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What is your reckon our political system operates? Maybe similar to this. Citizens choose MPs. They debate and pass bills. If a majority is secured, the bills are enacted as law. Legislation is upheld by the courts. That's it. Yet, that’s how it operated in the past. Not anymore.

The Advent of Shadow Courts

Today, foreign corporations, along with the oligarchs behind them, can sue elected administrations for the laws they pass, at private courts made up of commercial attorneys. The cases are conducted behind closed doors. Unlike our courts, these tribunals allow no opportunity to appeal or judicial review. Ordinary citizens cannot take a case to them, and neither can our government, including enterprises based in this country. The door is open solely for entities operating from foreign soil.

When a secret court finds that a legislative action might diminish the corporation’s anticipated profits, it may order damages of vast sums, running into billions.

These sums represent not real financial harm but compensation the panel members determine the company might otherwise have made. The administration might be compelled to rescind the measure. It becomes discouraged from enacting future policies along the same lines, worried about being sued.

A Mechanism Growing Exponentially

Historically high figures of cases are being initiated, as firms take cues from each other, and hedge funds bankroll lawsuits in return for a portion of the awards. The outcome? Democratic sovereignty and popular rule are becoming too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede a country's own laws and the choices enacted by parliaments is that this clause has been inserted – without public consent, and often in a climate of profound opacity – inside international trade agreements.

A Specific Instance: The Whitehaven Coal Mine

Last year, activists achieved a major legal triumph at the senior court. The judge determined that proposals to excavate the first deep coalmine in the UK for a generation, in northwest England, were found to be wrongly permitted by the outgoing administration, which had accepted the questionable argument that the mine could have no impact on climate commitments. The Labour government subsequently revoked the consent the former government had issued. Now, this victory faces being overturned by an offshore tribunal accountable to exclusively the entities petitioning it.

Last August, a corporate entity whose beneficial owners are based in the Cayman Islands initiated proceedings versus the UK government. The previous week a dispute settlement body in Washington DC was convened to consider the case.

This firm is suing the UK for the money it would have generated if the mine had been allowed to go ahead. Citizens have little idea how much this sum represents. Who is serving as its counsel against the British government? A member of parliament, and former attorney-general in the outgoing administration, that great patriot Sir Geoffrey Cox. The administration passes a law, the domestic court supports it, then a international entity challenges it through an secretive offshore tribunal, and a member of our parliament represents its behalf.

An Oligarch's Case

On the same day that the tribunal on the coal mine dispute was convened, we learned from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. The public knows nothing of the case to date, but it is highly possible that he will utilise the tribunal to contest the sanctions the UK imposed on him subsequent to the Russian aggression. He has filed a claim against Luxembourg with similar intent, claiming a colossal sum: equivalent to half of government’s yearly income. Part of the legal team on his side? Cherie Blair, married to the former British prime minister.

Trade specialists believe that the EU’s procrastination in utilising seized Russian assets as guarantee for its aid for Ukraine is due to Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a investment pact. This unprecedented, secretive influence over sovereign states may be obstructing the money Ukraine critically depends on.

Misleading Claims and Growing Threats

Politicians promised that such things wouldn’t happen. Previously, a government leader, championing the most significant and hazardous of all these agreements, stated: “The UK has signed trade deal after trade deal and we have never seen a issue in the past.” A consultant on this topic described campaigners of “scaremongering … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that exclusively weaker states needed to fear these lawsuits. Predictions that “when companies grasp the authority they’ve been granted, they will shift their focus from the poorer states to the developed economies” were dismissed with widespread derision.

That warning has now materialised. This year, energy and extraction companies have initiated a unprecedented number of cases against nations across the economic spectrum, challenging – as in the case of the Cumbrian coalmine – government attempts to halt global warming. Firms have so far won vast sums by using ISDS, of which fossil fuel companies have secured the majority. That represents the combined GDP