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Can you perceive our system of government operates? Maybe something like this. Citizens choose MPs. They debate and pass bills. Should a majority is achieved, the bills pass into law. Statutes is upheld by the courts. That's it. Well, that used to be how it once functioned. No longer.

The Advent of Shadow Courts

In the modern era, overseas companies, along with the billionaires who own them, are able to litigate against elected administrations for the policies they pass, at secret arbitration panels made up of business advocates. Such disputes take place behind closed doors. Unlike our courts, these tribunals allow no opportunity to appeal or oversight by judges. You or I cannot take a case to them, just as our government, or even enterprises based in this country. The door is open exclusively to businesses registered abroad.

When a secret court rules that a government measure could harm the corporation’s projected profits, it may order damages of vast sums, running into billions.

These sums represent not real financial harm but money the tribunal officials conclude the company could potentially have made. The state may have to rescind the measure. It becomes hesitant to passing future laws of a similar nature, due to the risk of being sued.

A Process Running Rampant

Historically high figures of cases are being initiated, as corporations observe each other, and private equity fund legal actions in return for a share of the takings. The result? National sovereignty and democracy are turning into unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump domestic law and the rulings made by parliaments is that this clause has been inserted – without public consent, and often in conditions of total confidentiality – inside bilateral investment treaties.

A Real-World Case: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners secured a significant win at the High Court. The justice determined that schemes to excavate the first new deep coal mine in the UK for 30 years, in northwest England, had been unlawfully approved by the Conservative government, which had agreed to the questionable argument that the mine could have zero effect on our carbon budgets. The new government subsequently revoked the consent the previous administration had issued. Now, this legal outcome could be compromised by an offshore tribunal answering to exclusively the entities bringing the case.

Last August, a corporate entity whose final controllers are located in the tax haven lodged a claim versus the UK government. Recently a dispute settlement body in Washington DC was established to consider the case.

This firm is seeking compensation from the UK for the revenue it could have earned if the mine had been permitted to proceed. The public has no idea how much this could amount to. Which individual is representing it against the state? An elected representative, and previous senior legal advisor in the previous government, the noted patriot the MP. The state passes a law, the national judiciary validates it, then a foreign company contests it through an undemocratic arbitration panel, and a sitting MP represents its behalf.

A Sanctions Lawsuit

Simultaneously that the tribunal on the coal mine dispute was appointed, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. The public knows nothing of the case so far, but it appears probable that he’ll use the tribunal to contest the restrictions the UK imposed on him following the invasion of Ukraine. He has previously started suing Luxembourg with similar intent, seeking $16bn: an amount representing half state's annual revenue. Included in the counsel acting for him in that case? the wife of a former prime minister, wife of the former British prime minister.

Trade specialists argue that the EU’s procrastination in utilising seized Russian assets as collateral for its aid for Ukraine stems from Belgium’s fear that it could be sued in the offshore corporate courts, under a trade agreement. This unprecedented, undemocratic power over sovereign states might be preventing the finance Ukraine critically depends on.

False Assurances and Escalating Risks

The public was told that these scenarios wouldn’t happen. 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 we have never seen a case in the past.” An expert on this matter described critics of “scaremongering … the fact is, ISDS does not affect the UK much”. The overall message was crafted to be that only poorer nations needed to fear ISDS claims. Warnings that “once firms grasp the authority they’ve been granted, they will turn their attention from the weak nations to the strong ones” were dismissed with scepticism.

That warning is now a reality. This year, fossil fuel and mining firms have lodged a historic level of cases against nations across the economic spectrum, contesting – similar to the Whitehaven project – government attempts to halt environmental catastrophe. Corporations have thus far won $114bn through ISDS, of which energy giants have been awarded $84bn. That is equivalent to the combined GDP