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What is your understand our system of government works? Maybe along the lines of this. We elect MPs. They debate and pass bills. When a majority is obtained, the bills pass into law. Statutes is maintained by the courts. End of story. Yet, that was how it operated in the past. No longer.

The Rise of Shadow Courts

Today, overseas companies, along with the billionaires behind them, are able to litigate against elected administrations for the laws they pass, at offshore tribunals staffed by commercial attorneys. The cases take place in secret. In contrast to domestic courts, these bodies allow no avenue for appeal or judicial review. The general public are unable to file a case to them, and neither can our government, or even companies based in this country. They are open solely for businesses based overseas.

Should an arbitration panel determines that a government measure might diminish the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions of pounds, running into billions.

These awards are based not on actual losses but money the panel members decide the company could potentially have made. The government could be forced to drop the legislation. It becomes deterred from introducing similar legislation of a similar nature, for fear of facing litigation.

A System Growing Exponentially

Record numbers of disputes are being initiated, as companies observe each other, and hedge funds bankroll lawsuits in exchange for a cut of the settlements. The consequence? Democratic sovereignty and democracy are now unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump a country's own laws and the rulings enacted by elected bodies is that this provision has been incorporated – absent public approval, and frequently under a climate of profound opacity – into bilateral investment treaties.

A Concrete Example: The UK Coal Mine

A year ago, activists achieved a major legal triumph at the high court. The presiding officer found that proposals to excavate the first new deep coal mine in the UK for three decades, in Cumbria, had been illegally sanctioned by the outgoing administration, which had accepted the extraordinary assertion that the mine would have had no impact on climate commitments. The Labour government subsequently revoked the licence the Tories had granted. Today, this success faces being overturned by an secret arbitration panel answering to no one but the companies bringing the case.

In August, a firm whose beneficial owners reside in the Cayman Islands lodged a claim against the UK government. Last week a dispute settlement body in Washington DC was set up to adjudicate on it.

The company is litigating against the UK for the revenue it would have generated if the mine had been permitted to go ahead. Citizens have no idea how much this might be. Who is representing it in opposition to the British government? A sitting MP, and former attorney-general in the Conservative government, that great patriot the MP. The government enacts a policy, the domestic court supports it, then a overseas corporation disputes it through an unaccountable offshore tribunal, and a sitting MP represents its behalf.

The Russian Lawsuit

Simultaneously that the court on the coalmine case was established, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. Details are little of the case so far, but it is highly possible that he will utilise the arbitration process to contest the restrictions the UK imposed on him subsequent to the Russian aggression. He has started suing a small nation for this reason, claiming sixteen billion dollars: equivalent to half of nation's yearly budget. Part of the legal team representing him there? Cherie Blair, married to the former British prime minister.

Trade specialists argue that the EU’s hesitation in using frozen Russian assets as security for its loan to Ukraine stems from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a investment pact. This remarkable, secretive influence over sovereign states might be preventing the money Ukraine desperately needs.

Misleading Claims and Mounting Threats

The public was told that these events wouldn’t happen. In 2014, a former prime minister, promoting the largest and riskiest of all such treaties, told us: “We’ve signed trade agreement after trade deal and there has never been a issue in the past.” An expert on this matter labelled activists of “exaggeration … in reality, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that solely developing countries had to worry about these lawsuits. Predictions that “once firms begin to understand the influence they’ve been granted, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with widespread derision.

That prediction is now a reality. Recently, fossil fuel and extraction companies have initiated a record number of cases against nations across the economic spectrum, contesting – like the example of the Whitehaven project – state efforts to prevent climate breakdown. Corporations have thus far won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have secured the majority. That equates to the combined GDP