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Can you reckon our political system functions? It could be something like this. The public votes for MPs. They debate and pass bills. Should a majority is achieved, the bills become law. The law is maintained by the courts. End of story. However, that was how it operated in the past. No longer.

The Emergence of Shadow Courts

Today, foreign corporations, along with the wealthy individuals behind them, can sue elected administrations for the laws they pass, at private courts staffed by commercial attorneys. Such disputes take place behind closed doors. In contrast to domestic courts, these bodies grant no opportunity to appeal or judicial review. The general public cannot take a case to them, and neither can our government, including enterprises headquartered in this country. Access is granted exclusively to businesses based overseas.

When a secret court rules that a legislative action may compromise the corporation’s expected profits, it has the power to grant compensation of vast sums, potentially billions.

This compensation represent not tangible damages but funds the tribunal officials decide the company could potentially have made. The administration could be forced to abandon its policy. It is discouraged from passing future laws of a similar nature, due to the risk of being sued.

A Mechanism Running Rampant

Record numbers of disputes are being brought, as firms take cues from each other, and investment funds bankroll lawsuits in return for a portion of the awards. The result? Democratic sovereignty and democracy are now prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The reason it is permitted to trump a country's own laws and the choices taken by elected bodies is that this stipulation has been inserted – without public consent, and often in conditions of profound opacity – within bilateral investment treaties.

A Real-World Example: The Whitehaven Coal Mine

A year ago, environmental campaigners secured a significant win at the senior court. The judge determined that schemes to excavate the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, were found to be unlawfully approved by the Conservative government, which had agreed to the questionable argument that the mine would have no impact on climate commitments. The Labour government subsequently revoked the permission the former government had granted. Today, this success faces being overturned by an secret arbitration panel reporting to only the companies petitioning it.

In August, a firm whose beneficial owners are located in the tax haven lodged a claim challenging the UK government. The previous week a dispute settlement body in the US capital was set up to hear it.

The claimant is seeking compensation from the UK for the profits it could have earned if the mine had been permitted to commence operations. Citizens have no clear indication how much this sum represents. Which individual is representing it challenging the UK administration? A member of parliament, and former attorney-general in the Conservative government, the noted patriot Geoffrey Cox. The government makes a decision, the high court upholds it, then a international entity disputes it through an undemocratic arbitration panel, and a member of our parliament represents its behalf.

The Russian Lawsuit

On the same day that the court on the coalmine case was appointed, it was revealed from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. The public knows nothing of the case to date, but it appears probable that he may employ the ISDS mechanism to fight the sanctions the UK imposed on him after the Russian aggression. He has previously filed a claim against another European state with similar intent, claiming a colossal sum: half that nation's yearly income. Included in the legal team representing him there? the wife of a former prime minister, spouse of the previous PM.

Trade specialists contend that the EU’s delay in using frozen Russian assets as guarantee for its loan to Ukraine arises from concerns within Belgium that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, unaccountable authority over elected governments may be obstructing the money Ukraine urgently requires.

Empty Promises and Escalating Risks

The public was told that these events wouldn’t happen. In 2014, a former prime minister, championing the largest and riskiest of all investment pacts, stated: “We’ve signed investment treaty upon trade deal and there has not been a problem in the past.” An expert on this issue described activists of “alarmism … in reality, ISDS has little impact on the UK much”. The overall message seemed to be that exclusively weaker states had to worry about ISDS claims. Predictions that “once firms grasp the influence they’ve been granted, they will shift their focus from the vulnerable countries to the strong ones” were met with widespread derision.

That warning has come to pass. Recently, oil and gas and extraction companies have initiated a historic level of claims against nations rich and poor, opposing – like the example of the Whitehaven project – government attempts to stop global warming. Firms have thus far won $114bn by using ISDS, of which energy giants have secured the majority. That equates to the combined GDP