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Can you perceive our system of government operates? Perhaps something like this. We elect MPs. They vote on bills. If a majority is secured, the bills pass into law. The law is maintained by the courts. Simple as that. However, that’s how it operated in the past. Those days are over.

The Advent of Offshore Courts

Nowadays, foreign corporations, along with the billionaires that control them, have the power to sue governments for the laws they pass, at offshore tribunals staffed by commercial attorneys. Such disputes are conducted in secret. Unlike our courts, these tribunals grant no opportunity to appeal or legal review. The general public are barred from bringing a case to them, just as our government, or even businesses headquartered in this country. They are open exclusively to businesses based overseas.

When a secret court rules that a legislative action might diminish the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions of pounds, running into billions.

This compensation represent not actual losses but money the arbitrators conclude the company could potentially have made. The administration could be forced to drop the legislation. It will be deterred from passing future laws in that area, worried about incurring a lawsuit.

A System Spiralling Out of Control

Record numbers of disputes are being initiated, as corporations take cues from each other, and hedge funds bankroll lawsuits in return for a share of the takings. The result? Sovereignty and popular rule are becoming too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump domestic law and the choices enacted by parliaments is that this stipulation has been inserted – absent public approval, and frequently under a climate of total confidentiality – within bilateral investment treaties.

A Real-World Instance: The UK Coal Mine

A year ago, a conservation group won a great victory at the high court. The justice found that proposals to open the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, had been illegally sanctioned by the Conservative government, which had accepted the bizarre claim that the mine would have no consequence on our carbon budgets. The incoming administration later cancelled the licence the former government had granted. Currently, this legal outcome could be compromised by an foreign court reporting to no one but the companies filing the suit.

In August, a firm whose ultimate owners are based in the tax haven filed a lawsuit against the UK government. Recently a arbitration panel in the United States was set up to adjudicate on it.

This firm is seeking compensation from the UK for the profits it might have made if the mine had been allowed to commence operations. We have no idea how much this could amount to. What legal team is serving as its counsel in opposition to the British government? An elected representative, and former attorney-general in the outgoing administration, the noted patriot the MP. The administration enacts a policy, the high court validates it, then a international entity disputes it through an undemocratic private court, and a member of our parliament works for its behalf.

A Sanctions Lawsuit

On the same day that the tribunal on the coal mine dispute was appointed, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. The public knows nothing of the case to date, but it appears probable that he’ll use the tribunal to fight the penalties the UK enacted against him following the invasion of Ukraine. He has previously filed a claim against Luxembourg for this reason, seeking a colossal sum: equivalent to half of government’s annual revenue. Among the lawyers on his side? a prominent lawyer, married to the former British prime minister.

Legal experts contend that the EU’s procrastination in utilising seized oligarchs' funds as guarantee for its aid for Ukraine is due to concerns within Belgium that it could be taken to court in the ISDS tribunals, under a investment pact. This unprecedented, undemocratic power over democratic administrations may be obstructing the finance Ukraine critically depends on.

Misleading Claims and Growing Threats

The public was told that these events were not possible. Years ago, a former prime minister, promoting the biggest and most dangerous of all investment pacts, told us: “Britain has agreed to trade agreement upon trade deal and there has never been a problem in the past.” An expert on this issue described critics of “exaggeration … in reality, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that solely developing countries had to worry about these lawsuits. Warnings that “when companies grasp the power they now possess, they will turn their attention from the poorer states to the strong ones” were greeted by scepticism.

That prediction has come to pass. Recently, energy and mining firms have filed a historic level of claims against nations across the economic spectrum, challenging – similar to the Cumbrian coalmine – government attempts to prevent environmental catastrophe. Companies have so far won $114bn through ISDS, of which energy giants have obtained the majority. That equates to the combined GDP