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How do you reckon our political system works? It could be something like this. The public votes for MPs. They debate and pass bills. If a majority is achieved, the bills become law. Statutes is upheld by the courts. End of story. Yet, that’s how it used to work. Those days are over.

The Emergence of Offshore Courts

In the modern era, international firms, or the billionaires that control them, are able to litigate against elected administrations for the laws they pass, at private courts staffed by business advocates. These proceedings are conducted in secret. Unlike our courts, these panels grant no right of appeal or oversight by judges. You or I are barred from bringing a case to them, and neither can our government, or even businesses operating from this country. Access is granted solely for businesses based overseas.

If a tribunal finds that a legislative action may compromise the corporation’s anticipated profits, it can award financial penalties of vast sums, even billions.

These sums represent not actual losses but funds the panel members conclude the company might otherwise have made. The administration may have to abandon its policy. It becomes hesitant to passing future laws in that area, due to the risk of incurring a lawsuit.

A Process Running Rampant

Historically high figures of legal actions are being initiated, as firms observe each other, and investment funds fund legal actions in exchange for a share of the awards. The result? National sovereignty and popular rule are becoming prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it can trump domestic law and the rulings taken by legislatures is that this stipulation has been inserted – without democratic mandate, and typically amid conditions of profound opacity – into trade treaties.

A Real-World Example: The Cumbrian Coal Mine

Twelve months ago, activists achieved a major legal triumph at the High Court. The judge determined that plans to excavate the first major coal mine in the UK for a generation, in Cumbria, had been wrongly permitted by the previous government, which had endorsed the questionable argument that the mine could have zero effect on our carbon budgets. The new government then withdrew the permission the previous administration had approved. Today, this success is under threat by an foreign court answering to only the entities bringing the case.

Last August, a corporate entity whose beneficial owners reside in the tax haven lodged a claim against the UK government. The previous week a dispute settlement body in the United States was set up to consider the case.

The company is litigating against the UK for the money it might have made if the mine had received permission to go ahead. Citizens have no clear indication how much this sum represents. What legal team is representing it in opposition to the state? A member of parliament, and ex-law officer in the outgoing administration, that great patriot the MP. The government passes a law, the high court supports it, then a overseas corporation contests it through an undemocratic arbitration panel, and a elected official represents its behalf.

An Oligarch's Case

Simultaneously that the panel on the mining lawsuit was appointed, information emerged from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. We know little of the case so far, but it appears probable that he may employ the ISDS mechanism to challenge the penalties the UK imposed on him following the Russian aggression. He has previously initiated proceedings against a small nation with similar intent, seeking a colossal sum: equivalent to half of state's annual revenue. Among the legal team on his side? a prominent lawyer, married to the previous PM.

International law scholars believe that the EU’s procrastination in using frozen oligarchs' funds as guarantee for its financial support package stems from apprehension in Brussels that it could be sued in the ISDS tribunals, under a trade agreement. This remarkable, unaccountable authority over sovereign states could be blocking the finance Ukraine desperately needs.

Empty Promises and Mounting Risks

The public was told that these events wouldn’t happen. In 2014, a government leader, championing the most significant and hazardous of all these agreements, declared: “The UK has signed investment treaty after trade deal and there has never been a issue in the past.” An adviser on this matter labelled activists of “scaremongering … the fact is, ISDS does not affect the UK much”. The overall message seemed to be that only poorer nations should be concerned by such legal actions. Predictions that “once firms begin to understand the influence bestowed upon them, they will shift their focus from the weak nations to the developed economies” were dismissed with widespread derision.

That warning is now a reality. In the current period, energy and extraction companies have initiated a historic level of claims against nations across the economic spectrum, contesting – like the example of the UK mine – government attempts to stop global warming. Companies have so far won $114bn via ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP