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What is your perceive our political system works? It could be along the lines of this. Citizens choose MPs. They legislate on bills. If a majority is secured, the bills pass into law. Legislation is upheld by the courts. That's it. However, that was how it used to work. Those days are over.

The Advent of Offshore Courts

Nowadays, international firms, and the billionaires that control them, can sue elected administrations for the policies they pass, at secret arbitration panels made up of commercial attorneys. Such disputes take place away from public scrutiny. Unlike our courts, these tribunals provide no right of appeal or oversight by judges. Ordinary citizens cannot take a case to them, just as our government, or even companies headquartered in this country. Access is granted exclusively to entities operating from foreign soil.

Should an arbitration panel rules that a government measure might diminish the corporation’s projected profits, it can award financial penalties of hundreds of millions, running into billions.

These sums are based not on real financial harm but money the panel members decide the company would perhaps have made. The administration might be compelled to drop the legislation. It is discouraged from passing future laws along the same lines, for fear of facing litigation.

A System Growing Exponentially

Unprecedented levels of legal actions are being initiated, as corporations learn from each other, and investment funds fund legal actions in return for a portion of the awards. The consequence? Sovereignty and democratic governance are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it can supersede national legislation and the decisions taken by elected bodies is that this stipulation has been incorporated – absent public approval, and frequently under a climate of profound opacity – within trade treaties.

A Real-World Case: The Whitehaven Coalmine

Twelve months ago, activists won a great victory at the high court. The justice determined that proposals to excavate the first major coal mine in the UK for three decades, in northwest England, had been illegally sanctioned by the Conservative government, which had accepted the bizarre claim that the mine would have zero effect on national carbon targets. The new government later cancelled the permission the Tories had issued. Currently, this victory is under threat by an offshore tribunal answering to no one but the entities bringing the case.

In August, a firm whose beneficial owners reside in the offshore financial centre lodged a claim versus the UK government. Recently a tribunal in Washington DC was convened to adjudicate on it.

This firm is litigating against the UK for the profits it might have made if the mine had been allowed to go ahead. Citizens have no idea how much this sum represents. What legal team is serving as its counsel in opposition to the British government? An elected representative, and former attorney-general in the previous government, the noted patriot Sir Geoffrey Cox. The administration passes a law, the national judiciary validates it, then a foreign company contests it through an unaccountable arbitration panel, and a sitting MP works for its behalf.

The Russian Challenge

On the same day that the tribunal on the coal mine dispute was appointed, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. The public knows scarce of the case so far, but it seems likely that he may employ the tribunal to fight the penalties the UK imposed on him following the Russian aggression. He has previously initiated proceedings against a small nation for this reason, demanding $16bn: half that nation's annual revenue. Among the legal team on his side? Cherie Blair, spouse of the ex-UK leader.

Legal experts argue that the EU’s procrastination in utilising seized state funds as security for its aid for Ukraine arises from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a trade agreement. This remarkable, unaccountable authority over democratic administrations may be obstructing the money Ukraine desperately needs.

Misleading Claims and Escalating Costs

The public was told that these scenarios were not possible. In 2014, a former prime minister, promoting the most significant and hazardous of all such treaties, declared: “We’ve signed investment treaty after trade deal and there has not been a issue in the past.” An adviser on this topic described critics of “exaggeration … the fact is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that solely developing countries needed to fear these lawsuits. Cautionary notes that “as corporations begin to understand the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the strong ones” 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, opposing – as in the case of the Cumbrian coalmine – official measures to stop global warming. Companies have to date won $114bn via ISDS, of which oil majors have obtained the majority. That equates to the combined GDP