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How do you understand our political system functions? Perhaps along the lines of this. We elect MPs. They vote on bills. When a majority is secured, the bills pass into law. The law are enforced by the courts. That's it. Well, that’s how it once functioned. No longer.

The Advent of Shadow Tribunals

In the modern era, international firms, or the wealthy individuals behind them, are able to litigate against nation states for the policies they pass, at secret arbitration panels composed of business advocates. The cases are conducted behind closed doors. Unlike our courts, these tribunals provide no opportunity to appeal or legal review. The general public cannot take a case to them, nor can our government, or even enterprises headquartered in this country. Access is granted only to corporations operating from foreign soil.

If a tribunal rules that a government measure may compromise the corporation’s projected profits, it can award damages of vast sums, potentially billions.

These awards constitute not actual losses but money the tribunal officials decide the company might otherwise have made. The administration might be compelled to drop the legislation. It is discouraged from enacting future policies of a similar nature, for fear of being sued.

A System Spiralling Out of Control

Unprecedented levels of disputes are being brought, as companies observe each other, and investment funds finance suits in exchange for a cut of the awards. The result? Sovereignty and popular rule are becoming unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede domestic law and the decisions enacted by elected bodies is that this provision has been incorporated – without democratic mandate, and often in an atmosphere of extreme secrecy – inside trade treaties.

A Concrete Instance: The Cumbrian Coal Mine

Last year, environmental campaigners secured a significant win at the high court. The justice found that proposals to dig the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, had been unlawfully approved by the Conservative government, which had endorsed the extraordinary assertion that the mine would have no consequence on our carbon budgets. The new government then withdrew the permission the Tories had issued. Currently, this success faces being overturned by an offshore tribunal answering to exclusively the entities petitioning it.

In August, a company whose final controllers reside in the offshore financial centre initiated proceedings versus the UK government. The previous week a tribunal in the United States was convened to hear it.

This firm is litigating against the UK for the profits it could have earned if the mine had received permission to go ahead. We have no clear indication how much this might be. Which individual is representing it challenging the state? An elected representative, and ex-law officer in the previous government, that great patriot Geoffrey Cox. The state passes a law, the national judiciary upholds it, then a international entity challenges it through an secretive offshore tribunal, and a sitting MP works for its behalf.

The Russian Case

On the same day that the panel on the mining lawsuit was convened, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows scarce of the case so far, but it is highly possible that he will utilise the arbitration process to contest the restrictions the UK levied against him subsequent to the Russian aggression. He has already started suing another European state on these grounds, seeking a colossal sum: equivalent to half of government’s yearly budget. Included in the counsel on his side? Cherie Blair, married to the ex-UK leader.

Legal experts contend that the EU’s hesitation in using frozen Russian assets as security for its aid for Ukraine stems from Belgium’s fear that it could be sued in the offshore corporate courts, under a investment pact. This extraordinary, undemocratic power over sovereign states could be blocking the funds Ukraine urgently requires.

Empty Promises and Growing Threats

We were assured that such things could not occur. Previously, a former prime minister, advocating for the biggest and most dangerous of all investment pacts, stated: “The UK has signed investment treaty after trade deal and there has not been a issue in the past.” A consultant on this topic described critics of “exaggeration … the fact is, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries had to worry about these lawsuits. Cautionary notes that “as corporations grasp the influence they now possess, they will shift their focus from the weak nations to the strong ones” were dismissed with widespread derision.

That prediction is now a reality. Recently, fossil fuel and resource corporations have lodged a record number of cases against nations rich and poor, challenging – like the example of the Whitehaven project – state efforts to stop environmental catastrophe. Corporations have to date won $114bn through ISDS, of which energy giants have obtained eighty-four billion dollars. That is equivalent to the combined GDP