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What is your understand our political system functions? Perhaps something like this. Citizens choose MPs. They debate and pass bills. If a majority is obtained, the bills are enacted as law. Legislation are enforced by the courts. That's it. Yet, that used to be how it operated in the past. No longer.

The Rise of Shadow Courts

In the modern era, international firms, or the oligarchs that control them, can sue elected administrations for the policies they pass, at secret arbitration panels staffed by corporate lawyers. Such disputes are held in secret. Differing from national judiciaries, these bodies grant no right of appeal or legal review. You or I 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 based overseas.

When a secret court rules that a law or policy may compromise the corporation’s projected profits, it can award financial penalties of hundreds of millions, potentially billions.

This compensation constitute not tangible damages but money the tribunal officials determine the company would perhaps have made. The government might be compelled to drop the legislation. It becomes hesitant to introducing similar legislation of a similar nature, for fear of incurring a lawsuit.

A System Running Rampant

Historically high figures of disputes are being brought, as firms take cues from each other, and investment funds fund legal actions in exchange for a cut of the takings. The outcome? National sovereignty and popular rule are turning into unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to override national legislation and the choices taken by parliaments is that this stipulation has been inserted – without public consent, and often in conditions of extreme secrecy – inside bilateral investment treaties.

A Real-World Case: The Cumbrian Coalmine

Twelve months ago, environmental campaigners secured a significant win at the High Court. The justice determined that plans to excavate the first major coal mine in the UK for 30 years, in northwest England, were found to be illegally sanctioned by the previous government, which had agreed to the bizarre claim that the mine could have zero effect on our carbon budgets. The Labour government subsequently revoked the permission the Tories had issued. Today, this success is under threat by an secret arbitration panel answering to exclusively the companies filing the suit.

In August, a company whose ultimate owners are based in the offshore financial centre filed a lawsuit challenging the UK government. Last week a dispute settlement body in the United States was set up to adjudicate on it.

This firm is litigating against the UK for the profits it could have earned if the mine had received permission to go ahead. The public has little idea how much this could amount to. Which individual is serving as its counsel challenging the state? A member of parliament, and former attorney-general in the Conservative government, the noted patriot Sir Geoffrey Cox. The state makes a decision, the domestic court validates it, then a foreign company disputes it through an secretive arbitration panel, and a member of our parliament works for its behalf.

The Russian Challenge

On the same day that the tribunal on the coal mine dispute was appointed, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. The public knows little of the case at present, but it appears probable that he will utilise the ISDS mechanism to contest the restrictions the UK levied against him following the Russian aggression. He has already initiated proceedings against another European state for this reason, demanding a colossal sum: an amount representing half state's yearly budget. Part of the counsel acting for him in that case? Cherie Blair, married to the previous PM.

Legal experts believe that the EU’s procrastination in leveraging immobilised state funds as collateral for its aid for Ukraine is due to concerns within Belgium that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, undemocratic power over sovereign states could be blocking the finance Ukraine critically depends on.

Misleading Claims and Mounting Risks

We were assured that these scenarios were not possible. Years ago, a senior politician, promoting the largest and riskiest of all such treaties, stated: “Britain has agreed to trade agreement after trade deal and there has not been a problem in the past.” An adviser on this matter accused campaigners of “scaremongering … in reality, ISDS does not affect the UK much”. The prevailing narrative appeared to be that solely developing countries needed to fear such legal actions. Predictions that “once firms start to realise the authority bestowed upon them, they will turn their attention from the weak nations to the strong ones” were dismissed with general mockery.

That threat has come to pass. In the current period, fossil fuel and extraction companies have lodged a historic level of suits against nations rich and poor, challenging – similar to the UK mine – official measures to halt climate breakdown. Companies have so far won $114bn through ISDS, of which oil majors have obtained eighty-four billion dollars. That is equivalent to the combined GDP