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What is your perceive our system of government operates? Maybe along the lines of this. Citizens choose MPs. They debate and pass bills. If a majority is achieved, the bills are enacted as law. Statutes are enforced by the courts. End of story. Well, that was how it operated in the past. Not anymore.

The Rise of Shadow Courts

Nowadays, foreign corporations, and the billionaires who own them, are able to litigate against governments for the laws they pass, at private courts staffed by corporate lawyers. The cases are conducted in secret. Unlike our courts, these panels allow no right of appeal or oversight by judges. You or I are barred from bringing a case to them, just as our government, including companies headquartered in this country. Access is granted solely for businesses operating from foreign soil.

If a tribunal determines that a law or policy could harm the corporation’s expected profits, it has the power to grant compensation of hundreds of millions, potentially billions.

These sums represent not tangible damages but funds the arbitrators determine the company might otherwise have made. The administration could be forced to abandon its policy. It will be hesitant to introducing similar legislation of a similar nature, for fear of being sued.

A System Running Rampant

Record numbers of cases are being initiated, as companies observe each other, and investment funds finance suits in return for a cut of the awards. The consequence? National sovereignty and popular rule are turning into unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The rationale it is permitted to override national legislation and the decisions made by parliaments is that this clause has been incorporated – without public consent, and frequently under conditions of profound opacity – into bilateral investment treaties.

A Real-World Instance: The UK Coalmine

Last year, environmental campaigners won a great victory at the senior court. The presiding officer determined that plans to open the first deep coalmine in the UK for a generation, in Cumbria, were unlawfully approved by the outgoing administration, which had accepted the bizarre claim that the mine could have zero effect on climate commitments. The incoming administration then withdrew the permission the former government had approved. Now, this victory could be compromised by an offshore tribunal accountable to only the companies bringing the case.

Last August, a company whose ultimate owners are based in the Cayman Islands lodged a claim versus the UK government. Last week a tribunal in the US capital was established to consider the case.

The claimant is suing the UK for the revenue it might have made if the mine had received permission to go ahead. We have no clear indication how much this might be. Which individual is serving as its counsel in opposition to the state? A member of parliament, and former attorney-general in the outgoing administration, the noted patriot Sir Geoffrey Cox. The state enacts a policy, the national judiciary upholds it, then a international entity disputes it through an undemocratic arbitration panel, and a sitting MP works for its behalf.

An Oligarch's Challenge

On the same day that the court on the mining lawsuit was established, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. We know nothing of the case at present, but it seems likely that he may employ the ISDS mechanism to contest the penalties the UK imposed on him after the invasion of Ukraine. He has already filed a claim against a small nation on these grounds, claiming a colossal sum: an amount representing half nation's yearly budget. Included in the lawyers representing him there? Cherie Blair, spouse of the ex-UK leader.

Trade specialists believe that the EU’s delay in using frozen oligarchs' funds as security for its aid for Ukraine arises from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This remarkable, undemocratic power over elected governments could be blocking the funds Ukraine urgently requires.

Misleading Claims and Mounting Costs

We were assured that such things were not possible. Years ago, a former prime minister, championing the biggest and most dangerous of all these agreements, stated: “We’ve signed trade deal upon trade deal and there has never been a case in the past.” An expert on this issue labelled activists of “alarmism … in reality, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that only poorer nations needed to fear these lawsuits. Predictions that “when companies start to realise the influence they’ve been granted, they will redirect their efforts from the weak nations to the developed economies” were greeted by scepticism.

That threat is now a reality. Recently, oil and gas and resource corporations have initiated a historic level of claims against nations both wealthy and developing, opposing – like the example of the UK mine – government attempts to stop global warming. Companies have to date won one hundred and fourteen billion dollars via ISDS, of which energy giants have secured the majority. That is equivalent to the combined GDP