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What is your understand our political system functions? Maybe something like this. We elect MPs. They legislate on bills. Should a majority is achieved, the bills become law. Statutes is upheld by the courts. That's it. Yet, that’s how it once functioned. No longer.

The Emergence of Shadow Courts

Nowadays, foreign corporations, and the wealthy individuals behind them, can sue governments for the laws they pass, at private courts composed of business advocates. Such disputes are held away from public scrutiny. Differing from national judiciaries, these panels provide no right of appeal or judicial review. Ordinary citizens cannot take a case to them, and neither can our government, or even companies operating from this country. The door is open only to businesses operating from foreign soil.

If a tribunal determines that a government measure might diminish the corporation’s expected profits, it has the power to grant damages of hundreds of millions, even billions.

These sums are based not on real financial harm but funds the arbitrators determine the company would perhaps have made. The state could be forced to drop the legislation. It is deterred from introducing similar legislation of a similar nature, worried about facing litigation.

A System Spiralling Out of Control

Unprecedented levels of disputes are being initiated, as companies learn from each other, and private equity finance suits in exchange for a portion of the awards. The outcome? Democratic sovereignty and popular rule are now too costly.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to override a country's own laws and the rulings made by elected bodies is that this provision has been inserted – without democratic mandate, and often in conditions of profound opacity – inside trade treaties.

A Concrete Case: The Whitehaven Coal Mine

Last year, activists achieved a major legal triumph at the high court. The judge determined that proposals to open the first new deep coal mine in the UK for 30 years, in Cumbria, were unlawfully approved by the Conservative government, which had endorsed the extraordinary assertion that the mine could have no impact on our carbon budgets. The incoming administration later cancelled the consent the former government had issued. Today, this victory could be compromised by an offshore tribunal accountable to no one but the companies petitioning it.

Last August, a firm whose beneficial owners are based in the tax haven lodged a claim challenging the UK government. The previous week a tribunal in the United States was convened to adjudicate on it.

This firm is litigating against the UK for the revenue it could have earned if the mine had been allowed to proceed. The public has no clear indication how much this might be. What legal team is serving as its counsel against the UK administration? An elected representative, and ex-law officer in the Conservative government, that great patriot Sir Geoffrey Cox. The government passes a law, the high court supports it, then a international entity contests it through an undemocratic offshore tribunal, and a elected official works for its behalf.

A Sanctions Lawsuit

Simultaneously that the tribunal on the coalmine case was appointed, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. The public knows nothing of the case so far, but it seems likely that he will utilise the arbitration process to fight the sanctions the UK enacted against him subsequent to the war in Ukraine. He has previously filed a claim against another European state on these grounds, seeking a colossal sum: half that nation's annual revenue. Included in the lawyers representing him there? Cherie Blair, spouse of the previous PM.

Trade specialists believe that the EU’s hesitation in using frozen oligarchs' funds as security for its loan to Ukraine is due to concerns within Belgium that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This remarkable, undemocratic power over elected governments may be obstructing the finance Ukraine desperately needs.

False Assurances and Mounting Costs

The public was told that these events were not possible. Years ago, a senior politician, championing the most significant and hazardous of all these agreements, told us: “We’ve signed investment treaty upon trade deal and there has never been a problem in the past.” An expert on this matter labelled campaigners of “exaggeration … in reality, ISDS does not affect the UK much”. The general impression was crafted to be that solely developing countries should be concerned by ISDS claims. Warnings that “once firms start to realise the power they now possess, they will turn their attention from the weak nations to the wealthy nations” were dismissed with scepticism.

That prediction is now a reality. In the current period, oil and gas and extraction companies have initiated a historic level of cases against nations across the economic spectrum, challenging – similar to the UK mine – government attempts to prevent global warming. Firms have to date won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have been awarded $84bn. That equates to the combined GDP