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How do you reckon our political system operates? It could be along the lines of this. We elect MPs. They debate and pass bills. Should a majority is achieved, the bills become law. Statutes are enforced by the courts. That's it. However, that was how it used to work. No longer.

The Emergence of Shadow Tribunals

Nowadays, overseas companies, or the wealthy individuals who own them, can sue governments for the regulations they pass, at private courts made up of business advocates. These proceedings are held behind closed doors. In contrast to domestic courts, these tribunals grant no avenue for appeal or oversight by judges. The general public are barred from bringing a case to them, nor can our government, or even companies operating from this country. Access is granted exclusively to businesses registered abroad.

If a tribunal finds that a law or policy may compromise the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions, potentially billions.

These awards constitute not tangible damages but money the tribunal officials determine the company might otherwise have made. The administration could be forced to rescind the measure. It becomes discouraged from passing future laws in that area, for fear of being sued.

A Mechanism Growing Exponentially

Historically high figures of cases are being initiated, as companies observe each other, and private equity finance suits in exchange for a share of the awards. The consequence? Sovereignty and democratic governance are turning into unaffordable.

This mechanism 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 elected bodies is that this clause has been inserted – without public consent, and often in a climate of profound opacity – into trade treaties.

A Specific Case: The Cumbrian Coalmine

Last year, activists achieved a major legal triumph at the High Court. The justice determined that plans to dig the first new deep coal mine in the UK for a generation, in northwest England, were wrongly permitted by the previous government, which had agreed to the extraordinary assertion that the mine would have zero effect on our carbon budgets. The Labour government subsequently revoked the consent the former government had issued. Today, this success is under threat by an offshore tribunal reporting to exclusively the corporations bringing the case.

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

The company is suing the UK for the profits it could have earned if the mine had been permitted to commence operations. Citizens have no idea how much this sum represents. Who is representing it challenging the state? An elected representative, and former attorney-general in the Conservative government, the noted patriot the MP. The government passes a law, the high court upholds it, then a international entity contests it through an secretive arbitration panel, and a member of our parliament works for its behalf.

The Russian Lawsuit

Concurrently that the tribunal on the coalmine case was convened, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. We know little of the case at present, but it is highly possible that he’ll use the tribunal to challenge the restrictions the UK imposed on him subsequent to the war in Ukraine. He has previously initiated proceedings against a small nation for this reason, claiming sixteen billion dollars: equivalent to half of nation's yearly budget. Among the legal team acting for him in that case? a prominent lawyer, married to the previous PM.

Legal experts believe that the EU’s procrastination in leveraging immobilised Russian assets as security for its loan to Ukraine arises from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This remarkable, unaccountable authority over democratic administrations may be obstructing the money Ukraine critically depends on.

Empty Promises and Escalating Threats

We were assured that such things wouldn’t happen. In 2014, a government leader, promoting the biggest and most dangerous of all such treaties, declared: “We’ve signed trade deal after trade deal and there has not been a case in the past.” An expert on this issue accused campaigners of “alarmism … in reality, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that exclusively weaker states needed to fear ISDS claims. Predictions that “once firms grasp the authority bestowed upon them, they will turn their attention from the vulnerable countries to the developed economies” were greeted by scepticism.

That warning has now materialised. This year, oil and gas and resource corporations have lodged a historic level of claims against nations rich and poor, challenging – similar to the Whitehaven project – state efforts to stop environmental catastrophe. Corporations have so far won vast sums through ISDS, of which oil majors have secured the majority. That is equivalent to the combined GDP