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Can you reckon our political system operates? It could be along the lines of this. We elect MPs. They vote on bills. Should a majority is obtained, the bills are enacted as law. Statutes is maintained by the courts. That's it. However, that was how it used to work. Not anymore.

The Rise of Shadow Tribunals

Today, foreign corporations, or the oligarchs who own them, have the power to sue nation states for the policies they pass, at private courts made up of corporate lawyers. These proceedings take place behind closed doors. Differing from national judiciaries, these tribunals provide no opportunity to appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, or even companies headquartered in this country. The door is open exclusively to businesses registered abroad.

When a secret court rules that a law or policy could harm the corporation’s expected profits, it has the power to grant compensation of hundreds of millions of pounds, running into billions.

These awards represent not actual losses but funds the panel members conclude the company would perhaps have made. The administration could be forced to abandon its policy. It is hesitant to passing future laws in that area, due to the risk of being sued.

A Process Spiralling Out of Control

Record numbers of disputes are being filed, as corporations observe each other, and hedge funds finance suits in return for a portion of the takings. The outcome? Democratic sovereignty and democracy are now too costly.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede a country's own laws and the choices enacted by parliaments is that this stipulation has been inserted – without democratic mandate, and frequently under a climate of extreme secrecy – into trade treaties.

A Specific Example: The Cumbrian Coal Mine

Last year, a conservation group achieved a major legal triumph at the high court. The justice ruled that plans to open the first new deep coal mine in the UK for 30 years, in northwest England, had been illegally sanctioned by the previous government, which had endorsed the extraordinary assertion that the mine would have had zero effect on national carbon targets. The incoming administration subsequently revoked the consent the Tories had issued. Currently, this legal outcome faces being overturned by an offshore tribunal accountable to no one but the entities petitioning it.

During August, a firm whose ultimate owners are based in the Cayman Islands lodged a claim versus the UK government. Last week a dispute settlement body in Washington DC was set up to adjudicate on it.

This firm is litigating against the UK for the profits it would have generated if the mine had been permitted to go ahead. Citizens have no clear indication how much this could amount to. What legal team is serving as its counsel challenging the state? A sitting MP, and previous senior legal advisor in the outgoing administration, the noted patriot Geoffrey Cox. The administration enacts a policy, the high court upholds it, then a international entity disputes it through an unaccountable arbitration panel, and a elected official acts on its behalf.

An Oligarch's Lawsuit

Concurrently that the panel on the mining lawsuit was appointed, it was revealed from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. Details are nothing of the case to date, but it seems likely that he’ll use the ISDS mechanism to contest the restrictions the UK imposed on him after the invasion of Ukraine. He has previously filed a claim against another European state with similar intent, demanding sixteen billion dollars: half that state's yearly income. Among the lawyers representing him there? the wife of a former prime minister, wife of the ex-UK leader.

Legal experts contend that the EU’s delay in utilising seized Russian assets as guarantee for its aid for Ukraine stems from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This remarkable, undemocratic power over sovereign states might be preventing the funds Ukraine critically depends on.

Empty Promises and Escalating Costs

The public was told that such things were not possible. Years ago, a government leader, promoting the largest and riskiest of all investment pacts, stated: “We’ve signed trade deal upon trade deal and there has not been a issue in the past.” A consultant on this topic labelled critics of “alarmism … the truth is, ISDS does not affect the UK much”. The general impression seemed to be that solely developing countries should be concerned by ISDS claims. Warnings that “as corporations grasp the authority they’ve been granted, they will turn their attention from the poorer states to the strong ones” were dismissed with scepticism.

That warning has now materialised. Recently, oil and gas and mining firms have initiated a record number of claims against nations both wealthy and developing, challenging – as in the case of the Cumbrian coalmine – official measures to stop climate breakdown. Companies have to date won vast sums through ISDS, of which oil majors have been awarded eighty-four billion dollars. That is equivalent to the combined GDP