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Can you understand our political system operates? Perhaps along the lines of this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. Legislation is upheld by the courts. That's it. Well, that was how it used to work. Those days are over.

The Advent of Shadow Courts

In the modern era, international firms, and the billionaires who own them, can sue elected administrations for the regulations they pass, at secret arbitration panels staffed by corporate lawyers. The cases take place away from public scrutiny. Differing from national judiciaries, these panels grant no opportunity to appeal or legal review. The general public are unable to file a case to them, just as our government, or even companies operating from this country. They are open solely for corporations based overseas.

Should an arbitration panel finds that a government measure may compromise the corporation’s anticipated profits, it may order compensation of hundreds of millions of pounds, even billions.

These sums constitute not real financial harm but funds the panel members determine the company might otherwise have made. The administration may have to abandon its policy. It will be hesitant to passing future laws of a similar nature, worried about being sued.

A Process Running Rampant

Historically high figures of legal actions are being brought, as corporations take cues from each other, and investment funds bankroll lawsuits in exchange for a portion of the awards. The result? National sovereignty and democracy are becoming prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to override a country's own laws and the rulings made by elected bodies is that this provision has been inserted – absent public approval, and often in conditions of extreme secrecy – within international trade agreements.

A Specific Case: The UK Coal Mine

Twelve months ago, environmental campaigners achieved a major legal triumph at the High Court. The judge found that schemes to excavate the first deep coalmine in the UK for three decades, in northwest England, were found to be unlawfully approved by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have had zero effect on climate commitments. The incoming administration then withdrew the permission the previous administration had approved. Currently, this legal outcome is under threat by an foreign court accountable to no one but the entities bringing the case.

In August, a firm whose final controllers are located in the Cayman Islands filed a lawsuit challenging the UK government. Recently a arbitration panel in the US capital was established to hear it.

The company is seeking compensation from the UK for the revenue it could have earned if the mine had received permission to proceed. Citizens have no idea how much this could amount to. Which individual is serving as its counsel in opposition to the state? A member of parliament, and ex-law officer in the outgoing administration, that great patriot the MP. The state passes a law, the national judiciary validates it, then a foreign company disputes it through an secretive arbitration panel, and a elected official represents its behalf.

A Sanctions Lawsuit

Simultaneously that the tribunal on the coal mine dispute was appointed, information emerged from a government response that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. Details are nothing of the case to date, but it is highly possible that he’ll use the arbitration process to fight the penalties the UK enacted against him following the Russian aggression. He has started suing Luxembourg with similar intent, demanding a colossal sum: equivalent to half of state's annual revenue. Included in the legal team representing him there? a prominent lawyer, spouse of the previous PM.

Legal experts believe that the EU’s procrastination in using frozen state funds as security for its loan to Ukraine arises from concerns within Belgium that it could be sued in the ISDS tribunals, under a trade agreement. This unprecedented, unaccountable authority over elected governments could be blocking the finance Ukraine critically depends on.

False Assurances and Mounting Costs

The public was told that these events could not occur. Years ago, a former prime minister, promoting the most significant and hazardous of all these agreements, told us: “We’ve signed trade deal upon trade deal and there has not been a issue in the past.” An expert on this topic labelled critics of “exaggeration … in reality, ISDS barely touches the UK much”. The general impression seemed to be that only poorer nations had to worry about ISDS claims. Cautionary notes that “once firms begin to understand the influence they now possess, they will shift their focus from the weak nations to the developed economies” were greeted by widespread derision.

That threat has come to pass. Recently, energy and extraction companies have lodged a unprecedented number of suits against nations across the economic spectrum, challenging – like the example of the Whitehaven project – state efforts to halt climate breakdown. Corporations have to date won vast sums by using ISDS, of which oil majors have obtained eighty-four billion dollars. That equates to the combined GDP