes a decision, the high court validates it, then a international entity contests it through an unaccountable offshore tribunal, and a member of our parliament works for its behalf.

An Oligarch's Challenge

Concurrently that the court on the mining lawsuit was established, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. We know nothing of the case to date, but it is highly possible that he may employ the tribunal to contest the restrictions the UK enacted against him following the Russian aggression. He has already filed a claim against a small nation for this reason, demanding a colossal sum: equivalent to half of state's annual revenue. Part of the legal team on his side? a prominent lawyer, married to the ex-UK leader.

Trade specialists believe that the EU’s delay in leveraging immobilised oligarchs' funds as collateral for its financial support package is due to Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a investment pact. This remarkable, undemocratic power over democratic administrations may be obstructing the finance Ukraine urgently requires.

False Assurances and Escalating Threats

We were assured that such things wouldn’t happen. Years ago, a government leader, advocating for the most significant and hazardous of all such treaties, declared: “Britain has agreed to investment treaty after trade deal and there has not been a problem in the past.” An adviser on this matter labelled activists of “scaremongering … in reality, 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 “once firms start to realise the authority they now possess, they will redirect their efforts from the poorer states to the developed economies” were greeted by general mockery.

That threat is now a reality. This year, fossil fuel and resource corporations have initiated a record number of cases against nations across the economic spectrum, opposing – like the example of the Cumbrian coalmine – government attempts to halt environmental catastrophe. Firms have thus far won vast sums through ISDS, of which fossil fuel companies have secured $84bn. That represents the combined GDP