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Can you understand our system of government operates? Maybe along the lines of this. Citizens choose MPs. They legislate on bills. Should a majority is obtained, the bills become law. The law is upheld by the courts. That's it. Yet, that’s how it used to work. No longer.

The Rise of Offshore Courts

Nowadays, overseas companies, or the wealthy individuals behind them, are able to litigate against elected administrations for the laws they pass, at offshore tribunals composed of corporate lawyers. The cases are conducted away from public scrutiny. Differing from national judiciaries, these bodies grant no avenue for appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, including businesses based in this country. Access is granted solely for businesses registered abroad.

When a secret court finds that a law or policy might diminish the corporation’s expected profits, it has the power to grant compensation of vast sums, even billions.

These sums are based not on actual losses but money the arbitrators determine the company might otherwise have made. The government might be compelled to abandon its policy. It becomes discouraged from introducing similar legislation along the same lines, due to the risk of facing litigation.

A System Growing Exponentially

Historically high figures of legal actions are being brought, as companies take cues from each other, and investment funds finance suits for a share of a cut of the settlements. The outcome? National sovereignty and popular rule are becoming too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override domestic law and the choices enacted by parliaments is that this stipulation has been incorporated – absent public approval, and frequently under a climate of extreme secrecy – inside bilateral investment treaties.

A Specific Case: The UK Coalmine

Last year, environmental campaigners secured a significant win at the high court. The justice determined that schemes to excavate the first new deep coal mine in the UK for 30 years, in northwest England, had been illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine would have zero effect on our carbon budgets. The new government subsequently revoked the consent the former government had issued. Now, this legal outcome faces being overturned by an secret arbitration panel answering to no one but the corporations petitioning it.

Last August, a corporate entity whose final controllers are located in the offshore financial centre filed a lawsuit against the UK government. The previous week a tribunal in the United States was convened to consider the case.

The claimant is litigating against the UK for the profits it might have made if the mine had been allowed to go ahead. Citizens have little idea how much this could amount to. What legal team is acting on its behalf challenging the British government? A sitting MP, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The government makes a decision, the domestic court supports it, then a international entity disputes it through an undemocratic private court, and a sitting MP represents its behalf.

An Oligarch's Lawsuit

On the same day that the court on the coal mine dispute was convened, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. The public knows little of the case so far, but it is highly possible that he’ll use the ISDS mechanism to challenge the restrictions the UK levied against him subsequent to the war in Ukraine. He has already started suing Luxembourg on these grounds, seeking a colossal sum: an amount representing half state's yearly budget. Included in the legal team on his side? the wife of a former prime minister, wife of the former British prime minister.

Legal experts contend that the EU’s hesitation in utilising seized Russian assets as guarantee for its aid for Ukraine stems from apprehension in Brussels that it could be sued in the offshore corporate courts, under a investment pact. This unprecedented, secretive influence over democratic administrations may be obstructing the money Ukraine urgently requires.

False Assurances and Escalating Costs

The public was told that these events wouldn’t happen. In 2014, a government leader, advocating for the biggest and most dangerous of all these agreements, stated: “We’ve signed trade agreement upon trade deal and there has not been a issue in the past.” An adviser on this topic described activists of “alarmism … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that exclusively weaker states needed to fear such legal actions. Warnings that “as corporations start to realise the power they now possess, they will shift their focus from the vulnerable countries to the wealthy nations” were met with widespread derision.

That threat is now a reality. Recently, oil and gas and resource corporations have filed a historic level of suits against nations rich and poor, contesting – as in the case of the Cumbrian coalmine – government attempts to stop global warming. Firms have thus far won one hundred and fourteen billion dollars through ISDS, of which oil majors have been awarded the majority. That represents the combined GDP