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How do you understand our political system works? Perhaps along the lines of this. We elect MPs. They vote on bills. Should a majority is secured, the bills pass into law. Statutes are enforced by the courts. End of story. Well, that’s how it used to work. No longer.

The Emergence of Shadow Courts

In the modern era, foreign corporations, along with the oligarchs that control them, can sue elected administrations for the policies they pass, at offshore tribunals made up of business advocates. Such disputes take place behind closed doors. Differing from national judiciaries, these bodies provide no right of appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, including enterprises headquartered in this country. They are open solely for businesses operating from foreign soil.

If a tribunal finds that a legislative action could harm the corporation’s expected profits, it has the power to grant compensation of hundreds of millions, potentially billions.

These sums are based not on tangible damages but compensation the panel members determine the company might otherwise have made. The administration may have to rescind the measure. It will be hesitant to passing future laws in that area, for fear of being sued.

A Process Running Rampant

Historically high figures of disputes are being brought, as firms learn from each other, and hedge funds finance suits in return for a portion of the takings. The result? Sovereignty and popular rule are becoming prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The reason it is allowed to trump national legislation and the choices taken by parliaments is that this provision has been written – absent public approval, and frequently under an atmosphere of total confidentiality – inside bilateral investment treaties.

A Specific Example: The Whitehaven Coal Mine

Last year, environmental campaigners achieved a major legal triumph at the High Court. The judge found that proposals to excavate the first major coal mine in the UK for 30 years, in Cumbria, had been illegally sanctioned by the Conservative government, which had agreed to the extraordinary assertion that the mine would have no consequence on our carbon budgets. The incoming administration subsequently revoked the permission the Tories had approved. Today, this legal outcome faces being overturned by an foreign court reporting to no one but the companies petitioning it.

Last August, a corporate entity whose final controllers are located in the offshore financial centre filed a lawsuit versus the UK government. The previous week a tribunal in Washington DC was convened to consider the case.

This firm is seeking compensation from the UK for the money it might have made if the mine had been allowed to proceed. We have no clear indication how much this might be. Who is acting on its behalf in opposition to the state? An elected representative, and former attorney-general in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The administration passes a law, the high court supports it, then a foreign company challenges it through an secretive arbitration panel, and a sitting MP works for its behalf.

The Russian Challenge

Simultaneously that the court on the mining lawsuit was established, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. We know nothing of the case so far, but it appears probable that he’ll use the ISDS mechanism to challenge the penalties the UK enacted against him after the Russian aggression. He has previously initiated proceedings against a small nation for this reason, claiming sixteen billion dollars: equivalent to half of nation's yearly income. Part of the counsel on his side? Cherie Blair, wife of the previous PM.

Trade specialists argue that the EU’s hesitation in leveraging immobilised oligarchs' funds as security for its aid for Ukraine arises from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a investment pact. This remarkable, undemocratic power over elected governments could be blocking the finance Ukraine critically depends on.

Empty Promises and Mounting Costs

We were assured that these events could not occur. Previously, a senior politician, promoting the biggest and most dangerous of all investment pacts, stated: “The UK has signed trade deal after trade deal and there has not been a case in the past.” An adviser on this topic accused activists of “alarmism … in reality, ISDS barely touches the UK much”. The overall message appeared to be that exclusively weaker states needed to fear these lawsuits. Predictions that “as corporations begin to understand the power bestowed upon them, they will turn their attention from the poorer states to the developed economies” were dismissed with scepticism.

That warning is now a reality. Recently, oil and gas and mining firms have initiated a record number of suits against nations both wealthy and developing, challenging – as in the case of the Whitehaven project – government attempts to prevent global warming. Firms have to date won $114bn via ISDS, of which fossil fuel companies have obtained the majority. That equates to the combined GDP