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What is your reckon our system of government operates? Perhaps something like this. We elect MPs. They legislate on bills. Should a majority is secured, the bills pass into law. The law is maintained by the courts. End of story. Yet, that’s how it used to work. Not anymore.

The Advent of Shadow Tribunals

In the modern era, foreign corporations, or the billionaires who own them, are able to litigate against nation states for the regulations they pass, at private courts staffed by corporate lawyers. Such disputes take place in secret. Unlike our courts, these panels allow no avenue for appeal or legal review. The general public are barred from bringing a case to them, just as our government, or even businesses based in this country. They are open only to businesses based overseas.

If a tribunal determines that a law or policy might diminish the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions, even billions.

These sums constitute not tangible damages but funds the tribunal officials conclude the company could potentially have made. The administration might be compelled to abandon its policy. It becomes discouraged from enacting future policies of a similar nature, worried about being sued.

A Process Spiralling Out of Control

Record numbers of legal actions are being filed, as companies learn from each other, and hedge funds bankroll lawsuits in return for a share of the takings. The result? National sovereignty and popular rule are becoming prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the choices taken by legislatures is that this provision has been written – without public consent, and typically amid an atmosphere of extreme secrecy – within trade treaties.

A Real-World Example: The Cumbrian Coal Mine

Last year, environmental campaigners won a great victory at the high court. The presiding officer determined that schemes to excavate the first deep coalmine in the UK for 30 years, in northwest England, were found to be illegally sanctioned by the Conservative government, which had agreed to the extraordinary assertion that the mine would have no impact on national carbon targets. The incoming administration then withdrew the consent the Tories had approved. Now, this legal outcome is under threat by an foreign court accountable to only the companies bringing the case.

In August, a company whose final controllers are located in the tax haven initiated proceedings against the UK government. Last week a dispute settlement body in the United States was set up to consider the case.

The company is suing the UK for the revenue it could have earned if the mine had been permitted to proceed. Citizens have no clear indication how much this might be. What legal team is serving as its counsel in opposition to the UK administration? A sitting MP, and ex-law officer in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The administration enacts a policy, the domestic court validates it, then a international entity disputes it through an secretive arbitration panel, and a elected official acts on its behalf.

An Oligarch's Lawsuit

Simultaneously that the panel on the mining lawsuit was established, we learned from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. We know little of the case so far, but it seems likely that he will utilise the arbitration process to contest the penalties the UK enacted against him subsequent to the Russian aggression. He has previously started suing a small nation with similar intent, claiming sixteen billion dollars: half that government’s annual revenue. Among the counsel acting for him in that case? a prominent lawyer, spouse of the ex-UK leader.

International law scholars contend that the EU’s procrastination in using frozen oligarchs' funds as guarantee for its financial support package arises from Belgium’s fear that it could be sued in the offshore corporate courts, under a trade agreement. This unprecedented, unaccountable authority over sovereign states could be blocking the money Ukraine urgently requires.

Empty Promises and Escalating Risks

The public was told that these events were not possible. Previously, a former prime minister, promoting the largest and riskiest of all these agreements, stated: “We’ve signed trade deal after trade deal and we have never seen a issue in the past.” A consultant on this matter described activists of “exaggeration … in reality, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that exclusively weaker states should be concerned by such legal actions. Predictions that “when companies begin to understand the authority they now possess, they will redirect their efforts from the poorer states to the strong ones” were dismissed with widespread derision.

That prediction has come to pass. In the current period, fossil fuel and resource corporations have lodged a unprecedented number of suits against nations rich and poor, contesting – like the example of the UK mine – official measures to stop climate breakdown. Companies have so far won vast sums via ISDS, of which oil majors have been awarded eighty-four billion dollars. That represents the combined GDP