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Can you reckon our political system operates? Perhaps something like this. Citizens choose MPs. They legislate on bills. Should a majority is obtained, the bills pass into law. The law are enforced by the courts. End of story. Yet, that’s how it used to work. Not anymore.

The Advent of Offshore Tribunals

Nowadays, overseas companies, and the wealthy individuals who own them, have the power to sue governments for the regulations they pass, at private courts made up of corporate lawyers. These proceedings are held in secret. Unlike our courts, these bodies grant no opportunity to appeal or oversight by judges. The general public cannot take a case to them, and neither can our government, or even businesses headquartered in this country. The door is open exclusively to corporations registered abroad.

If a tribunal finds that a legislative action could harm the corporation’s expected profits, it may order compensation of vast sums, running into billions.

This compensation constitute not real financial harm but money the panel members conclude the company might otherwise have made. The government may have to abandon its policy. It is hesitant to passing future laws along the same lines, due to the risk of facing litigation.

A Process Growing Exponentially

Unprecedented levels of cases are being initiated, as corporations learn from each other, and private equity finance suits in return for a share of the settlements. The outcome? Democratic sovereignty and popular rule are now unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The reason it can supersede national legislation and the rulings enacted by parliaments is that this provision has been incorporated – without public consent, and often in conditions of extreme secrecy – into international trade agreements.

A Specific Case: The Cumbrian Coalmine

Last year, environmental campaigners won a great victory at the High Court. The presiding officer determined that proposals to dig the first new deep coal mine in the UK for 30 years, in northwest England, were found to be illegally sanctioned by the previous government, which had accepted the extraordinary assertion that the mine would have zero effect on climate commitments. The Labour government later cancelled the licence the Tories had issued. Now, this success could be compromised by an foreign court answering to only the corporations filing the suit.

In 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 US capital was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the profits it would have generated if the mine had been permitted to go ahead. Citizens have no clear indication how much this could amount to. Which individual is representing it against the state? A member of parliament, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The administration makes a decision, the domestic court supports it, then a overseas corporation contests it through an secretive private court, and a member of our parliament acts on its behalf.

A Sanctions Case

On the same day that the court on the coal mine dispute was established, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case to date, but it is highly possible that he may employ the tribunal to challenge the sanctions the UK levied against him after the Russian aggression. He has already started suing a small nation with similar intent, demanding $16bn: equivalent to half of nation's yearly budget. Included in the counsel on his side? Cherie Blair, married to the ex-UK leader.

International law scholars contend that the EU’s hesitation in using frozen Russian assets as collateral for its loan to Ukraine arises from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This extraordinary, secretive influence over elected governments may be obstructing the finance Ukraine urgently requires.

Misleading Claims and Escalating Costs

We were assured that these events could not occur. In 2014, a former prime minister, advocating for the largest and riskiest of all these agreements, declared: “Britain has agreed to trade agreement after trade deal and there has not been a problem in the past.” An expert on this topic labelled campaigners of “alarmism … the fact is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that exclusively weaker states had to worry about these lawsuits. Predictions that “once firms begin to understand the authority they’ve been granted, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with scepticism.

That prediction has now materialised. This year, oil and gas and extraction companies have filed a historic level of claims against nations both wealthy and developing, contesting – like the example of the Cumbrian coalmine – government attempts to stop environmental catastrophe. Firms have thus far won $114bn by using ISDS, of which energy giants have secured the majority. That represents the combined GDP