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What is your perceive our political system operates? It could be something like this. The public votes for MPs. They vote on bills. When a majority is secured, the bills become law. The law is upheld by the courts. That's it. Yet, that’s how it once functioned. Those days are over.

The Emergence of Shadow Tribunals

In the modern era, foreign corporations, or the wealthy individuals that control them, have the power to sue nation states for the laws they pass, at secret arbitration panels staffed by commercial attorneys. These proceedings are held away from public scrutiny. Unlike our courts, these bodies provide no right of appeal or oversight by judges. You or I are unable to file a case to them, nor can our government, or even businesses based in this country. They are open exclusively to corporations registered abroad.

When a secret court finds that a law or policy may compromise the corporation’s anticipated profits, it may order damages of hundreds of millions, even billions.

These awards represent not actual losses but money the panel members determine the company might otherwise have made. The state might be compelled to rescind the measure. It becomes hesitant to passing future laws of a similar nature, worried about being sued.

A Process Running Rampant

Historically high figures of disputes are being filed, as companies take cues from each other, and hedge funds fund legal actions for a share of a share of the takings. The outcome? Democratic sovereignty and democratic governance are now too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it can supersede national legislation and the rulings enacted by elected bodies is that this stipulation has been inserted – without public consent, and frequently under an atmosphere of total confidentiality – within international trade agreements.

A Real-World Instance: The Cumbrian Coalmine

A year ago, a conservation group won a great victory at the senior court. The judge found that proposals to excavate the first major coal mine in the UK for three decades, in northwest England, had been illegally sanctioned by the outgoing administration, which had endorsed the questionable argument that the mine could have zero effect on our carbon budgets. The incoming administration later cancelled the licence the previous administration had granted. Now, this victory could be compromised by an foreign court reporting to no one but the entities filing the suit.

Last August, a firm whose beneficial owners are based in the tax haven filed a lawsuit against the UK government. The previous week a arbitration panel in Washington DC was set up to consider the case.

The company is seeking compensation from the UK for the money it would have generated if the mine had received permission to go ahead. Citizens have no idea how much this might be. What legal team is serving as its counsel against the British government? A member of parliament, and previous senior legal advisor in the outgoing administration, the noted patriot the MP. The state enacts a policy, the domestic court supports it, then a international entity disputes it through an secretive arbitration panel, and a sitting MP represents its behalf.

The Russian Challenge

Simultaneously that the panel on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. The public knows 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 war in Ukraine. He has previously filed a claim against Luxembourg with similar intent, demanding a colossal sum: an amount representing half nation's yearly budget. Included in the legal team acting for him in that case? the wife of a former prime minister, married to the ex-UK leader.

Trade specialists argue that the EU’s procrastination in leveraging immobilised state funds as collateral for its aid for Ukraine is due to Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, unaccountable authority over sovereign states might be preventing the funds Ukraine desperately needs.

Misleading Claims and Escalating Risks

We were assured that such things could not occur. Previously, a senior politician, promoting the most significant and hazardous of all such treaties, told us: “Britain has agreed to trade agreement after trade deal and there has never been a issue in the past.” A consultant on this issue accused critics of “scaremongering … the fact is, ISDS barely touches the UK much”. The general impression was crafted to be that only poorer nations should be concerned by ISDS claims. Predictions that “when companies begin to understand the authority they’ve been granted, they will turn their attention from the vulnerable countries to the strong ones” were greeted by general mockery.

That prediction has now materialised. This year, fossil fuel and mining firms have filed a record number of cases against nations across the economic spectrum, opposing – like the example of the Whitehaven project – state efforts to stop environmental catastrophe. Firms have to date won one hundred and fourteen billion dollars through ISDS, of which energy giants have been awarded eighty-four billion dollars. That equates to the combined GDP