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Can you reckon our political system operates? Maybe along the lines of this. The public votes for MPs. They debate and pass bills. When a majority is secured, the bills become law. The law are enforced by the courts. That's it. Yet, that used to be how it operated in the past. Those days are over.

The Advent of Offshore Tribunals

Nowadays, international firms, and the oligarchs behind them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals made up of commercial attorneys. These proceedings are held away from public scrutiny. In contrast to domestic courts, these tribunals grant no avenue for appeal or legal review. The general public are barred from bringing a case to them, nor can our government, or even businesses headquartered in this country. The door is open solely for entities registered abroad.

If a tribunal rules that a legislative action may compromise the corporation’s projected profits, it may order damages of hundreds of millions of pounds, running into billions.

These sums represent not real financial harm but compensation the arbitrators decide the company could potentially have made. The government could be forced to drop the legislation. It is discouraged from introducing similar legislation along the same lines, due to the risk of incurring a lawsuit.

A Mechanism Running Rampant

Record numbers of legal actions are being filed, as firms observe each other, and investment funds bankroll lawsuits in return for a portion of the awards. The result? National sovereignty and democracy are becoming too costly.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it is allowed to trump national legislation and the decisions taken by elected bodies is that this provision has been incorporated – without democratic mandate, and frequently under a climate of total confidentiality – inside bilateral investment treaties.

A Real-World Case: The Whitehaven Coalmine

A year ago, a conservation group secured a significant win at the high court. The judge found that plans to dig the first deep coalmine in the UK for 30 years, in Cumbria, were found to be unlawfully approved by the outgoing administration, which had accepted the questionable argument that the mine would have no impact on national carbon targets. The Labour government then withdrew the permission the previous administration had approved. Today, this success is under threat by an foreign court answering to exclusively the corporations bringing the case.

Last August, a company whose beneficial owners reside in the Cayman Islands filed a lawsuit against the UK government. The previous week a arbitration panel in the United States was established to consider the case.

This firm is seeking compensation from the UK for the revenue it could have earned if the mine had been allowed to go ahead. The public has little idea how much this could amount to. What legal team is serving as its counsel challenging the UK administration? An elected representative, and previous senior legal advisor in the Conservative government, the noted patriot the MP. The state enacts a policy, the high court supports it, then a overseas corporation contests it through an undemocratic private court, and a sitting MP represents its behalf.

A Sanctions Case

On the same day that the panel on the coal mine dispute was convened, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. Details are little of the case at present, but it is highly possible that he’ll use the tribunal to contest the penalties the UK imposed on him following the Russian aggression. He has previously started suing another European state for this reason, seeking $16bn: an amount representing half nation's yearly income. Part of the lawyers acting for him in that case? the wife of a former prime minister, married to the former British prime minister.

Trade specialists contend that the EU’s hesitation in utilising seized Russian assets as security for its financial support package stems from Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This extraordinary, unaccountable authority over democratic administrations may be obstructing the money Ukraine urgently requires.

Misleading Claims and Escalating Risks

Politicians promised that these scenarios could not occur. In 2014, a former prime minister, advocating for the largest and riskiest of all investment pacts, stated: “We’ve signed investment treaty upon trade deal and there has never been a problem in the past.” A consultant on this topic described campaigners of “exaggeration … in reality, ISDS does not affect the UK much”. The overall message was crafted to be that only poorer nations had to worry about these lawsuits. Predictions that “as corporations grasp the authority they now possess, they will shift their focus from the weak nations to the wealthy nations” were dismissed with scepticism.

That warning is now a reality. This year, fossil fuel and resource corporations have filed a historic level of suits against nations across the economic spectrum, contesting – as in the case of the Whitehaven project – government attempts to stop environmental catastrophe. Companies have so far won $114bn via ISDS, of which energy giants have been awarded $84bn. That represents the combined GDP