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What is your understand our system of government functions? Perhaps something like this. The public votes for MPs. They debate and pass bills. Should a majority is achieved, the bills pass into law. The law is maintained by the courts. Simple as that. However, that was how it operated in the past. No longer.

The Emergence of Shadow Tribunals

In the modern era, foreign corporations, and the billionaires who own them, are able to litigate against governments for the regulations they pass, at private courts composed of commercial attorneys. These proceedings are conducted in secret. Differing from national judiciaries, these panels provide no opportunity to appeal or oversight by judges. Ordinary citizens are unable to file a case to them, and neither can our government, or even businesses headquartered in this country. They are open exclusively to corporations registered abroad.

When a secret court finds that a law or policy could harm the corporation’s anticipated profits, it has the power to grant financial penalties of vast sums, running into billions.

This compensation are based not on tangible damages but funds the panel members decide the company could potentially have made. The administration may have to drop the legislation. It becomes discouraged from enacting future policies of a similar nature, due to the risk of being sued.

A System Spiralling Out of Control

Historically high figures of legal actions are being initiated, as corporations learn from each other, and private equity finance suits for a share of a portion of the takings. The result? Sovereignty and popular rule are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede a country's own laws and the rulings made by legislatures is that this clause has been written – without democratic mandate, and typically amid conditions of extreme secrecy – inside bilateral investment treaties.

A Real-World Instance: The Whitehaven Coalmine

Last year, a conservation group achieved a major legal triumph at the High Court. The judge determined that proposals to open the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been unlawfully approved by the outgoing administration, which had endorsed the bizarre claim that the mine would have had no consequence on climate commitments. The incoming administration then withdrew the consent the previous administration had approved. Today, this victory could be compromised by an secret arbitration panel accountable to only the entities filing the suit.

During August, a corporate entity whose beneficial owners reside in the tax haven filed a lawsuit against the UK government. The previous week a dispute settlement body in the US capital was convened to adjudicate on it.

The claimant is suing the UK for the profits it could have earned if the mine had received permission to commence operations. Citizens have little idea how much this might be. What legal team is representing it challenging the state? A sitting MP, and former attorney-general in the previous government, the noted patriot Geoffrey Cox. The administration passes a law, the domestic court validates it, then a overseas corporation contests it through an secretive offshore tribunal, and a member of our parliament works for its behalf.

The Russian Lawsuit

On the same day that the panel on the coalmine case was established, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. We know scarce of the case to date, but it appears probable that he’ll use the arbitration process to challenge the penalties the UK imposed on him after the Russian aggression. He has initiated proceedings against another European state with similar intent, seeking $16bn: half that state's annual revenue. Included in the legal team on his side? Cherie Blair, spouse of the ex-UK leader.

Trade specialists argue that the EU’s delay in using frozen Russian assets as guarantee for its aid for Ukraine arises from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, undemocratic power over democratic administrations may be obstructing the money Ukraine desperately needs.

Empty Promises and Growing Threats

The public was told that these scenarios were not possible. Previously, a government leader, championing the largest and riskiest of all these agreements, told us: “Britain has agreed to trade agreement after trade deal and there has not been a problem in the past.” An adviser on this issue labelled activists of “exaggeration … the truth is, ISDS does not affect the UK much”. The overall message seemed to be that solely developing countries should be concerned by such legal actions. Cautionary notes 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 widespread derision.

That prediction has now materialised. In the current period, energy and resource corporations have filed a historic level of claims against nations across the economic spectrum, opposing – as in the case of the Whitehaven project – government attempts to stop climate breakdown. Corporations have so far won vast sums via ISDS, of which fossil fuel companies have secured the majority. That represents the combined GDP