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What is your perceive our political system works? It could be along the lines of this. The public votes for MPs. They debate and pass bills. If a majority is secured, the bills are enacted as law. Legislation is upheld by the courts. End of story. Yet, that was how it operated in the past. Not anymore.

The Emergence of Secret Arbitration Panels

Today, foreign corporations, or the oligarchs who own them, have the power to sue governments for the policies they pass, at offshore tribunals composed of business advocates. The cases are held in secret. In contrast to domestic courts, these bodies allow no opportunity to appeal or oversight by judges. You or I cannot take a case to them, nor can our government, including enterprises based in this country. Access is granted solely for entities operating from foreign soil.

If a tribunal determines that a government measure could harm the corporation’s anticipated profits, it may order compensation of vast sums, even billions.

These sums are based not on real financial harm but compensation the panel members decide the company might otherwise have made. The administration could be forced to abandon its policy. It becomes hesitant to passing future laws in that area, worried about incurring a lawsuit.

A Process Growing Exponentially

Historically high figures of disputes are being filed, as firms learn from each other, and hedge funds bankroll lawsuits in return for a share of the awards. The outcome? Democratic sovereignty and democratic governance are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to override domestic law and the choices taken by elected bodies is that this stipulation has been inserted – absent public approval, and frequently under an atmosphere of extreme secrecy – inside trade treaties.

A Concrete Instance: The Cumbrian Coal Mine

Last year, environmental campaigners secured a significant win at the High Court. The judge ruled that proposals to excavate the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, had been unlawfully approved by the Conservative government, which had accepted the questionable argument that the mine would have had zero effect on national carbon targets. The incoming administration later cancelled the permission the Tories had granted. Currently, this victory is under threat by an offshore tribunal accountable to exclusively the companies filing the suit.

During August, a company whose final controllers are located in the Cayman Islands filed a lawsuit against the UK government. The previous week a dispute settlement body in Washington DC was set up to consider the case.

This firm is suing the UK for the revenue it might have made if the mine had been allowed to proceed. We have no idea how much this might be. Who is acting on its behalf in opposition to the British government? A member of parliament, and ex-law officer in the previous government, that great patriot Sir Geoffrey Cox. The administration enacts a policy, the domestic court supports it, then a overseas corporation contests it through an secretive offshore tribunal, and a elected official acts on its behalf.

A Sanctions Lawsuit

Simultaneously that the panel on the coalmine case was established, we learned from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. We know little of the case to date, but it is highly possible that he may employ the tribunal to challenge the restrictions the UK enacted against him subsequent to the Russian aggression. He has previously filed a claim against another European state on these grounds, seeking sixteen billion dollars: equivalent to half of government’s yearly income. Among the lawyers on his side? a prominent lawyer, wife of the previous PM.

Legal experts believe that the EU’s hesitation in leveraging immobilised state funds as security for its aid for Ukraine is due to concerns within Belgium that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, secretive influence over democratic administrations could be blocking the finance Ukraine critically depends on.

Misleading Claims and Escalating Risks

Politicians promised that these events wouldn’t happen. In 2014, a government leader, championing the most significant and hazardous of all investment pacts, told us: “The UK has signed investment treaty after trade deal and there has never been a issue in the past.” A consultant on this topic labelled critics of “alarmism … the truth is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations needed to fear these lawsuits. Predictions that “when companies begin to understand the authority they’ve been granted, they will redirect their efforts from the vulnerable countries to the developed economies” were met with widespread derision.

That threat has come to pass. Recently, fossil fuel and resource corporations have filed a unprecedented number of claims against nations across the economic spectrum, challenging – similar to the Whitehaven project – state efforts to prevent global warming. Corporations have thus far won $114bn via ISDS, of which fossil fuel companies have been awarded $84bn. That equates to the combined GDP