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What is your reckon our system of government works? It could be along the lines of this. We elect MPs. They legislate on bills. When a majority is secured, the bills pass into law. The law are enforced by the courts. That's it. Well, that was how it once functioned. No longer.

The Emergence of Offshore Courts

Today, overseas companies, and the oligarchs that control them, have the power to sue governments for the regulations they pass, at offshore tribunals composed of commercial attorneys. The cases are conducted in secret. In contrast to domestic courts, these bodies allow no right of appeal or judicial review. The general public are barred from bringing a case to them, and neither can our government, or even companies operating from this country. The door is open solely for entities operating from foreign soil.

Should an arbitration panel rules that a law or policy could harm the corporation’s expected profits, it can award compensation of hundreds of millions, potentially billions.

This compensation constitute not actual losses but money the tribunal officials decide the company might otherwise have made. The state could be forced to rescind the measure. It is discouraged from introducing similar legislation along the same lines, for fear of facing litigation.

A Process Running Rampant

Historically high figures of disputes are being initiated, as firms take cues from each other, and hedge funds fund legal actions in return for a cut of the takings. The result? Democratic sovereignty and democracy are becoming too costly.

The system is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to override domestic law and the rulings made by legislatures is that this stipulation has been inserted – absent public approval, and often in an atmosphere of total confidentiality – into international trade agreements.

A Specific Example: The Whitehaven Coal Mine

Last year, a conservation group achieved a major legal triumph at the high court. The presiding officer determined that plans to open the first new deep coal mine in the UK for three decades, in northwest England, were illegally sanctioned by the previous 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 licence the former government had granted. Now, this victory is under threat by an secret arbitration panel accountable to exclusively the entities filing the suit.

During August, a firm whose ultimate owners are located in the Cayman Islands lodged a claim against the UK government. Recently a arbitration panel in the United States was set up to consider the case.

The claimant is suing the UK for the revenue it could have earned if the mine had received permission to proceed. The public has no clear indication how much this might be. Which individual is serving as its counsel in opposition to the UK administration? A member of parliament, and ex-law officer in the previous government, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the national judiciary supports it, then a overseas corporation contests it through an undemocratic private court, and a member of our parliament works for its behalf.

An Oligarch's Lawsuit

Concurrently that the tribunal on the coal mine dispute was convened, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. We know little of the case so far, but it is highly possible that he’ll use the ISDS mechanism to contest the restrictions the UK imposed on him subsequent to the Russian aggression. He has already filed a claim against a small nation for this reason, seeking $16bn: an amount representing half nation's yearly budget. Included in the counsel representing him there? Cherie Blair, married to the former British prime minister.

Legal experts believe that the EU’s procrastination in using frozen oligarchs' funds as guarantee for its aid for Ukraine is due to Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, unaccountable authority over democratic administrations could be blocking the finance Ukraine critically depends on.

False Assurances and Mounting Threats

We were assured that these events could not occur. In 2014, a government leader, promoting the biggest and most dangerous of all such treaties, declared: “Britain has agreed to investment treaty after trade deal and we have never seen a issue in the past.” A consultant on this topic described activists of “alarmism … in reality, ISDS does not affect the UK much”. The overall message was crafted to be that exclusively weaker states had to worry about these lawsuits. Cautionary notes that “once firms grasp the power bestowed upon them, they will redirect their efforts from the weak nations to the developed economies” were dismissed with widespread derision.

That threat has now materialised. Recently, energy and extraction companies have lodged a historic level of claims against nations across the economic spectrum, contesting – similar to the Cumbrian coalmine – state efforts to stop environmental catastrophe. Companies have thus far won $114bn via ISDS, of which energy giants have secured $84bn. That equates to the combined GDP