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How do you understand our political system functions? Maybe along the lines of this. The public votes for MPs. They debate and pass bills. Should a majority is secured, the bills pass into law. The law are enforced by the courts. Simple as that. Yet, that used to be how it operated in the past. Those days are over.

The Advent of Shadow Courts

Today, foreign corporations, along with the billionaires behind them, are able to litigate against elected administrations for the regulations they pass, at private courts staffed by business advocates. These proceedings are conducted in secret. Differing from national judiciaries, these panels provide no opportunity to appeal or judicial review. The general public cannot take a case to them, and neither can our government, or even companies headquartered in this country. Access is granted only to businesses based overseas.

If a tribunal rules that a government measure might diminish the corporation’s projected profits, it may order damages of hundreds of millions, potentially billions.

These sums constitute not tangible damages but compensation the tribunal officials conclude the company would perhaps have made. The administration could be forced to drop the legislation. It becomes hesitant to passing future laws of a similar nature, worried about incurring a lawsuit.

A System Growing Exponentially

Record numbers of disputes are being filed, as firms take cues from each other, and private equity fund legal actions for a share of a share of the awards. The result? National sovereignty and democratic governance are now unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede domestic law and the decisions taken by elected bodies is that this clause has been written – absent public approval, and frequently under conditions of total confidentiality – within international trade agreements.

A Concrete Instance: The Cumbrian Coalmine

A year ago, activists secured a significant win at the high court. The justice determined that proposals to open the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, had been illegally sanctioned by the Conservative government, which had agreed to the extraordinary assertion that the mine could have zero effect on our carbon budgets. The Labour government then withdrew the consent the Tories had issued. Currently, this victory faces being overturned by an secret arbitration panel accountable to no one but the entities filing the suit.

During August, a corporate entity whose ultimate owners reside in the Cayman Islands lodged a claim against the UK government. Last week a tribunal in the United States was established to adjudicate on it.

The claimant is suing the UK for the money it might have made if the mine had been permitted to go ahead. Citizens have no idea how much this might be. What legal team is representing it challenging the state? A member of parliament, and previous senior legal advisor in the previous government, that great patriot the MP. The administration passes a law, the national judiciary validates it, then a international entity challenges it through an unaccountable offshore tribunal, and a member of our parliament represents its behalf.

An Oligarch's Challenge

On the same day that the court on the mining lawsuit was convened, we learned from a government response that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. We know nothing of the case at present, but it seems likely that he may employ the ISDS mechanism to fight the sanctions the UK imposed on him subsequent to the Russian aggression. He has started suing a small nation for this reason, claiming $16bn: equivalent to half of state's yearly income. Included in the counsel representing him there? Cherie Blair, married to the former British prime minister.

Trade specialists contend that the EU’s procrastination in leveraging immobilised state funds as collateral for its financial support package stems from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a investment pact. This unprecedented, undemocratic power over democratic administrations could be blocking the funds Ukraine critically depends on.

False Assurances and Escalating Risks

We were assured that these events could not occur. In 2014, a senior politician, championing the most significant and hazardous of all investment pacts, stated: “We’ve signed trade deal upon trade deal and there has never been a problem in the past.” An adviser on this matter labelled campaigners of “alarmism … the truth is, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states had to worry about these lawsuits. Predictions that “when companies begin to understand the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the developed economies” were greeted by scepticism.

That threat has come to pass. In the current period, fossil fuel and resource corporations have initiated a unprecedented number of cases against nations rich and poor, challenging – similar to the Cumbrian coalmine – official measures to prevent climate breakdown. Firms have so far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have obtained the majority. That equates to the combined GDP