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How do you understand our democratic process functions? It could be along the lines of this. The public votes for MPs. They vote on bills. If a majority is obtained, the bills become law. Statutes are enforced by the courts. That's it. Yet, that was how it once functioned. Not anymore.

The Emergence of Shadow Courts

Today, foreign corporations, and the wealthy individuals who own them, have the power to sue governments for the policies they pass, at secret arbitration panels staffed by commercial attorneys. The cases take place away from public scrutiny. Differing from national judiciaries, these panels allow no avenue for appeal or oversight by judges. The general public are barred from bringing a case to them, nor can our government, or even companies operating from this country. They are open solely for corporations registered abroad.

Should an arbitration panel finds that a legislative action may compromise the corporation’s expected profits, it has the power to grant damages of hundreds of millions, even billions.

These awards constitute not tangible damages but funds the arbitrators determine the company might otherwise have made. The government may have to drop the legislation. It will be hesitant to passing future laws along the same lines, due to the risk of being sued.

A Mechanism Running Rampant

Historically high figures of cases are being filed, as corporations learn from each other, and investment funds bankroll lawsuits in exchange for a cut of the settlements. The consequence? Sovereignty and popular rule are turning into too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it can override a country's own laws and the rulings enacted by legislatures is that this provision has been written – without democratic mandate, and typically amid conditions of profound opacity – inside bilateral investment treaties.

A Concrete Example: The Cumbrian Coalmine

Twelve months ago, activists won a great victory at the senior court. The presiding officer determined that plans to dig the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were wrongly permitted by the previous government, which had agreed to the questionable argument that the mine could have no impact on our carbon budgets. The Labour government then withdrew the permission the former government had granted. Now, this legal outcome is under threat by an offshore tribunal answering to no one but the entities petitioning it.

In August, a firm whose ultimate owners are located in the tax haven lodged a claim against the UK government. Last week a tribunal in Washington DC was set up to consider the case.

The claimant is seeking compensation from the UK for the money it might have made if the mine had been allowed to go ahead. We have no clear indication how much this sum represents. Who is acting on its behalf in opposition to the British government? A sitting MP, and former attorney-general in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The government passes a law, the national judiciary supports it, then a foreign company contests it through an secretive offshore tribunal, and a member of our parliament acts on its behalf.

An Oligarch's Challenge

Simultaneously that the court on the coal mine dispute was appointed, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. We know nothing of the case to date, but it appears probable that he’ll use the arbitration process to challenge the penalties the UK levied against him subsequent to the Russian aggression. He has initiated proceedings against another European state with similar intent, demanding a colossal sum: equivalent to half of nation's yearly budget. Included in the counsel acting for him in that case? Cherie Blair, married to the ex-UK leader.

International law scholars argue that the EU’s hesitation in utilising seized oligarchs' funds as security for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a investment pact. This unprecedented, unaccountable authority over democratic administrations may be obstructing the funds Ukraine desperately needs.

False Assurances and Growing Risks

We were assured that such things were not possible. Years ago, a senior politician, promoting the most significant and hazardous of all these agreements, declared: “The UK has signed investment treaty after trade deal and we have never seen a problem in the past.” An adviser on this issue labelled critics of “alarmism … in reality, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that exclusively weaker states should be concerned by ISDS claims. Predictions that “once firms grasp the influence they’ve been granted, they will turn their attention from the vulnerable countries to the strong ones” were met with general mockery.

That warning has come to pass. In the current period, energy and mining firms have lodged a unprecedented number of cases against nations rich and poor, challenging – as in the case of the UK mine – official measures to stop climate breakdown. Firms have thus far won $114bn through ISDS, of which fossil fuel companies have obtained $84bn. That represents the combined GDP