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What is your understand our political system works? Perhaps something like this. The public votes for MPs. They vote on bills. If a majority is obtained, the bills become law. Legislation is maintained by the courts. End of story. Yet, that was how it operated in the past. Not anymore.

The Advent of Offshore Courts

In the modern era, foreign corporations, along with the billionaires behind them, have the power to sue nation states for the regulations they pass, at private courts staffed by corporate lawyers. These proceedings are conducted behind closed doors. In contrast to domestic courts, these tribunals allow no right of appeal or legal review. The general public cannot take a case to them, and neither can our government, or even companies based in this country. They are open solely for businesses operating from foreign soil.

If a tribunal rules that a government measure could harm the corporation’s projected profits, it has the power to grant compensation of vast sums, running into billions.

These sums are based not on tangible damages but compensation the arbitrators decide the company would perhaps have made. The government could be forced to drop the legislation. It is hesitant to enacting future policies along the same lines, worried about being sued.

A Mechanism Spiralling Out of Control

Record numbers of legal actions are being brought, as companies learn from each other, and hedge funds finance suits for a share of a cut of the takings. The consequence? National sovereignty and popular rule are turning into prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The explanation it can override domestic law and the decisions enacted by elected bodies is that this clause has been inserted – without public consent, and frequently under conditions of extreme secrecy – inside trade treaties.

A Concrete Case: The Cumbrian Coalmine

Last year, environmental campaigners achieved a major legal triumph at the high court. The judge determined that proposals to dig the first major coal mine in the UK for three decades, in Cumbria, had been unlawfully approved by the Conservative government, which had agreed to the questionable argument that the mine would have had zero effect on climate commitments. The new government subsequently revoked the licence the former government had approved. Now, this success could be compromised by an offshore tribunal answering to exclusively the entities petitioning it.

In August, a firm whose ultimate owners are based in the tax haven lodged a claim against the UK government. The previous week a tribunal in Washington DC was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the money it would have generated if the mine had been allowed to go ahead. The public has no clear indication how much this could amount to. Who is acting on its behalf challenging the UK administration? A sitting MP, and ex-law officer in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The administration passes a law, the domestic court validates it, then a overseas corporation contests it through an unaccountable offshore tribunal, and a sitting MP works for its behalf.

A Sanctions Lawsuit

Concurrently that the panel on the coalmine case was appointed, we learned from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. We know little of the case at present, but it is highly possible that he may employ the tribunal to challenge the restrictions the UK enacted against him following the Russian aggression. He has already initiated proceedings against a small nation on these grounds, demanding a colossal sum: equivalent to half of nation's yearly budget. Among the counsel acting for him in that case? the wife of a former prime minister, married to the ex-UK leader.

International law scholars believe that the EU’s delay in utilising seized oligarchs' funds as collateral for its financial support package is due to Belgium’s fear that it could be taken to court in the offshore corporate courts, under a trade agreement. This unprecedented, unaccountable authority over sovereign states may be obstructing the funds Ukraine critically depends on.

Empty Promises and Mounting Threats

Politicians promised that these scenarios could not occur. Years ago, a government leader, championing the largest and riskiest of all investment pacts, stated: “We’ve signed trade deal after trade deal and there has never been a case 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 seemed to be that solely developing countries needed to fear such legal actions. Cautionary notes that “once firms begin to understand the influence they now possess, they will turn their attention from the weak nations to the developed economies” were dismissed with general mockery.

That threat has come to pass. This year, energy and mining firms have initiated a unprecedented number of suits against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – government attempts to halt environmental catastrophe. Firms have thus far won vast sums through ISDS, of which energy giants have been awarded $84bn. That equates to the combined GDP