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What is your perceive our political system works? Maybe something like this. We elect MPs. They legislate on bills. If a majority is achieved, the bills are enacted as law. Legislation is upheld by the courts. Simple as that. Yet, that was how it operated in the past. Those days are over.

The Advent of Secret Courts

Today, foreign corporations, or the billionaires who own them, have the power to sue governments for the regulations they pass, at offshore tribunals made up of commercial attorneys. These proceedings are held behind closed doors. Unlike our courts, these tribunals grant no avenue for appeal or judicial review. You or I are unable to file a case to them, nor can our government, or even businesses operating from this country. They are open exclusively to businesses operating from foreign soil.

If a tribunal finds that a government measure might diminish the corporation’s projected profits, it has the power to grant damages of vast sums, potentially billions.

These awards are based not on tangible damages but money the arbitrators decide the company could potentially have made. The administration may have to drop the legislation. It is discouraged from passing future laws in that area, worried about facing litigation.

A Process Growing Exponentially

Historically high figures of legal actions are being brought, as corporations take cues from each other, and investment funds finance suits in return for a cut of the settlements. The outcome? National sovereignty and democracy are now unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede a country's own laws and the decisions enacted by legislatures is that this clause has been inserted – without democratic mandate, and typically amid an atmosphere of total confidentiality – inside bilateral investment treaties.

A Real-World Instance: The Whitehaven Coal Mine

Last year, activists secured a significant win at the senior court. The presiding officer ruled that plans to excavate the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine could have zero effect on climate commitments. The incoming administration then withdrew the licence the Tories had issued. Currently, this legal outcome is under threat by an foreign court answering to exclusively the companies filing the suit.

In August, a firm whose ultimate owners reside in the tax haven filed a lawsuit against the UK government. Recently a arbitration panel in Washington DC was convened to adjudicate on it.

The claimant is suing the UK for the profits it could have earned if the mine had been allowed to commence operations. Citizens have little idea how much this could amount to. Who is acting on its behalf in opposition to the British government? A sitting MP, and previous senior legal advisor in the outgoing administration, that great patriot Geoffrey Cox. The government passes a law, the high court validates it, then a international entity challenges it through an undemocratic arbitration panel, and a member of our parliament represents its behalf.

A Sanctions Challenge

Simultaneously that the court on the mining lawsuit was appointed, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. We know nothing of the case at present, but it seems likely that he’ll use the arbitration process to challenge the penalties the UK enacted against him following the Russian aggression. He has already filed a claim against Luxembourg for this reason, seeking a colossal sum: equivalent to half of nation's yearly income. Part of the legal team on his side? Cherie Blair, married to the previous PM.

Legal experts believe that the EU’s delay in utilising seized oligarchs' funds as security for its aid for Ukraine is due to apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a investment pact. This unprecedented, undemocratic power over sovereign states may be obstructing the money Ukraine urgently requires.

False Assurances and Escalating Threats

Politicians promised that such things were not possible. Previously, a senior politician, championing the most significant and hazardous of all investment pacts, declared: “Britain has agreed to trade deal after trade deal and there has never been a problem in the past.” An expert on this topic described campaigners of “exaggeration … in reality, ISDS does not affect the UK much”. The general impression was crafted to be that solely developing countries should be concerned by ISDS claims. Warnings that “when companies begin to understand the power they’ve been granted, they will turn their attention from the weak nations to the developed economies” were met with widespread derision.

That threat is now a reality. In the current period, oil and gas and mining firms have initiated a historic level of suits against nations both wealthy and developing, challenging – like the example of the Cumbrian coalmine – state efforts to stop environmental catastrophe. Firms have to date won one hundred and fourteen billion dollars through ISDS, of which oil majors have obtained the majority. That is equivalent to the combined GDP