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What is your understand our system of government operates? It could be something like this. Citizens choose MPs. They debate and pass bills. If a majority is secured, the bills become law. Statutes is maintained by the courts. That's it. However, that used to be how it used to work. Those days are over.

The Advent of Shadow Tribunals

In the modern era, foreign corporations, and the oligarchs behind them, have the power to sue elected administrations for the laws they pass, at offshore tribunals staffed by business advocates. The cases take place in secret. Differing from national judiciaries, these bodies grant no opportunity to appeal or judicial review. The general public are unable to file a case to them, just as our government, or even enterprises operating from this country. Access is granted solely for entities operating from foreign soil.

Should an arbitration panel finds that a legislative action could harm the corporation’s projected profits, it can award financial penalties of vast sums, running into billions.

These sums constitute not tangible damages but funds the tribunal officials determine the company would perhaps have made. The state could be forced to abandon its policy. It is discouraged from passing future laws along the same lines, due to the risk of facing litigation.

A Process Running Rampant

Unprecedented levels of disputes are being filed, as corporations observe each other, and private equity bankroll lawsuits for a share of a portion of the takings. The result? Democratic sovereignty and popular rule are now unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede domestic law and the rulings made by parliaments is that this provision has been incorporated – without public consent, and typically amid conditions of extreme secrecy – within international trade agreements.

A Concrete Example: The UK Coal Mine

A year ago, a conservation group achieved a major legal triumph at the senior court. The judge determined that plans to excavate the first deep coalmine in the UK for a generation, in Cumbria, had been unlawfully approved by the previous government, which had accepted the extraordinary assertion that the mine could have no consequence on our carbon budgets. The new government then withdrew the licence the previous administration had approved. Now, this victory is under threat by an foreign court accountable to exclusively the companies bringing the case.

Last August, a corporate entity whose beneficial owners are based in the Cayman Islands filed a lawsuit against the UK government. The previous week a arbitration panel in Washington DC was established to adjudicate on it.

The claimant is suing the UK for the profits it might have made if the mine had been permitted to go ahead. The public has no idea how much this might be. Which individual is representing it challenging the state? An elected representative, and former attorney-general in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The state passes a law, the high court supports it, then a foreign company contests it through an unaccountable private court, and a elected official acts on its behalf.

A Sanctions Case

On the same day that the tribunal on the mining lawsuit was convened, we learned from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. Details are scarce of the case so far, but it appears probable that he’ll use the arbitration process to contest the penalties the UK enacted against him after the Russian aggression. He has previously initiated proceedings against Luxembourg on these grounds, seeking a colossal sum: half that state's yearly income. Included in the legal team representing him there? Cherie Blair, married to the ex-UK leader.

Trade specialists argue that the EU’s delay in using frozen Russian assets as collateral for its financial support package stems from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This remarkable, undemocratic power over sovereign states may be obstructing the funds Ukraine desperately needs.

False Assurances and Mounting Threats

Politicians promised that such things could not occur. In 2014, a government leader, championing the largest and riskiest of all these agreements, stated: “We’ve signed trade deal after trade deal and there has never been a issue in the past.” A consultant on this matter labelled campaigners of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message seemed to be that solely developing countries needed to fear such legal actions. Predictions that “once firms start to realise the power they now possess, they will turn their attention from the weak nations to the wealthy nations” were met with general mockery.

That prediction has now materialised. This year, fossil fuel and mining firms have filed a record number of claims against nations both wealthy and developing, opposing – similar to the Whitehaven project – government attempts to halt climate breakdown. Companies have to date won $114bn through ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That equates to the combined GDP