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What is your perceive our system of government functions? Perhaps something like this. Citizens choose MPs. They vote on bills. When a majority is obtained, the bills are enacted as law. Statutes are enforced by the courts. Simple as that. Yet, that used to be how it once functioned. No longer.

The Advent of Offshore Tribunals

Today, international firms, along with the wealthy individuals behind them, have the power to sue nation states for the regulations they pass, at offshore tribunals staffed by corporate lawyers. These proceedings are conducted in secret. In contrast to domestic courts, these bodies provide no right of appeal or legal review. You or I are barred from bringing a case to them, nor can our government, or even companies based in this country. They are open only to entities operating from foreign soil.

When a secret court determines that a government measure might diminish the corporation’s expected profits, it can award compensation of vast sums, potentially billions.

These awards are based not on actual losses but funds the tribunal officials conclude the company might otherwise have made. The government could be forced to abandon its policy. It is hesitant to passing future laws of a similar nature, worried about incurring a lawsuit.

A System Growing Exponentially

Record numbers of legal actions are being initiated, as firms learn from each other, and hedge funds fund legal actions for a share of a share of the awards. The result? National sovereignty and popular rule are now too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to supersede a country's own laws and the rulings enacted by legislatures is that this stipulation has been incorporated – without public consent, and typically amid an atmosphere of extreme secrecy – into international trade agreements.

A Real-World Example: The Cumbrian Coal Mine

Last year, environmental campaigners achieved a major legal triumph at the senior court. The justice determined that schemes to open the first deep coalmine in the UK for 30 years, in Cumbria, were found to be illegally sanctioned by the previous government, which had endorsed the questionable argument that the mine would have had zero effect on climate commitments. The Labour government subsequently revoked the licence the former government had granted. Now, this success could be compromised by an foreign court answering to exclusively the entities filing the suit.

In August, a firm whose beneficial owners reside in the offshore financial centre initiated proceedings challenging the UK government. Recently a dispute settlement body in Washington DC was convened to consider the case.

The claimant is suing the UK for the revenue it would have generated if the mine had been permitted to commence operations. The public has no clear indication how much this might be. Who is serving as its counsel against the British government? An elected representative, and ex-law officer in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the high court validates it, then a overseas corporation challenges it through an unaccountable offshore tribunal, and a member of our parliament represents its behalf.

The Russian Challenge

Simultaneously that the court on the coal mine dispute was convened, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. Details are nothing of the case so far, but it is highly possible that he may employ the tribunal to fight the restrictions the UK enacted against him following the Russian aggression. He has already filed a claim against another European state on these grounds, claiming sixteen billion dollars: half that nation's annual revenue. Among the lawyers acting for him in that case? a prominent lawyer, spouse of the former British prime minister.

Legal experts argue that the EU’s procrastination in utilising seized Russian assets as guarantee for its aid for Ukraine arises from apprehension in Brussels that it could be sued in the secret arbitration panels, under a investment pact. This unprecedented, unaccountable authority over democratic administrations may be obstructing the finance Ukraine critically depends on.

Empty Promises and Growing Threats

The public was told that such things were not possible. Previously, a former prime minister, promoting the most significant and hazardous of all such treaties, stated: “We’ve signed trade agreement after trade deal and there has never been a case in the past.” A consultant on this matter accused activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The general impression was crafted to be that exclusively weaker states needed to fear these lawsuits. Cautionary notes that “as corporations start to realise the influence bestowed upon them, they will redirect their efforts from the poorer states to the wealthy nations” were dismissed with scepticism.

That prediction has come to pass. This year, energy and extraction companies have filed a record number of claims against nations both wealthy and developing, contesting – similar to the Whitehaven project – official measures to halt environmental catastrophe. Corporations have thus far won vast sums by using ISDS, of which energy giants have secured $84bn. That represents the combined GDP