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How do you understand our political system operates? It could be something like this. Citizens choose MPs. They legislate on bills. Should a majority is secured, the bills pass into law. The law is maintained by the courts. End of story. Well, that was how it used to work. No longer.

The Emergence of Shadow Tribunals

Nowadays, foreign corporations, and the wealthy individuals that control them, can sue elected administrations for the regulations they pass, at offshore tribunals composed of commercial attorneys. The cases are held in secret. In contrast to domestic courts, these tribunals provide no opportunity to appeal or judicial review. The general public are unable to file a case to them, and neither can our government, or even companies based in this country. Access is granted solely for corporations based overseas.

If a tribunal determines that a law or policy may compromise the corporation’s expected profits, it may order compensation of vast sums, running into billions.

This compensation constitute not actual losses but compensation the panel members determine the company might otherwise have made. The government might be compelled to drop the legislation. It will be discouraged from enacting future policies of a similar nature, due to the risk of incurring a lawsuit.

A Process Running Rampant

Historically high figures of legal actions are being initiated, as firms take cues from each other, and investment funds finance suits in exchange for a portion of the awards. The result? National sovereignty and popular rule are turning into unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede domestic law and the rulings enacted by legislatures is that this stipulation has been inserted – absent public approval, and often in an atmosphere of total confidentiality – into trade treaties.

A Concrete Instance: The Whitehaven Coalmine

Twelve months ago, a conservation group won a great victory at the senior court. The justice found that plans to excavate the first new deep coal mine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had endorsed the questionable argument that the mine could have no consequence on our carbon budgets. The Labour government subsequently revoked the permission the former government had issued. Now, this legal outcome faces being overturned by an foreign court accountable to no one but the entities bringing the case.

In August, a firm whose ultimate owners are based in the offshore financial centre initiated proceedings versus the UK government. Last week a tribunal in the United States was convened to hear it.

This firm is suing the UK for the money it could have earned if the mine had been permitted to proceed. We have no clear indication how much this sum represents. What legal team is representing it challenging the state? An elected representative, and former attorney-general in the outgoing administration, that great patriot Geoffrey Cox. The government enacts a policy, the high court supports it, then a overseas corporation contests it through an unaccountable private court, and a elected official acts on its behalf.

A Sanctions Case

On the same day that the panel on the coal mine dispute was convened, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. The public knows scarce of the case so far, but it appears probable that he may employ the tribunal to fight the penalties the UK levied against him subsequent to the invasion of Ukraine. He has initiated proceedings against a small nation with similar intent, demanding $16bn: an amount representing half nation's annual revenue. Among the legal team acting for him in that case? a prominent lawyer, wife of the former British prime minister.

Trade specialists argue that the EU’s delay in leveraging immobilised Russian assets as guarantee for its aid for Ukraine arises from Belgium’s fear that it could be sued in the ISDS tribunals, under a trade agreement. This remarkable, unaccountable authority over elected governments could be blocking the funds Ukraine urgently requires.

Empty Promises and Mounting Threats

We were assured that these events wouldn’t happen. Previously, a senior politician, championing the biggest and most dangerous of all these agreements, declared: “We’ve signed investment treaty upon trade deal and there has never been a problem in the past.” An adviser on this issue described critics of “scaremongering … the truth is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that only poorer nations had to worry about such legal actions. Warnings that “as corporations begin to understand the power bestowed upon them, they will redirect their efforts from the vulnerable countries to the developed economies” were greeted by general mockery.

That prediction has come to pass. This year, fossil fuel and mining firms have initiated a record number of claims against nations across the economic spectrum, opposing – like the example of the Cumbrian coalmine – state efforts to halt environmental catastrophe. Companies have to date won vast sums by using ISDS, of which energy giants have obtained the majority. That is equivalent to the combined GDP