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What is your reckon our political system works? Perhaps similar to this. We elect MPs. They legislate on bills. If a majority is achieved, the bills pass into law. Statutes is upheld by the courts. That's it. However, that was how it once functioned. Those days are over.

The Emergence of Shadow Courts

In the modern era, overseas companies, along with the billionaires behind them, can sue governments for the regulations they pass, at secret arbitration panels staffed by commercial attorneys. These proceedings are held away from public scrutiny. Differing from national judiciaries, these bodies allow no opportunity to appeal or legal review. The general public are barred from bringing a case to them, and neither can our government, or even businesses operating from this country. Access is granted only to entities registered abroad.

If a tribunal determines that a government measure could harm the corporation’s projected profits, it can award damages of vast sums, even billions.

These sums are based not on actual losses but money the panel members determine the company could potentially have made. The state may have to drop the legislation. It will be hesitant to enacting future policies in that area, for fear of facing litigation.

A System Running Rampant

Historically high figures of legal actions are being brought, as companies observe each other, and investment funds fund legal actions for a share of a cut of the takings. The consequence? Democratic sovereignty and democracy are turning into unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to override a country's own laws and the decisions taken by parliaments is that this stipulation has been written – without public consent, and frequently under a climate of total confidentiality – into international trade agreements.

A Concrete Instance: The Cumbrian Coal Mine

Last year, environmental campaigners secured a significant win at the senior court. The judge ruled that plans to dig the first major coal mine in the UK for 30 years, in northwest England, were found to be wrongly permitted by the previous government, which had agreed to the questionable argument that the mine would have had no impact on climate commitments. The new government later cancelled the consent the Tories had granted. Now, this legal outcome faces being overturned by an foreign court accountable to no one but the companies bringing the case.

In August, a company whose ultimate owners are based in the tax haven lodged a claim versus the UK government. Last week a dispute settlement body in the US capital was convened to consider the case.

This firm is suing the UK for the profits it could have earned if the mine had been allowed to commence operations. The public has little idea how much this could amount to. What legal team is serving as its counsel in opposition to the state? An elected representative, and former attorney-general in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The administration passes a law, the domestic court supports it, then a international entity challenges it through an unaccountable arbitration panel, and a member of our parliament acts on its behalf.

A Sanctions Lawsuit

On the same day that the court on the mining lawsuit was convened, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. Details are scarce of the case so far, but it is highly possible that he’ll use the arbitration process to challenge the sanctions the UK enacted against him following the Russian aggression. He has already started suing another European state on these grounds, seeking sixteen billion dollars: equivalent to half of nation's annual revenue. Part of the legal team on his side? the wife of a former prime minister, wife of the former British prime minister.

International law scholars argue that the EU’s procrastination in using frozen oligarchs' funds as guarantee for its aid for Ukraine is due to concerns within Belgium that it could be sued in the offshore corporate courts, under a trade agreement. This unprecedented, secretive influence over democratic administrations might be preventing the funds Ukraine critically depends on.

Misleading Claims and Mounting Threats

The public was told that such things were not possible. Years ago, a former prime minister, advocating for the largest and riskiest of all such treaties, stated: “We’ve signed trade deal upon trade deal and there has not been a issue in the past.” An expert on this matter accused campaigners of “exaggeration … the truth is, ISDS does not affect the UK much”. The general impression was crafted to be that only poorer nations needed to fear these lawsuits. Cautionary notes that “once firms grasp the authority bestowed upon them, they will redirect their efforts from the weak nations to the wealthy nations” were greeted by widespread derision.

That threat has now materialised. Recently, oil and gas and mining firms have filed a unprecedented number of suits against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – government attempts to prevent global warming. Firms have thus far won one hundred and fourteen billion dollars through ISDS, of which energy giants have obtained the majority. That equates to the combined GDP