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What is your perceive our political system operates? It could be along the lines of this. We elect MPs. They vote on bills. When a majority is obtained, the bills become law. Statutes are enforced by the courts. Simple as that. However, that’s how it operated in the past. Those days are over.

The Advent of Secret Arbitration Panels

In the modern era, overseas companies, or the wealthy individuals who own them, are able to litigate against governments for the regulations they pass, at offshore tribunals composed of corporate lawyers. These proceedings take place behind closed doors. Differing from national judiciaries, these panels allow no avenue for appeal or oversight by judges. Ordinary citizens are unable to file a case to them, and neither can our government, or even enterprises headquartered in this country. Access is granted exclusively to entities based overseas.

Should an arbitration panel finds that a law or policy could harm the corporation’s expected profits, it may order compensation of vast sums, even billions.

These sums represent not tangible damages but compensation the panel members decide the company might otherwise have made. The administration might be compelled to drop the legislation. It is deterred from enacting future policies of a similar nature, worried about incurring a lawsuit.

A System Growing Exponentially

Historically high figures of legal actions are being filed, as corporations observe each other, and investment funds bankroll lawsuits for a share of a cut of the settlements. The outcome? National sovereignty and democracy are becoming too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to override a country's own laws and the rulings made by elected bodies is that this clause has been written – without public consent, and often in a climate of total confidentiality – within bilateral investment treaties.

A Concrete Case: The Whitehaven Coalmine

Last year, a conservation group won a great victory at the high court. The justice ruled that proposals to open the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were wrongly permitted by the Conservative government, which had endorsed the bizarre claim that the mine could have zero effect on climate commitments. The Labour government then withdrew the consent the Tories had granted. Currently, this legal outcome faces being overturned by an secret arbitration panel answering to no one but the corporations filing the suit.

During August, a corporate entity whose final controllers are based in the offshore financial centre filed a lawsuit versus the UK government. Recently a tribunal in the United States was established to adjudicate on it.

This firm is litigating against the UK for the money it would have generated if the mine had received permission to proceed. We have little idea how much this could amount to. What legal team is acting on its behalf challenging the UK administration? A member of parliament, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the domestic court upholds it, then a international entity challenges it through an undemocratic private court, and a elected official acts on its behalf.

A Sanctions Case

On the same day that the tribunal on the mining lawsuit was convened, information emerged from a government response that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. Details are little of the case to date, but it appears probable that he’ll use the arbitration process to challenge the sanctions the UK enacted against him after the Russian aggression. He has previously started suing a small nation with similar intent, claiming sixteen billion dollars: half that state's annual revenue. Among the lawyers on his side? the wife of a former prime minister, wife of the ex-UK leader.

International law scholars contend that the EU’s procrastination in leveraging immobilised Russian assets as guarantee for its loan to Ukraine arises from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, unaccountable authority over sovereign states might be preventing the money Ukraine urgently requires.

Empty Promises and Mounting Threats

Politicians promised that these events were not possible. In 2014, a senior politician, advocating for the biggest and most dangerous of all such treaties, told us: “Britain has agreed to investment treaty upon trade deal and there has not been a issue in the past.” A consultant on this issue described critics of “exaggeration … the fact is, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries needed to fear ISDS claims. Warnings that “once firms begin to understand the authority they’ve been granted, they will redirect their efforts from the vulnerable countries to the strong ones” were met with scepticism.

That warning has now materialised. In the current period, fossil fuel and mining firms have initiated a historic level of claims against nations both wealthy and developing, contesting – as in the case of the Cumbrian coalmine – state efforts to stop environmental catastrophe. Firms have thus far won vast sums via ISDS, of which oil majors have secured the majority. That is equivalent to the combined GDP