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What is your understand our political system functions? Perhaps similar to this. We elect MPs. They legislate on bills. When a majority is secured, the bills pass into law. Legislation are enforced by the courts. That's it. Well, that’s how it once functioned. No longer.

The Rise of Offshore Courts

Today, overseas companies, along with the oligarchs behind them, are able to litigate against nation states for the laws they pass, at secret arbitration panels staffed by corporate lawyers. These proceedings are conducted in secret. Unlike our courts, these panels allow no avenue for appeal or judicial review. You or I cannot take a case to them, just as our government, or even enterprises based in this country. Access is granted only to corporations operating from foreign soil.

If a tribunal determines that a law or policy could harm the corporation’s expected profits, it may order damages of hundreds of millions, running into billions.

These sums represent not tangible damages but compensation the panel members determine the company would perhaps have made. The government might be compelled to drop the legislation. It will be discouraged from introducing similar legislation of a similar nature, worried about being sued.

A Process Running Rampant

Unprecedented levels of disputes are being initiated, as corporations observe each other, and investment funds finance suits in exchange for a cut of the settlements. The result? Sovereignty and popular rule are now unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede domestic law and the choices taken by elected bodies is that this stipulation has been incorporated – without public consent, and frequently under conditions of extreme secrecy – inside trade treaties.

A Specific Instance: The Cumbrian Coal Mine

A year ago, activists won a great victory at the High Court. The presiding officer determined that schemes to excavate the first new deep coal mine in the UK for 30 years, in northwest England, were found to be wrongly permitted by the Conservative government, which had accepted the bizarre claim that the mine could have no impact on national carbon targets. The incoming administration subsequently revoked the consent the former government had granted. Now, this victory could be compromised by an foreign court reporting to only the companies filing the suit.

Last August, a corporate entity whose beneficial owners are located in the offshore financial centre lodged a claim versus the UK government. The previous week a dispute settlement body in the United States was set up to adjudicate on it.

This firm is suing the UK for the money it could have earned if the mine had received permission to commence operations. Citizens have no idea how much this could amount to. What legal team is representing it challenging the state? A sitting MP, and previous senior legal advisor in the previous government, that great patriot Geoffrey Cox. The administration passes a law, the national judiciary upholds it, then a international entity contests it through an undemocratic offshore tribunal, and a elected official works for its behalf.

The Russian Lawsuit

Concurrently that the court on the mining lawsuit was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. The public knows little of the case at present, but it seems likely that he may employ the arbitration process to contest the sanctions the UK enacted against him following the invasion of Ukraine. He has already filed a claim against another European state on these grounds, claiming $16bn: an amount representing half government’s yearly income. Among the legal team acting for him in that case? a prominent lawyer, wife of the previous PM.

Trade specialists believe that the EU’s delay in utilising seized oligarchs' funds as security for its financial support package stems from Belgium’s fear that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, unaccountable authority over sovereign states may be obstructing the finance Ukraine critically depends on.

Misleading Claims and Growing Costs

The public was told that these events wouldn’t happen. Previously, a senior politician, advocating for the biggest and most dangerous of all investment pacts, declared: “We’ve signed investment treaty upon trade deal and we have never seen a problem in the past.” An adviser on this topic labelled campaigners of “exaggeration … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that exclusively weaker states should be concerned by these lawsuits. Warnings that “as corporations begin to understand the power bestowed upon them, they will redirect their efforts from the poorer states to the developed economies” were met with scepticism.

That prediction has now materialised. This year, fossil fuel and resource corporations have filed a unprecedented number of suits against nations across the economic spectrum, challenging – as in the case of the UK mine – state efforts to halt environmental catastrophe. Corporations have to date won $114bn via ISDS, of which oil majors have been awarded eighty-four billion dollars. That represents the combined GDP