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What is your understand our political system operates? Maybe something like this. The public votes for MPs. They debate and pass bills. Should a majority is obtained, the bills pass into law. Legislation is maintained by the courts. That's it. However, that’s how it once functioned. Those days are over.

The Advent of Shadow Courts

Today, foreign corporations, and the oligarchs behind them, are able to litigate against governments for the regulations they pass, at private courts staffed by business advocates. The cases take place behind closed doors. Differing from national judiciaries, these bodies provide no right of appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, including businesses headquartered in this country. Access is granted exclusively to businesses registered abroad.

When a secret court finds that a government measure could harm the corporation’s projected profits, it can award compensation of vast sums, even billions.

These awards constitute not actual losses but funds the panel members conclude the company might otherwise have made. The government could be forced to abandon its policy. It becomes hesitant to introducing similar legislation along the same lines, worried about incurring a lawsuit.

A Process Growing Exponentially

Historically high figures of legal actions are being brought, as companies learn from each other, and private equity finance suits in return for a share of the awards. The result? National sovereignty and democracy are turning into too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to override a country's own laws and the decisions made by legislatures is that this stipulation has been written – without public consent, and often in a climate of extreme secrecy – within bilateral investment treaties.

A Concrete Case: The Cumbrian Coalmine

Twelve months ago, environmental campaigners secured a significant win at the senior court. The presiding officer determined that proposals to dig the first new deep coal mine in the UK for three decades, in northwest England, were wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine could have zero effect on climate commitments. The new government subsequently revoked the permission the Tories had granted. Currently, this success could be compromised by an offshore tribunal accountable to no one but the entities petitioning it.

During August, a company whose final controllers are located in the offshore financial centre filed a lawsuit against the UK government. Recently a tribunal in the United States was established to consider the case.

The claimant is litigating against the UK for the revenue it could have earned if the mine had been permitted to proceed. The public has no idea how much this might be. Who is acting on its behalf challenging the British government? A member of parliament, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The state passes a law, the domestic court validates it, then a overseas corporation contests it through an secretive offshore tribunal, and a elected official represents its behalf.

An Oligarch's Lawsuit

On the same day that the panel on the coalmine case was appointed, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. The public knows little of the case to date, but it appears probable that he will utilise the tribunal to challenge the penalties the UK levied against him subsequent to the Russian aggression. He has previously started suing another European state with similar intent, seeking sixteen billion dollars: half that state's annual revenue. Included in the legal team acting for him in that case? Cherie Blair, spouse of the previous PM.

International law scholars argue that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its loan to Ukraine arises from Belgium’s fear that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This remarkable, undemocratic power over elected governments may be obstructing the funds Ukraine urgently requires.

Empty Promises and Growing Threats

We were assured that these events were not possible. Previously, a former prime minister, championing the most significant and hazardous of all investment pacts, stated: “We’ve signed trade agreement after trade deal and there has never been a problem in the past.” An adviser on this matter accused critics of “scaremongering … the truth is, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that only poorer nations should be concerned by such legal actions. Predictions that “as corporations start to realise the influence they now possess, they will shift their focus from the poorer states to the wealthy nations” were met with general mockery.

That prediction is now a reality. Recently, energy and extraction companies have lodged a unprecedented number of suits against nations across the economic spectrum, opposing – similar to the Cumbrian coalmine – state efforts to halt global warming. Firms have thus far won $114bn via ISDS, of which energy giants have obtained eighty-four billion dollars. That is equivalent to the combined GDP