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What is your perceive our democratic process operates? Maybe something like this. We elect MPs. They vote on bills. When a majority is achieved, the bills become law. The law is maintained by the courts. End of story. Yet, that’s how it once functioned. No longer.

The Advent of Shadow Courts

In the modern era, foreign corporations, and the oligarchs that control them, can sue governments for the regulations they pass, at private courts staffed by business advocates. The cases take place in secret. Unlike our courts, these bodies allow no right of appeal or legal review. Ordinary citizens are barred from bringing a case to them, just as our government, or even businesses operating from this country. The door is open exclusively to businesses operating from foreign soil.

When a secret court finds that a legislative action could harm the corporation’s expected profits, it may order financial penalties of hundreds of millions of pounds, running into billions.

This compensation constitute not tangible damages but money the panel members decide the company might otherwise have made. The administration could be forced to abandon its policy. It becomes deterred from passing future laws of a similar nature, due to the risk of being sued.

A System Spiralling Out of Control

Unprecedented levels of legal actions are being brought, as firms take cues from each other, and investment funds fund legal actions in exchange for a share of the settlements. The outcome? Democratic sovereignty and popular rule are turning into unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede domestic law and the rulings made by legislatures is that this stipulation has been inserted – absent public approval, and frequently under an atmosphere of total confidentiality – within international trade agreements.

A Real-World Case: The UK Coalmine

Twelve months ago, environmental campaigners won a great victory at the high court. The justice ruled that schemes to dig the first deep coalmine in the UK for 30 years, in Cumbria, were found to be unlawfully approved by the previous government, which had accepted the questionable argument that the mine would have had no impact on our carbon budgets. The new government subsequently revoked the consent the Tories had granted. Today, this legal outcome is under threat by an foreign court accountable to exclusively the entities petitioning it.

Last August, a corporate entity whose ultimate owners reside in the tax haven initiated proceedings against the UK government. Recently a arbitration panel in the United States was set up to adjudicate on it.

The claimant is litigating against the UK for the money it would have generated if the mine had been permitted to commence operations. Citizens have no idea how much this could amount to. Who is acting on its behalf in opposition to the UK administration? A member of parliament, and former attorney-general in the Conservative government, the noted patriot Sir Geoffrey Cox. The state enacts a policy, the high court upholds it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a sitting MP acts on its behalf.

A Sanctions Case

Simultaneously that the court on the coal mine dispute was convened, information emerged from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. The public knows nothing of the case at present, but it appears probable that he may employ the tribunal to contest the penalties the UK levied against him after the war in Ukraine. He has previously started suing Luxembourg with similar intent, demanding sixteen billion dollars: equivalent to half of government’s annual revenue. Part of the counsel acting for him in that case? Cherie Blair, wife of the former British prime minister.

Legal experts argue that the EU’s procrastination in leveraging immobilised state funds as security for its aid for Ukraine is due to Belgium’s fear that it could be sued in the ISDS tribunals, under a trade agreement. This unprecedented, undemocratic power over sovereign states may be obstructing the funds Ukraine critically depends on.

Empty Promises and Growing Threats

The public was told that these events were not possible. In 2014, a government leader, advocating for the most significant and hazardous of all these agreements, declared: “Britain has agreed to investment treaty after trade deal and there has never been a issue in the past.” A consultant on this topic described activists of “scaremongering … the fact is, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that solely developing countries needed to fear ISDS claims. Predictions that “once firms grasp the authority they’ve been granted, they will redirect their efforts from the weak nations to the wealthy nations” were greeted by general mockery.

That warning has come to pass. In the current period, fossil fuel and resource corporations have lodged a historic level of suits against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – official measures to stop global warming. Companies have so far won vast sums through ISDS, of which oil majors have obtained $84bn. That represents the combined GDP