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Can you perceive our system of government works? It could be similar to this. We elect MPs. They vote on bills. When a majority is obtained, the bills pass into law. The law is maintained by the courts. End of story. Yet, that’s how it operated in the past. Not anymore.

The Advent of Offshore Tribunals

Nowadays, international firms, along with the wealthy individuals who own them, are able to litigate against governments for the regulations they pass, at private courts composed of commercial attorneys. These proceedings are held away from public scrutiny. In contrast to domestic courts, these bodies grant no opportunity to appeal or judicial review. Ordinary citizens cannot take a case to them, nor can our government, or even enterprises headquartered in this country. They are open only to entities operating from foreign soil.

Should an arbitration panel finds that a law or policy may compromise the corporation’s projected profits, it can award compensation of hundreds of millions, even billions.

These awards are based not on actual losses but money the arbitrators conclude the company might otherwise have made. The government might be compelled to drop the legislation. It becomes discouraged from passing future laws of a similar nature, due to the risk of incurring a lawsuit.

A Process Running Rampant

Record numbers of disputes are being filed, as firms take cues from each other, and investment funds bankroll lawsuits in return for a cut of the awards. The result? National sovereignty and popular rule are now unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump a country's own laws and the rulings taken by elected bodies is that this stipulation has been incorporated – without democratic mandate, and frequently under a climate of extreme secrecy – into trade treaties.

A Specific Case: The Whitehaven Coalmine

Twelve months ago, a conservation group won a great victory at the high court. The presiding officer ruled that schemes to open the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had accepted the bizarre claim that the mine could have zero effect on climate commitments. The new government then withdrew the licence the former government had approved. Currently, this success could be compromised by an foreign court answering to no one but the companies filing the suit.

Last August, a corporate entity whose beneficial owners are located in the offshore financial centre initiated proceedings challenging the UK government. Last week a arbitration panel in the US capital was established to hear it.

This firm is suing the UK for the money it could have earned if the mine had been permitted to go ahead. The public has no clear indication how much this sum represents. What legal team is serving as its counsel in opposition to the UK administration? A sitting MP, and former attorney-general in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The state makes a decision, the domestic court validates it, then a foreign company contests it through an unaccountable arbitration panel, and a sitting MP represents its behalf.

An Oligarch's Lawsuit

On the same day that the panel on the coal mine dispute was convened, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. The public knows scarce of the case at present, but it appears probable that he’ll use the ISDS mechanism to fight the restrictions the UK enacted against him subsequent to the Russian aggression. He has already started suing another European state for this reason, demanding sixteen billion dollars: half that government’s yearly budget. Part of the lawyers representing him there? the wife of a former prime minister, spouse of the former British prime minister.

Legal experts argue that the EU’s delay in utilising seized state funds as guarantee for its financial support package is due to concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, undemocratic power over democratic administrations might be preventing the funds Ukraine urgently requires.

Misleading Claims and Escalating Threats

The public was told that these events could not occur. In 2014, a senior politician, promoting the largest and riskiest of all these agreements, told us: “The UK has signed investment treaty upon trade deal and there has never been a case in the past.” An adviser on this matter labelled critics of “alarmism … the truth is, ISDS has little impact on the UK much”. The general impression was crafted to be that solely developing countries should be concerned by these lawsuits. Cautionary notes that “when companies grasp the authority they’ve been granted, they will turn their attention from the weak nations to the wealthy nations” were met with general mockery.

That warning has come to pass. This year, oil and gas and extraction companies have filed a historic level of cases against nations across the economic spectrum, opposing – like the example of the Cumbrian coalmine – state efforts to stop environmental catastrophe. Companies have thus far won $114bn via ISDS, of which oil majors have obtained $84bn. That represents the combined GDP