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What is your perceive our system of government operates? Maybe similar to this. We elect MPs. They vote on bills. When a majority is achieved, the bills pass into law. The law is upheld by the courts. That's it. Yet, that was how it operated in the past. No longer.

The Rise of Offshore Tribunals

Today, foreign corporations, along with the oligarchs who own them, have the power to sue nation states for the laws they pass, at private courts staffed by corporate lawyers. These proceedings are held away from public scrutiny. Differing from national judiciaries, these panels allow no avenue for appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, just as our government, or even enterprises operating from this country. The door is open solely for entities registered abroad.

Should an arbitration panel determines that a law or policy might diminish the corporation’s projected profits, it can award compensation of hundreds of millions of pounds, running into billions.

These sums are based not on tangible damages but money the panel members decide the company might otherwise have made. The administration could be forced to drop the legislation. It becomes hesitant to passing future laws in that area, due to the risk of being sued.

A Process Running Rampant

Record numbers of cases are being initiated, as companies observe each other, and investment funds finance suits for a share of a portion of the settlements. The outcome? Democratic sovereignty and popular rule are becoming unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The explanation it can override domestic law and the rulings enacted by parliaments is that this clause has been written – absent public approval, and typically amid an atmosphere of profound opacity – inside international trade agreements.

A Real-World Instance: The UK Coalmine

A year ago, environmental campaigners secured a significant win at the High Court. The presiding officer determined that schemes to dig the first major coal mine in the UK for 30 years, in Cumbria, were wrongly permitted by the Conservative government, which had agreed to the bizarre claim that the mine would have had no consequence on climate commitments. The incoming administration subsequently revoked the permission the former government had granted. Now, this success faces being overturned by an offshore tribunal accountable to only the companies petitioning it.

Last August, a company whose beneficial owners are based in the tax haven lodged a claim against the UK government. The previous week a dispute settlement body in Washington DC was convened to adjudicate on it.

The company is seeking compensation from the UK for the profits it could have earned if the mine had received permission to commence operations. The public has no clear indication how much this might be. What legal team is acting on its behalf against the state? A sitting MP, and previous senior legal advisor in the previous government, the noted patriot Geoffrey Cox. The government makes a decision, the national judiciary validates it, then a overseas corporation disputes it through an secretive private court, and a elected official represents its behalf.

The Russian Lawsuit

Concurrently that the tribunal on the mining lawsuit was appointed, we learned from a government response that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. We know scarce of the case so far, but it appears probable that he will utilise the arbitration process to challenge the restrictions the UK enacted against him subsequent to the war in Ukraine. He has already filed a claim against Luxembourg on these grounds, claiming sixteen billion dollars: half that nation's yearly income. Included in the legal team on his side? the wife of a former prime minister, married to the previous PM.

Legal experts argue that the EU’s hesitation in using frozen state funds as guarantee for its financial support package stems from Belgium’s fear that it could be sued in the offshore corporate courts, under a trade agreement. This unprecedented, secretive influence over elected governments could be blocking the finance Ukraine urgently requires.

False Assurances and Mounting Costs

The public was told that these scenarios could not occur. Previously, a former prime minister, advocating for the biggest and most dangerous of all such treaties, declared: “The UK has signed trade deal upon trade deal and we have never seen a issue in the past.” An adviser on this topic accused campaigners of “scaremongering … the fact is, ISDS does not affect the UK much”. The overall message seemed to be that only poorer nations should be concerned by such legal actions. Warnings that “when companies start to realise the authority they now possess, they will shift their focus from the vulnerable countries to the strong ones” were met with general mockery.

That warning is now a reality. In the current period, energy and extraction companies have filed a historic level of claims against nations rich and poor, opposing – similar to the Cumbrian coalmine – official measures to prevent climate breakdown. Companies have thus far won vast sums by using ISDS, of which energy giants have been awarded $84bn. That represents the combined GDP