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What is your perceive our system of government operates? Maybe along the lines of this. The public votes for MPs. They debate and pass bills. When a majority is secured, the bills are enacted as law. The law is upheld by the courts. End of story. Well, that’s how it once functioned. No longer.

The Advent of Shadow Tribunals

Today, overseas companies, or the billionaires behind them, have the power to sue governments for the laws they pass, at offshore tribunals staffed by business advocates. Such disputes are held behind closed doors. Unlike our courts, these bodies grant no avenue for appeal or judicial review. The general public are barred from bringing a case to them, and neither can our government, or even businesses operating from this country. Access is granted exclusively to businesses based overseas.

When a secret court determines that a government measure might diminish the corporation’s expected profits, it may order compensation of hundreds of millions of pounds, even billions.

These sums represent not actual losses but compensation the tribunal officials decide the company might otherwise have made. The administration could be forced to abandon its policy. It will be deterred from passing future laws of a similar nature, for fear of being sued.

A Process Growing Exponentially

Unprecedented levels of cases are being brought, as corporations observe each other, and hedge funds bankroll lawsuits in exchange for a cut of the awards. The consequence? Democratic sovereignty and popular rule are turning into too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump a country's own laws and the rulings made by elected bodies is that this provision has been incorporated – without democratic mandate, and often in a climate of profound opacity – within bilateral investment treaties.

A Concrete Example: The Cumbrian Coalmine

Last year, a conservation group secured a significant win at the high court. The judge found that schemes to excavate the first new deep coal mine in the UK for three decades, in Cumbria, were unlawfully approved by the Conservative government, which had accepted the extraordinary assertion that the mine would have zero effect on climate commitments. The Labour government then withdrew the permission the Tories had approved. Today, this success faces being overturned by an offshore tribunal reporting to exclusively the entities petitioning it.

In August, a firm whose beneficial owners are located in the offshore financial centre lodged a claim against the UK government. Last week a dispute settlement body in the United States was convened to adjudicate on it.

This firm is suing the UK for the profits it would have generated if the mine had been allowed to proceed. We have no idea how much this could amount to. Which individual is acting on its behalf in opposition to the British government? A member of parliament, and former attorney-general in the Conservative government, that great patriot Sir Geoffrey Cox. The government enacts a policy, the national judiciary supports it, then a foreign company disputes it through an secretive arbitration panel, and a member of our parliament works for its behalf.

An Oligarch's Challenge

Simultaneously that the court on the coal mine dispute was established, it was revealed from a government response that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. The public knows little of the case so far, but it is highly possible that he’ll use the arbitration process to fight the restrictions the UK imposed on him after the Russian aggression. He has previously filed a claim against another European state on these grounds, seeking a colossal sum: equivalent to half of government’s annual revenue. Among the legal team on his side? Cherie Blair, spouse of the ex-UK leader.

Legal experts believe that the EU’s delay in leveraging immobilised Russian assets as collateral for its loan to Ukraine stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a investment pact. This unprecedented, undemocratic power over sovereign states may be obstructing the funds Ukraine critically depends on.

False Assurances and Escalating Threats

We were assured that these events were not possible. In 2014, a senior politician, championing the most significant and hazardous of all these agreements, stated: “We’ve signed trade agreement after trade deal and we have never seen a issue in the past.” An expert on this matter labelled activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The general impression was crafted to be that exclusively weaker states should be concerned by these lawsuits. Cautionary notes that “once firms begin to understand the influence they now possess, they will turn their attention from the weak nations to the developed economies” were greeted by widespread derision.

That warning has come to pass. Recently, energy and extraction companies have lodged a historic level of claims against nations both wealthy and developing, contesting – similar to the Whitehaven project – government attempts to stop global warming. Firms have so far won vast sums by using ISDS, of which fossil fuel companies have secured the majority. That is equivalent to the combined GDP