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Can you understand our system of government operates? Perhaps something like this. Citizens choose MPs. They legislate on bills. If a majority is achieved, the bills pass into law. Legislation are enforced by the courts. Simple as that. However, that was how it used to work. No longer.

The Advent of Shadow Tribunals

Nowadays, foreign corporations, and the billionaires who own them, have the power to sue elected administrations for the laws they pass, at secret arbitration panels composed of business advocates. Such disputes are conducted in secret. Unlike our courts, these panels allow no opportunity to appeal or oversight by judges. Ordinary citizens are unable to file a case to them, nor can our government, including companies operating from this country. The door is open only to entities operating from foreign soil.

Should an arbitration panel determines that a law or policy might diminish the corporation’s anticipated profits, it may order damages of vast sums, running into billions.

This compensation constitute not tangible damages but funds the arbitrators decide the company could potentially have made. The administration may have to drop the legislation. It becomes deterred from introducing similar legislation in that area, worried about incurring a lawsuit.

A Process Running Rampant

Record numbers of legal actions are being filed, as corporations take cues from each other, and hedge funds bankroll lawsuits for a share of a share of the awards. The result? Sovereignty and popular rule are becoming prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump a country's own laws and the decisions taken by parliaments is that this stipulation has been written – absent public approval, and frequently under a climate of extreme secrecy – within bilateral investment treaties.

A Specific Instance: The Whitehaven Coalmine

Last year, a conservation group secured a significant win at the senior court. The judge determined that proposals to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were found to be wrongly permitted by the outgoing administration, which had agreed to the bizarre claim that the mine could have no impact on national carbon targets. The incoming administration then withdrew the permission the previous administration had granted. Today, this success is under threat by an offshore tribunal reporting to only the corporations filing the suit.

Last August, a firm whose final controllers are based in the Cayman Islands lodged a claim challenging the UK government. Last week a dispute settlement body in the United States was established to hear it.

This firm is suing the UK for the money it would have generated if the mine had been allowed to proceed. We have no clear indication how much this could amount to. Which individual is acting on its behalf challenging the UK administration? A member of parliament, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The government enacts a policy, the national judiciary supports it, then a overseas corporation contests it through an unaccountable private court, and a sitting MP works for its behalf.

A Sanctions Lawsuit

On the same day that the panel on the mining lawsuit was appointed, it was revealed from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. Details are little of the case to date, but it appears probable that he may employ the arbitration process to contest the penalties the UK imposed on him after the Russian aggression. He has initiated proceedings against Luxembourg on these grounds, claiming sixteen billion dollars: equivalent to half of government’s yearly income. Part of the lawyers acting for him in that case? Cherie Blair, wife of the former British prime minister.

Legal experts contend that the EU’s delay in leveraging immobilised oligarchs' funds as collateral for its loan to Ukraine stems from Belgium’s fear that it could be sued in the ISDS tribunals, under a trade agreement. This unprecedented, undemocratic power over sovereign states may be obstructing the funds Ukraine critically depends on.

Empty Promises and Escalating Costs

We were assured that these scenarios wouldn’t happen. Years ago, a government leader, promoting the largest and riskiest of all investment pacts, stated: “The UK has signed trade agreement after trade deal and there has not been a case in the past.” A consultant on this matter accused activists of “scaremongering … the truth is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that solely developing countries needed to fear such legal actions. Predictions that “as corporations start to realise the influence they now possess, they will turn their attention from the poorer states to the wealthy nations” were greeted by scepticism.

That threat has come to pass. In the current period, fossil fuel and mining firms have initiated a record number of cases against nations rich and poor, opposing – similar to the Whitehaven project – official measures to stop climate breakdown. Firms have so far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That is equivalent to the combined GDP