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What is your perceive our system of government operates? It could be something like this. The public votes for MPs. They legislate on bills. Should a majority is obtained, the bills pass into law. The law is upheld by the courts. That's it. Yet, that’s how it used to work. Those days are over.

The Rise of Shadow Courts

Nowadays, international firms, or the oligarchs that control them, can sue governments for the regulations they pass, at offshore tribunals composed of commercial attorneys. The cases take place behind closed doors. In contrast to domestic courts, these panels provide no right of appeal or judicial review. The general public cannot take a case to them, just as our government, including enterprises operating from this country. They are open only to businesses based overseas.

When a secret court finds that a law or policy might diminish the corporation’s projected profits, it has the power to grant financial penalties of hundreds of millions, potentially billions.

These awards represent not real financial harm but funds the tribunal officials conclude the company might otherwise have made. The state could be forced to rescind the measure. It is hesitant to introducing similar legislation of a similar nature, due to the risk of incurring a lawsuit.

A System Growing Exponentially

Unprecedented levels of cases are being initiated, as corporations learn from each other, and investment funds finance suits in exchange for a cut of the takings. The outcome? National sovereignty and democracy are now unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede national legislation and the decisions enacted by parliaments is that this provision has been inserted – without democratic mandate, and typically amid conditions of profound opacity – into trade treaties.

A Real-World Example: The Cumbrian Coal Mine

A year ago, activists won a great victory at the senior court. The presiding officer ruled that proposals to dig the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the previous government, which had endorsed the extraordinary assertion that the mine would have no consequence on climate commitments. The new government later cancelled the permission the Tories had approved. Now, this victory faces being overturned by an secret arbitration panel accountable to no one but the companies bringing the case.

Last August, a company whose ultimate owners reside in the offshore financial centre lodged a claim against the UK government. Recently a arbitration panel in the US capital was set up to adjudicate on it.

This firm is litigating against the UK for the money it would have generated if the mine had been permitted to commence operations. Citizens have no idea how much this sum represents. Which individual is representing it challenging the British government? A sitting MP, and former attorney-general in the outgoing administration, that great patriot Geoffrey Cox. The administration passes a law, the high court validates it, then a overseas corporation contests it through an secretive private court, and a member of our parliament acts on its behalf.

An Oligarch's Challenge

Concurrently that the court on the coalmine case was appointed, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. We know little of the case at present, but it is highly possible that he may employ the ISDS mechanism to contest the sanctions the UK enacted against him after the Russian aggression. He has already started suing another European state with similar intent, claiming sixteen billion dollars: half that nation's yearly budget. Among the lawyers on his side? Cherie Blair, spouse of the ex-UK leader.

Legal experts contend that the EU’s delay in leveraging immobilised state funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over sovereign states might be preventing the finance Ukraine urgently requires.

Misleading Claims and Growing Costs

Politicians promised that these events were not possible. Previously, a former prime minister, championing the biggest and most dangerous of all these agreements, stated: “Britain has agreed to trade agreement upon trade deal and there has never been a case in the past.” An adviser on this matter accused critics of “exaggeration … the fact is, ISDS barely touches the UK much”. The overall message was crafted to be that solely developing countries should be concerned by such legal actions. Warnings that “as corporations begin to understand the power they now possess, they will turn their attention from the poorer states to the strong ones” were dismissed with widespread derision.

That prediction has come to pass. In the current period, fossil fuel and resource corporations have lodged a historic level of suits against nations rich and poor, contesting – as in the case of the Cumbrian coalmine – government attempts to stop climate breakdown. Corporations have to date won $114bn through ISDS, of which oil majors have been awarded the majority. That is equivalent to the combined GDP