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What is your perceive our system of government functions? Perhaps similar to this. Citizens choose MPs. They debate and pass bills. Should a majority is obtained, the bills become law. Statutes is maintained by the courts. That's it. However, that was how it once functioned. Those days are over.

The Advent of Offshore Courts

Today, international firms, along with the billionaires that control them, have the power to sue nation states for the laws they pass, at secret arbitration panels made up of corporate lawyers. Such disputes are conducted in secret. Unlike our courts, these bodies provide no avenue for appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, or even enterprises headquartered in this country. Access is granted exclusively to corporations operating from foreign soil.

Should an arbitration panel finds that a legislative action may compromise the corporation’s expected profits, it can award compensation of hundreds of millions of pounds, running into billions.

These awards are based not on tangible damages but compensation the tribunal officials decide the company might otherwise have made. The government might be compelled to rescind the measure. It is discouraged from passing future laws of a similar nature, for fear of being sued.

A System Spiralling Out of Control

Record numbers of disputes are being filed, as firms learn from each other, and private equity bankroll lawsuits in exchange for a share of the awards. The result? Sovereignty and popular rule are turning into too costly.

The system is called “investor-state dispute settlement” (ISDS). The reason it can trump national legislation and the choices enacted by elected bodies is that this stipulation has been incorporated – without democratic mandate, and typically amid conditions of total confidentiality – inside bilateral investment treaties.

A Concrete Case: The Cumbrian Coal Mine

Last year, environmental campaigners won a great victory at the senior court. The presiding officer determined that plans to excavate the first new deep coal mine in the UK for 30 years, in Cumbria, were illegally sanctioned by the previous government, which had endorsed the extraordinary assertion that the mine could have no impact on national carbon targets. The incoming administration later cancelled the consent the Tories had granted. Today, this success is under threat by an secret arbitration panel answering to exclusively the companies petitioning it.

Last August, a corporate entity whose ultimate owners reside in the tax haven lodged a claim against the UK government. The previous week a dispute settlement body in the US capital was set up to hear it.

This firm is seeking compensation from the UK for the profits it might have made if the mine had received permission to commence operations. Citizens have no idea how much this could amount to. Which individual is acting on its behalf challenging the UK administration? An elected representative, and previous senior legal advisor in the previous government, the self-proclaimed patriot the MP. The administration passes a law, the domestic court validates it, then a overseas corporation contests it through an secretive private court, and a sitting MP acts on its behalf.

A Sanctions Case

On the same day that the tribunal on the coal mine dispute was established, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. Details are nothing of the case at present, but it seems likely that he’ll use the arbitration process to challenge the sanctions the UK levied against him after the invasion of Ukraine. He has already filed a claim against another European state with similar intent, demanding $16bn: an amount representing half nation's yearly income. Among the legal team acting for him in that case? the wife of a former prime minister, wife of the ex-UK leader.

Trade specialists contend that the EU’s procrastination in using frozen oligarchs' funds as collateral for its aid for Ukraine stems from apprehension in Brussels that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over elected governments may be obstructing the funds Ukraine desperately needs.

False Assurances and Growing Threats

We were assured that such things wouldn’t happen. In 2014, a government leader, advocating for the largest and riskiest of all such treaties, stated: “Britain has agreed to trade deal after trade deal and we have never seen a problem in the past.” An expert on this topic accused critics of “alarmism … in reality, ISDS barely touches the UK much”. The general impression appeared to be that solely developing countries needed to fear ISDS claims. Cautionary notes that “once firms begin to understand the power bestowed upon them, they will turn their attention from the vulnerable countries to the developed economies” were dismissed with widespread derision.

That threat has come to pass. In the current period, energy and extraction companies have initiated a record number of claims against nations both wealthy and developing, opposing – as in the case of the Cumbrian coalmine – state efforts to prevent climate breakdown. Firms have so far won vast sums through ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That is equivalent to the combined GDP