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What is your understand our system of government works? It could be something like this. We elect MPs. They legislate on bills. Should a majority is obtained, the bills are enacted as law. Statutes is upheld by the courts. End of story. Yet, that’s how it once functioned. Not anymore.

The Emergence of Offshore Tribunals

Today, overseas companies, or the billionaires that control them, are able to litigate against elected administrations for the laws they pass, at offshore tribunals composed of commercial attorneys. The cases are conducted away from public scrutiny. Differing from national judiciaries, these bodies allow no avenue for appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, or even enterprises headquartered in this country. Access is granted only to entities based overseas.

When a secret court finds that a legislative action may compromise the corporation’s anticipated profits, it may order damages of hundreds of millions, running into billions.

These sums constitute not actual losses but compensation the panel members conclude the company might otherwise have made. The administration might be compelled to rescind the measure. It is hesitant to passing future laws in that area, due to the risk of facing litigation.

A Process Spiralling Out of Control

Historically high figures of disputes are being initiated, as companies observe each other, and investment funds bankroll lawsuits for a share of a portion of the takings. The result? National sovereignty and democratic governance are becoming unaffordable.

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 choices enacted by parliaments is that this stipulation has been incorporated – without public consent, and often in conditions of extreme secrecy – inside international trade agreements.

A Specific Instance: The Whitehaven Coalmine

Last year, a conservation group achieved a major legal triumph at the senior court. The justice determined that schemes to dig the first major coal mine in the UK for 30 years, in Cumbria, had been wrongly permitted by the outgoing administration, which had accepted the questionable argument that the mine could have zero effect on climate commitments. The Labour government later cancelled the licence the former government had granted. Today, this legal outcome could be compromised by an foreign court reporting to only the companies bringing the case.

Last August, a company whose beneficial owners are based in the offshore financial centre initiated proceedings against the UK government. Recently a arbitration panel in Washington DC was established to consider the case.

This firm is seeking compensation from the UK for the profits it might have made if the mine had been allowed to proceed. The public has no idea how much this could amount to. Who is representing it in opposition to the British government? An elected representative, and ex-law officer in the outgoing administration, that great patriot Geoffrey Cox. The administration makes a decision, the high court validates it, then a foreign company challenges it through an undemocratic arbitration panel, and a sitting MP works for its behalf.

An Oligarch's Challenge

On the same day that the court on the coalmine case was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. We know scarce of the case at present, but it is highly possible that he will utilise the tribunal to fight the restrictions the UK enacted against him following the Russian aggression. He has filed a claim against Luxembourg on these grounds, demanding $16bn: equivalent to half of government’s annual revenue. Among the legal team on his side? Cherie Blair, married to the former British prime minister.

International law scholars believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its aid for Ukraine arises from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, undemocratic power over sovereign states could be blocking the money Ukraine desperately needs.

False Assurances and Mounting Risks

The public was told that these scenarios could not occur. In 2014, a senior politician, championing the largest and riskiest of all these agreements, stated: “The UK has signed trade deal after trade deal and there has not been a problem in the past.” An expert on this topic described campaigners of “exaggeration … the fact is, ISDS has little impact on the UK much”. The overall message seemed to be that only poorer nations had to worry about these lawsuits. Warnings that “when companies start to realise the power they now possess, they will shift their focus from the poorer states to the wealthy nations” were met with scepticism.

That prediction has now materialised. This year, fossil fuel and extraction companies have lodged a unprecedented number of claims against nations across the economic spectrum, contesting – similar to the UK mine – official measures to halt climate breakdown. Corporations have thus far won vast sums through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That represents the combined GDP