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Can you understand our political system functions? It could be similar to this. The public votes for MPs. They debate and pass bills. If a majority is obtained, the bills are enacted as law. The law is upheld by the courts. That's it. Well, that was how it operated in the past. No longer.

The Rise of Shadow Courts

Today, international firms, and the wealthy individuals that control them, are able to litigate against governments for the policies they pass, at secret arbitration panels staffed by commercial attorneys. Such disputes are conducted in secret. In contrast to domestic courts, these bodies grant no right of appeal or legal review. The general public are barred from bringing a case to them, and neither can our government, or even companies based in this country. They are open solely for businesses operating from foreign soil.

When a secret court determines that a legislative action may compromise the corporation’s projected profits, it may order damages of vast sums, running into billions.

This compensation represent not actual losses but funds the tribunal officials determine the company would perhaps have made. The state might be compelled to drop the legislation. It becomes discouraged from enacting future policies of a similar nature, worried about incurring a lawsuit.

A Mechanism Growing Exponentially

Historically high figures of cases are being filed, as companies learn from each other, and private equity bankroll lawsuits for a share of a share of the takings. The outcome? Sovereignty and popular rule are becoming unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it can override national legislation and the decisions taken by elected bodies is that this clause has been written – without democratic mandate, and typically amid conditions of profound opacity – into bilateral investment treaties.

A Specific Case: The Cumbrian Coalmine

Twelve months ago, a conservation group won a great victory at the high court. The presiding officer found that plans to dig the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, were unlawfully approved by the Conservative government, which had accepted the bizarre claim that the mine could have no impact on our carbon budgets. The new government then withdrew the permission the Tories had granted. Today, this success faces being overturned by an foreign court accountable to exclusively the companies bringing the case.

In August, a company whose beneficial owners reside in the offshore financial centre initiated proceedings against the UK government. The previous week a tribunal in the US capital was established to consider the case.

The company is suing the UK for the revenue it would have generated if the mine had been permitted to commence operations. We have no clear indication how much this might be. Who is serving as its counsel against the state? A sitting MP, and former attorney-general in the outgoing administration, the self-proclaimed patriot the MP. The state makes a decision, the national judiciary upholds it, then a overseas corporation contests it through an unaccountable arbitration panel, and a sitting MP acts on its behalf.

A Sanctions Case

Simultaneously that the tribunal on the mining lawsuit was convened, it was revealed from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows nothing of the case at present, but it seems likely that he will utilise the arbitration process to contest the restrictions the UK enacted against him subsequent to the Russian aggression. He has previously filed a claim against Luxembourg on these grounds, claiming a colossal sum: an amount representing half nation's annual revenue. Part of the lawyers representing him there? Cherie Blair, wife of the former British prime minister.

Legal experts believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its financial support package arises from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a investment pact. This extraordinary, undemocratic power over democratic administrations could be blocking the funds Ukraine urgently requires.

False Assurances and Mounting Threats

We were assured that these scenarios could not occur. In 2014, a government leader, advocating for the biggest and most dangerous of all investment pacts, declared: “We’ve signed trade deal after trade deal and we have never seen a case in the past.” An expert on this topic accused campaigners of “alarmism … the truth is, ISDS barely touches the UK much”. The overall message seemed to be that exclusively weaker states had to worry about ISDS claims. Warnings that “once firms grasp the power they now possess, they will redirect their efforts from the weak nations to the strong ones” were met with widespread derision.

That warning is now a reality. Recently, energy and mining firms have filed a unprecedented number of cases against nations across the economic spectrum, contesting – like the example of the Whitehaven project – government attempts to stop environmental catastrophe. Corporations have so far won $114bn through ISDS, of which energy giants have been awarded the majority. That equates to the combined GDP