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What is your understand our system of government functions? It could be similar to this. Citizens choose MPs. They debate and pass bills. When a majority is obtained, the bills are enacted as law. Statutes are enforced by the courts. Simple as that. However, that was how it operated in the past. No longer.

The Emergence of Offshore Tribunals

Today, foreign corporations, and the billionaires that control them, are able to litigate against nation states for the policies they pass, at offshore tribunals made up of corporate lawyers. These proceedings are conducted away from public scrutiny. Unlike our courts, these tribunals provide no avenue for appeal or judicial review. The general public are unable to file a case to them, and neither can our government, or even companies operating from this country. They are open exclusively to entities based overseas.

If a tribunal finds that a government measure may compromise the corporation’s anticipated profits, it may order compensation of vast sums, potentially billions.

This compensation represent not real financial harm but money the arbitrators determine the company would perhaps have made. The government might be compelled to abandon its policy. It will be deterred from introducing similar legislation along the same lines, for fear of being sued.

A Process Spiralling Out of Control

Historically high figures of disputes are being initiated, as companies take cues from each other, and investment funds fund legal actions in exchange for a cut of the takings. The result? Democratic sovereignty and democracy are now prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The explanation it is allowed to override domestic law and the rulings taken by parliaments is that this provision has been incorporated – without democratic mandate, and frequently under a climate of extreme secrecy – inside trade treaties.

A Real-World Instance: The Whitehaven Coalmine

Twelve months ago, environmental campaigners won a great victory at the High Court. The presiding officer determined that schemes to open the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be wrongly permitted by the previous government, which had endorsed the bizarre claim that the mine could have no impact on our carbon budgets. The new government then withdrew the consent the former government had issued. Currently, this victory is under threat by an offshore tribunal accountable to no one but the corporations petitioning it.

In August, a company whose final controllers are located in the offshore financial centre lodged a claim challenging the UK government. Recently a arbitration panel in the United States was established to adjudicate on it.

This firm is seeking compensation from the UK for the money it would have generated if the mine had been allowed to go ahead. Citizens have little idea how much this could amount to. What legal team is representing it challenging the state? An elected representative, and former attorney-general in the previous government, the noted patriot the MP. The administration makes a decision, the high court upholds it, then a overseas corporation contests it through an secretive arbitration panel, and a elected official works for its behalf.

An Oligarch's Challenge

Simultaneously that the tribunal on the coal mine dispute was convened, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. We know scarce of the case to date, but it is highly possible that he will utilise the arbitration process to contest the sanctions the UK levied against him following the invasion of Ukraine. He has started suing another European state on these grounds, demanding $16bn: half that state's yearly income. Part of the lawyers on his side? a prominent lawyer, spouse of the ex-UK leader.

Legal experts believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as guarantee for its financial support package arises from concerns within Belgium that it could be sued in the ISDS tribunals, under a trade agreement. This extraordinary, unaccountable authority over elected governments may be obstructing the finance Ukraine urgently requires.

False Assurances and Growing Costs

The public was told that these events could not occur. Previously, a government leader, advocating for the largest and riskiest of all investment pacts, told us: “Britain has agreed to trade deal upon trade deal and we have never seen a problem in the past.” A consultant on this topic accused campaigners of “alarmism … in reality, ISDS does not affect the UK much”. The prevailing narrative seemed to be that only poorer nations needed to fear these lawsuits. Cautionary notes that “when companies begin to understand the influence they now possess, they will shift their focus from the weak nations to the strong ones” were met with widespread derision.

That warning is now a reality. In the current period, fossil fuel and mining firms have lodged a historic level of suits against nations rich and poor, challenging – like the example of the UK mine – state efforts to stop environmental catastrophe. Companies have to date won $114bn through ISDS, of which oil majors have obtained the majority. That represents the combined GDP