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What is your reckon our political system operates? Perhaps something like this. We elect MPs. They legislate on bills. When a majority is achieved, the bills become law. Legislation is maintained by the courts. End of story. Yet, that was how it used to work. No longer.

The Rise of Shadow Courts

Nowadays, foreign corporations, and the wealthy individuals that control them, are able to litigate against governments for the laws they pass, at secret arbitration panels staffed by business advocates. The cases take place away from public scrutiny. In contrast to domestic courts, these tribunals provide no right of appeal or legal review. Ordinary citizens are barred from bringing a case to them, nor can our government, or even companies operating from this country. They are open exclusively to entities based overseas.

When a secret court rules that a government measure might diminish the corporation’s projected profits, it can award damages of hundreds of millions, potentially billions.

These sums are based not on actual losses but money the arbitrators conclude the company could potentially have made. The state could be forced to drop the legislation. It will be deterred from passing future laws of a similar nature, worried about facing litigation.

A Mechanism Running Rampant

Unprecedented levels of legal actions are being initiated, as corporations observe each other, and investment funds bankroll lawsuits in return for a share of the takings. The consequence? Democratic sovereignty and popular rule are becoming unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The reason it can trump domestic law and the decisions enacted by legislatures is that this stipulation has been inserted – without public consent, and frequently under an atmosphere of profound opacity – inside bilateral investment treaties.

A Concrete Instance: The Whitehaven Coalmine

A year ago, activists won a great victory at the High Court. The judge found that schemes to excavate the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were found to be unlawfully approved by the previous government, which had accepted the bizarre claim that the mine could have no consequence on our carbon budgets. The Labour government later cancelled the consent the former government had granted. Now, this success faces being overturned by an offshore tribunal reporting to no one but the entities filing the suit.

Last August, a firm whose ultimate owners reside in the Cayman Islands filed a lawsuit versus the UK government. Last week a tribunal in Washington DC was convened to consider the case.

The claimant is suing the UK for the profits it would have generated if the mine had been allowed to proceed. Citizens have no clear indication how much this might be. What legal team is representing it in opposition to the British government? A sitting MP, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The state passes a law, the national judiciary supports it, then a foreign company challenges it through an secretive arbitration panel, and a elected official acts on its behalf.

The Russian Lawsuit

On the same day that the panel on the coal mine dispute was established, information emerged from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. Details are nothing of the case so far, but it appears probable that he may employ the tribunal to challenge the sanctions the UK enacted against him subsequent to the Russian aggression. He has initiated proceedings against Luxembourg on these grounds, demanding sixteen billion dollars: half that nation's annual revenue. Included in the legal team acting for him in that case? Cherie Blair, spouse of the ex-UK leader.

International law scholars believe that the EU’s delay in leveraging immobilised oligarchs' funds as security for its loan to Ukraine stems from Belgium’s fear that it could be sued in the secret arbitration panels, under a investment pact. This remarkable, undemocratic power over elected governments might be preventing the money Ukraine urgently requires.

False Assurances and Growing Threats

The public was told that these scenarios could not occur. Years ago, a senior politician, championing the biggest and most dangerous of all investment pacts, stated: “The UK has signed investment treaty upon trade deal and there has never been a problem in the past.” An expert on this issue accused activists of “alarmism … in reality, ISDS does not affect the UK much”. The prevailing narrative appeared to be that only poorer nations had to worry about ISDS claims. Warnings that “when companies start to realise the power bestowed upon them, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with widespread derision.

That threat has now materialised. This year, oil and gas and mining firms have initiated a historic level of claims against nations rich and poor, contesting – as in the case of the UK mine – government attempts to stop environmental catastrophe. Companies have thus far won $114bn through ISDS, of which energy giants have been awarded the majority. That represents the combined GDP