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What is your reckon our political system functions? Maybe along the lines of this. The public votes for MPs. They vote on bills. When a majority is secured, the bills pass into law. The law is upheld by the courts. Simple as that. Yet, that used to be how it used to work. No longer.

The Advent of Shadow Courts

In the modern era, overseas companies, and the wealthy individuals behind them, are able to litigate against nation states for the regulations they pass, at secret arbitration panels made up of corporate lawyers. The cases take place behind closed doors. Unlike our courts, these tribunals allow no opportunity to appeal or judicial review. You or I are unable to file a case to them, nor can our government, or even companies operating from this country. Access is granted only to businesses operating from foreign soil.

If a tribunal finds that a legislative action could harm the corporation’s anticipated profits, it can award financial penalties of vast sums, even billions.

These sums constitute not tangible damages but compensation the panel members determine the company might otherwise have made. The administration could be forced to abandon its policy. It is discouraged from passing future laws in that area, for fear of incurring a lawsuit.

A System Running Rampant

Unprecedented levels of disputes are being brought, as companies observe each other, and private equity bankroll lawsuits in return for a portion of the awards. The consequence? Sovereignty and democracy are now unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to override a country's own laws and the rulings enacted by elected bodies is that this provision has been written – without public consent, and frequently under conditions of profound opacity – inside trade treaties.

A Specific Case: The Whitehaven Coal Mine

A year ago, activists achieved a major legal triumph at the senior court. The justice determined that proposals to dig the first major coal mine in the UK for a generation, in Cumbria, had been wrongly permitted by the previous government, which had agreed to the questionable argument that the mine could have no consequence on our carbon budgets. The new government later cancelled the licence the Tories had approved. Today, this legal outcome faces being overturned by an secret arbitration panel accountable to no one but the corporations petitioning it.

In August, a firm whose beneficial owners are based in the tax haven filed a lawsuit against the UK government. Last week a tribunal in Washington DC was convened to hear it.

The claimant is litigating against the UK for the money it might have made if the mine had received permission to commence operations. Citizens have little idea how much this sum represents. What legal team is serving as its counsel in opposition to the British government? An elected representative, and former attorney-general in the Conservative government, the noted patriot the MP. The administration makes a decision, the national judiciary validates it, then a international entity contests it through an secretive offshore tribunal, and a sitting MP acts on its behalf.

A Sanctions Lawsuit

Simultaneously that the panel on the mining lawsuit was appointed, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. The public knows nothing of the case at present, but it seems likely that he may employ the arbitration process to challenge the sanctions the UK imposed on him subsequent to the Russian aggression. He has already started suing Luxembourg with similar intent, claiming sixteen billion dollars: an amount representing half state's yearly budget. Included in the lawyers acting for him in that case? Cherie Blair, married to the previous PM.

Trade specialists believe that the EU’s procrastination in utilising seized oligarchs' funds as collateral for its financial support package arises from apprehension in Brussels that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, secretive influence over elected governments could be blocking the funds Ukraine urgently requires.

Misleading Claims and Mounting Threats

The public was told that such things could not occur. Years ago, a government leader, advocating for the biggest and most dangerous of all such treaties, told us: “Britain has agreed to investment treaty after trade deal and there has never been a problem in the past.” An adviser on this matter described critics of “alarmism … the fact is, ISDS barely touches the UK much”. The general impression was crafted to be that only poorer nations had to worry about ISDS claims. Warnings that “once firms begin to understand the power they now possess, they will redirect their efforts from the weak nations to the strong ones” were met with general mockery.

That warning has come to pass. Recently, oil and gas and extraction companies have filed a historic level of suits against nations both wealthy and developing, opposing – like the example of the Cumbrian coalmine – official measures to prevent climate breakdown. Firms have to date won vast sums by using ISDS, of which energy giants have obtained eighty-four billion dollars. That equates to the combined GDP