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Can you understand our political system operates? Perhaps similar to this. The public votes for MPs. They legislate on bills. If a majority is obtained, the bills pass into law. Statutes is upheld by the courts. That's it. Well, that used to be how it once functioned. Not anymore.

The Emergence of Offshore Courts

Nowadays, overseas companies, along with the oligarchs that control them, have the power to sue governments for the policies they pass, at offshore tribunals made up of corporate lawyers. Such disputes take place in secret. Differing from national judiciaries, these panels grant no opportunity to appeal or legal review. You or I are barred from bringing a case to them, just as our government, including companies headquartered in this country. They are open solely for entities operating from foreign soil.

If a tribunal finds that a legislative action might diminish the corporation’s projected profits, it has the power to grant financial penalties of vast sums, even billions.

This compensation are based not on actual losses but compensation the panel members decide the company could potentially have made. The government might be compelled to rescind the measure. It will be hesitant to passing future laws in that area, worried about facing litigation.

A System Running Rampant

Historically high figures of legal actions are being brought, as firms observe each other, and private equity finance suits in return for a portion of the awards. The outcome? National sovereignty and democratic governance are becoming unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The reason it can override a country's own laws and the decisions made by legislatures is that this stipulation has been inserted – absent public approval, and typically amid an atmosphere of extreme secrecy – within international trade agreements.

A Real-World Example: The Whitehaven Coal Mine

A year ago, activists achieved a major legal triumph at the high court. The justice ruled that plans to dig the first deep coalmine in the UK for 30 years, in Cumbria, had been wrongly permitted by the previous government, which had endorsed the extraordinary assertion that the mine would have had zero effect on national carbon targets. The Labour government later cancelled the consent the former government had approved. Currently, this victory faces being overturned by an offshore tribunal reporting to exclusively the companies filing the suit.

During August, a company whose ultimate owners are based in the Cayman Islands filed a lawsuit against the UK government. The previous week a arbitration panel in Washington DC was set up to consider the case.

This firm is seeking compensation from the UK for the money it could have earned if the mine had received permission to go ahead. Citizens have no clear indication how much this sum represents. Who is representing it in opposition to the British government? A member of parliament, and former attorney-general in the outgoing administration, the noted patriot the MP. The state makes a decision, the domestic court supports it, then a foreign company challenges it through an unaccountable private court, and a sitting MP represents its behalf.

An Oligarch's Lawsuit

On the same day that the court on the coalmine case was convened, we learned from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. Details are nothing of the case at present, but it appears probable that he’ll use the tribunal to challenge the penalties the UK levied against him following the invasion of Ukraine. He has filed a claim against another European state with similar intent, seeking a colossal sum: half that state's yearly income. Part of the lawyers acting for him in that case? the wife of a former prime minister, wife of the previous PM.

Trade specialists contend that the EU’s procrastination in leveraging immobilised oligarchs' funds as collateral for its aid for Ukraine is due to Belgium’s fear that it could be taken to court in the offshore corporate courts, under a trade agreement. This remarkable, undemocratic power over democratic administrations could be blocking the funds Ukraine desperately needs.

Misleading Claims and Mounting Threats

Politicians promised that these scenarios were not possible. Previously, a government leader, advocating for the largest and riskiest of all such treaties, stated: “The UK has signed trade agreement after trade deal and there has never been a case in the past.” An expert on this topic accused critics of “alarmism … the truth is, ISDS does not affect the UK much”. The general impression seemed to be that exclusively weaker states had to worry about ISDS claims. Predictions that “as corporations begin to understand the power they’ve been granted, they will shift their focus from the weak nations to the strong ones” were dismissed with widespread derision.

That prediction has come to pass. This year, energy and mining firms have filed a record number of suits against nations both wealthy and developing, challenging – as in the case of the Whitehaven project – official measures to halt climate breakdown. Corporations have so far won vast sums by using ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That equates to the combined GDP