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Can you understand our political system works? Perhaps something like this. We elect MPs. They vote on bills. Should a majority is achieved, the bills pass into law. Legislation is maintained by the courts. That's it. Well, that was how it once functioned. No longer.

The Emergence of Shadow Tribunals

Nowadays, international firms, along with the wealthy individuals who own them, are able to litigate against elected administrations for the regulations they pass, at private courts staffed by business advocates. The cases are held behind closed doors. In contrast to domestic courts, these bodies grant no avenue for appeal or judicial review. You or I cannot take a case to them, and neither can our government, including businesses based in this country. Access is granted solely for businesses operating from foreign soil.

When a secret court finds that a legislative action could harm the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions, even billions.

These awards represent not actual losses but funds the arbitrators conclude the company could potentially have made. The administration may have to rescind the measure. It becomes discouraged from introducing similar legislation along the same lines, for fear of facing litigation.

A Process Running Rampant

Historically high figures of cases are being brought, as firms take cues from each other, and private equity finance suits in exchange for a share of the awards. The outcome? Democratic sovereignty and popular rule are now prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump a country's own laws and the decisions taken by elected bodies is that this clause has been incorporated – without public consent, and often in a climate of total confidentiality – into bilateral investment treaties.

A Specific Case: The Cumbrian Coal Mine

Last year, environmental campaigners achieved a major legal triumph at the senior court. The presiding officer ruled that proposals to dig the first new deep coal mine in the UK for 30 years, in northwest England, were found to be unlawfully approved by the Conservative government, which had endorsed the bizarre claim that the mine would have had zero effect on our carbon budgets. The incoming administration later cancelled the consent the previous administration had issued. Now, this victory could be compromised by an secret arbitration panel accountable to no one but the corporations bringing the case.

In August, a company whose final controllers reside in the tax haven lodged a claim challenging the UK government. The previous week a tribunal in the US capital was set up to consider the case.

The company is seeking compensation from the UK for the revenue it could have earned if the mine had been permitted to go ahead. The public has little idea how much this sum represents. Who is representing it challenging the British government? A sitting MP, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the national judiciary supports it, then a international entity contests it through an undemocratic arbitration panel, and a sitting MP acts on its behalf.

The Russian Challenge

Simultaneously that the tribunal on the coalmine case was appointed, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. We know little of the case at present, but it is highly possible that he may employ the tribunal to contest the restrictions the UK imposed on him after the invasion of Ukraine. He has previously started suing another European state on these grounds, claiming a colossal sum: an amount representing half state's yearly budget. Part of the counsel on his side? Cherie Blair, spouse of the previous PM.

International law scholars believe that the EU’s delay in utilising seized state funds as guarantee for its financial support package arises from apprehension in Brussels that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, undemocratic power over sovereign states might be preventing the finance Ukraine urgently requires.

Empty Promises and Escalating Costs

The public was told that such things could not occur. In 2014, a senior politician, promoting the biggest and most dangerous of all such treaties, stated: “Britain has agreed to trade deal after trade deal and there has not been a issue in the past.” An expert on this matter accused campaigners of “exaggeration … in reality, ISDS does not affect the UK much”. The general impression was crafted to be that exclusively weaker states needed to fear these lawsuits. Warnings that “once firms begin to understand the influence bestowed upon them, they will redirect their efforts from the vulnerable countries to the wealthy nations” were met with scepticism.

That warning is now a reality. Recently, oil and gas and extraction companies have initiated a historic level of claims against nations rich and poor, contesting – like the example of the Whitehaven project – official measures to stop climate breakdown. Corporations have thus far won $114bn through ISDS, of which energy giants have secured eighty-four billion dollars. That is equivalent to the combined GDP