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Can you perceive our political system functions? Maybe something like this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills pass into law. Legislation are enforced by the courts. That's it. Well, that’s how it used to work. No longer.

The Advent of Offshore Courts

Nowadays, overseas companies, along with the billionaires who own them, can sue governments for the regulations they pass, at private courts made up of business advocates. Such disputes are held behind closed doors. Unlike our courts, these panels provide no avenue for appeal or judicial review. The general public are barred from bringing a case to them, and neither can our government, or even enterprises operating from this country. Access is granted exclusively to businesses based overseas.

Should an arbitration panel rules that a legislative action might diminish the corporation’s anticipated profits, it can award compensation of hundreds of millions, running into billions.

This compensation represent not real financial harm but money the panel members decide the company would perhaps have made. The administration might be compelled to rescind the measure. It becomes discouraged from passing future laws of a similar nature, for fear of incurring a lawsuit.

A System Spiralling Out of Control

Historically high figures of legal actions are being filed, as firms learn from each other, and hedge funds bankroll lawsuits in return for a portion of the takings. The outcome? Democratic sovereignty and democracy are now prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The reason it is allowed to override a country's own laws and the choices made by legislatures is that this clause has been written – absent public approval, and frequently under a climate of total confidentiality – into bilateral investment treaties.

A Specific Example: The Whitehaven Coalmine

Twelve months ago, activists secured a significant win at the senior court. The justice found that schemes to dig the first major coal mine in the UK for three decades, in Cumbria, were wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine could have zero effect on our carbon budgets. The Labour government then withdrew the licence the previous administration had issued. Today, this legal outcome faces being overturned by an secret arbitration panel answering to exclusively the corporations bringing the case.

During August, a company whose ultimate owners are based in the Cayman Islands filed a lawsuit versus the UK government. Last week a arbitration panel in the United States was convened to hear it.

The claimant is suing the UK for the revenue it could have earned if the mine had been permitted to commence operations. We have little idea how much this sum represents. Which individual is representing it challenging the UK administration? A sitting MP, and ex-law officer in the Conservative government, the self-proclaimed patriot the MP. The administration makes a decision, the high court upholds it, then a foreign company disputes it through an unaccountable private court, and a elected official acts on its behalf.

A Sanctions Lawsuit

On the same day that the court on the coal mine dispute was convened, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. The public knows little of the case at present, but it is highly possible that he may employ the tribunal to contest the penalties the UK enacted against him following the Russian aggression. He has previously initiated proceedings against a small nation on these grounds, seeking $16bn: an amount representing half nation's annual revenue. Included in the lawyers acting for him in that case? the wife of a former prime minister, spouse of the previous PM.

International law scholars contend that the EU’s procrastination in utilising seized state funds as collateral for its aid for Ukraine stems from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This extraordinary, secretive influence over elected governments could be blocking the money Ukraine desperately needs.

Empty Promises and Growing Costs

The public was told that these events could not occur. In 2014, a senior politician, promoting the largest and riskiest of all investment pacts, stated: “We’ve signed investment treaty upon trade deal and there has not been a issue in the past.” An expert on this topic described activists of “scaremongering … the fact is, ISDS does not affect the UK much”. The prevailing narrative appeared to be that only poorer nations had to worry about these lawsuits. Cautionary notes that “as corporations grasp the power bestowed upon them, they will shift their focus from the poorer states to the strong ones” were dismissed with general mockery.

That warning has come to pass. Recently, energy and resource corporations have initiated a unprecedented number of suits against nations both wealthy and developing, opposing – as in the case of the UK mine – state efforts to stop global warming. Companies have so far won vast sums by using ISDS, of which energy giants have secured eighty-four billion dollars. That represents the combined GDP