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What is your perceive our political system works? It could be along the lines of this. Citizens choose MPs. They vote on bills. Should a majority is obtained, the bills pass into law. The law are enforced by the courts. Simple as that. Well, that was how it used to work. Not anymore.

The Advent of Shadow Courts

In the modern era, international firms, or the billionaires that control them, have the power to sue elected administrations for the policies they pass, at secret arbitration panels staffed by corporate lawyers. These proceedings are held in secret. Unlike our courts, these panels provide no opportunity to appeal or legal review. You or I are unable to file a case to them, nor can our government, or even businesses headquartered in this country. The door is open solely for corporations operating from foreign soil.

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

These awards constitute not actual losses but funds the tribunal officials decide the company would perhaps have made. The government could be forced to rescind the measure. It will be deterred from enacting future policies in that area, worried about being sued.

A Process Running Rampant

Unprecedented levels of legal actions are being filed, as companies observe each other, and hedge funds bankroll lawsuits in exchange for a share of the takings. The outcome? Democratic sovereignty and democracy are turning into unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede a country's own laws and the choices made by parliaments is that this provision has been written – without public consent, and often in an atmosphere of total confidentiality – into bilateral investment treaties.

A Specific Example: The UK Coal Mine

Last year, activists secured a significant win at the High Court. The judge found that schemes to excavate the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, had been unlawfully approved by the outgoing administration, which had accepted the questionable argument that the mine would have had no impact on climate commitments. The incoming administration later cancelled the licence the Tories had issued. Today, this legal outcome is under threat by an secret arbitration panel accountable to only the corporations petitioning it.

In August, a corporate entity whose final controllers are based in the Cayman Islands filed a lawsuit against the UK government. Last week a arbitration panel in the US capital was convened to consider the case.

The company is suing the UK for the money it would have generated if the mine had been permitted to commence operations. We have no idea how much this might be. What legal team is representing it challenging the UK administration? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The administration makes a decision, the national judiciary upholds it, then a international entity contests it through an secretive private court, and a member of our parliament works for its behalf.

A Sanctions Case

Concurrently that the tribunal on the coalmine case 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. Details are little of the case to date, but it seems likely that he’ll use the tribunal to fight the restrictions the UK imposed on him after the invasion of Ukraine. He has filed a claim against another European state with similar intent, demanding a colossal sum: an amount representing half nation's yearly budget. Among the counsel acting for him in that case? the wife of a former prime minister, married to the previous PM.

Legal experts argue that the EU’s hesitation in utilising seized Russian assets as collateral for its aid for Ukraine arises from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, unaccountable authority over democratic administrations may be obstructing the funds Ukraine desperately needs.

False Assurances and Escalating Threats

Politicians promised that these scenarios wouldn’t happen. In 2014, a former prime minister, advocating for the most significant and hazardous of all investment pacts, stated: “Britain has agreed to trade deal after trade deal and there has never been a issue in the past.” A consultant on this matter accused activists of “scaremongering … in reality, ISDS has little impact on the UK much”. The overall message appeared to be that solely developing countries needed to fear ISDS claims. Predictions that “as corporations start to realise the power bestowed upon them, they will redirect their efforts from the weak nations to the wealthy nations” were dismissed with widespread derision.

That threat is now a reality. Recently, fossil fuel and mining firms have lodged a unprecedented number of claims against nations both wealthy and developing, contesting – like the example of the Cumbrian coalmine – state efforts to prevent global warming. Corporations have thus far won vast sums via ISDS, of which energy giants have secured eighty-four billion dollars. That is equivalent to the combined GDP