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What is your understand our political system functions? It could be similar to this. We elect MPs. They vote on bills. Should a majority is obtained, the bills are enacted as law. Legislation are enforced by the courts. That's it. Well, that was how it once functioned. Not anymore.

The Advent of Shadow Courts

Nowadays, international firms, or the oligarchs behind them, are able to litigate against governments for the policies they pass, at offshore tribunals composed of corporate lawyers. These proceedings take place away from public scrutiny. Differing from national judiciaries, these panels provide no opportunity to appeal or legal review. The general public are unable to file a case to them, and neither can our government, or even businesses operating from this country. The door is open solely for corporations operating from foreign soil.

If a tribunal rules that a legislative action may compromise the corporation’s anticipated profits, it can award financial penalties of hundreds of millions, running into billions.

These awards represent not tangible damages but funds the arbitrators decide the company might otherwise have made. The administration might be compelled to abandon its policy. It is discouraged from enacting future policies in that area, for fear of facing litigation.

A Process Running Rampant

Record numbers of cases are being filed, as companies observe each other, and hedge funds fund legal actions for a share of a portion of the awards. The consequence? Sovereignty and democratic governance are becoming too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the rulings enacted by elected bodies is that this stipulation has been inserted – without public consent, and frequently under an atmosphere of profound opacity – within trade treaties.

A Specific Instance: The Cumbrian Coal Mine

Twelve months ago, activists secured a significant win at the high court. The presiding officer found that schemes to excavate the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were unlawfully approved by the previous government, which had agreed to the questionable argument that the mine could have no consequence on national carbon targets. The incoming administration later cancelled the consent the Tories had issued. Currently, this legal outcome is under threat by an foreign court accountable to only the companies filing the suit.

Last August, a corporate entity whose beneficial owners are located in the Cayman Islands initiated proceedings against the UK government. Recently a arbitration panel in Washington DC was set up to adjudicate on it.

The claimant is seeking compensation from the UK for the revenue it might have made if the mine had been allowed to proceed. We have little idea how much this could amount to. Which individual is representing it against the British government? A member of parliament, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The government makes a decision, the high court upholds it, then a foreign company challenges it through an secretive offshore tribunal, and a member of our parliament represents its behalf.

The Russian Lawsuit

Concurrently that the court on the coal mine dispute was established, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. The public knows little of the case to date, but it is highly possible that he’ll use the tribunal to contest the penalties the UK levied against him subsequent to the invasion of Ukraine. He has already started suing Luxembourg with similar intent, demanding sixteen billion dollars: half that government’s annual revenue. Part of the counsel acting for him in that case? 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 financial support package arises from Belgium’s fear that it could be taken to court in the ISDS tribunals, under a investment pact. This extraordinary, unaccountable authority over sovereign states may be obstructing the finance Ukraine critically depends on.

False Assurances and Mounting Risks

The public was told that these events were not possible. Years ago, a former prime minister, promoting the biggest and most dangerous of all such treaties, told us: “Britain has agreed to trade agreement after trade deal and we have never seen a problem in the past.” An adviser on this matter labelled campaigners of “alarmism … in reality, ISDS has little impact on the UK much”. The overall message was crafted to be that solely developing countries should be concerned by such legal actions. Predictions that “once firms begin to understand the influence they now possess, they will redirect their efforts from the weak nations to the developed economies” were dismissed with general mockery.

That threat is now a reality. This year, fossil fuel and extraction companies have filed a unprecedented number of suits against nations rich and poor, challenging – similar to the UK mine – government attempts to halt environmental catastrophe. Corporations have so far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have obtained the majority. That is equivalent to the combined GDP