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What is your understand our political system works? It could be along the lines of this. The public votes for MPs. They debate and pass bills. Should a majority is secured, the bills are enacted as law. Legislation are enforced by the courts. That's it. However, that was how it operated in the past. Not anymore.

The Emergence of Offshore Arbitration Panels

Today, foreign corporations, and the billionaires behind them, are able to litigate against nation states for the laws they pass, at secret arbitration panels staffed by business advocates. The cases take place in secret. Differing from national judiciaries, these tribunals allow no right of appeal or judicial review. Ordinary citizens cannot take a case to them, and neither can our government, or even businesses operating from this country. The door is open only to entities based overseas.

Should an arbitration panel finds that a legislative action could harm the corporation’s expected profits, it can award compensation of vast sums, potentially billions.

These sums are based not on real financial harm but money the panel members determine the company could potentially have made. The state may have to drop the legislation. It will be discouraged from passing future laws along the same lines, for fear of incurring a lawsuit.

A Mechanism Running Rampant

Record numbers of disputes are being filed, as firms take cues from each other, and private equity fund legal actions for a share of a portion of the takings. The outcome? Sovereignty and democratic governance are turning into unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede domestic law and the decisions taken by legislatures is that this stipulation has been inserted – absent public approval, and frequently under conditions of extreme secrecy – into trade treaties.

A Specific Example: The Whitehaven Coalmine

Twelve months ago, environmental campaigners achieved a major legal triumph at the High Court. The justice ruled that proposals to dig the first major coal mine in the UK for a generation, in Cumbria, were found to be illegally sanctioned by the previous government, which had accepted the bizarre claim that the mine could have no impact on climate commitments. The new government then withdrew the permission the former government had issued. Currently, this victory faces being overturned by an secret arbitration panel answering to only the companies bringing the case.

During August, a corporate entity whose final controllers reside in the Cayman Islands lodged a claim versus the UK government. The previous week a arbitration panel in Washington DC was convened to adjudicate on it.

The company is litigating against the UK for the money it would have generated if the mine had been permitted to commence operations. We have little idea how much this might be. What legal team is representing it challenging the UK administration? An elected representative, and previous senior legal advisor in the previous government, that great patriot Geoffrey Cox. The administration makes a decision, the high court upholds it, then a foreign company disputes it through an undemocratic offshore tribunal, and a elected official represents its behalf.

An Oligarch's Lawsuit

Simultaneously that the court on the coal mine dispute was appointed, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. Details are scarce of the case at present, but it is highly possible that he may employ the tribunal to contest the restrictions the UK enacted against him subsequent to the Russian aggression. He has already initiated proceedings against a small nation on these grounds, seeking sixteen billion dollars: an amount representing half state's yearly budget. Among the counsel acting for him in that case? the wife of a former prime minister, wife of the ex-UK leader.

International law scholars believe that the EU’s hesitation in using frozen state funds as collateral for its financial support package is due to concerns within Belgium that it could be sued in the secret arbitration panels, under a trade agreement. This unprecedented, unaccountable authority over democratic administrations could be blocking the finance Ukraine critically depends on.

Empty Promises and Growing Costs

We were assured that such things could not occur. Years ago, a senior politician, championing the biggest and most dangerous of all such treaties, told us: “The UK has signed investment treaty upon trade deal and there has not been a issue in the past.” An expert on this matter described campaigners of “exaggeration … the fact is, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that only poorer nations should be concerned by these lawsuits. Warnings that “once firms begin to understand the authority bestowed upon them, they will redirect their efforts from the poorer states to the wealthy nations” were dismissed with scepticism.

That prediction is now a reality. In the current period, oil and gas and mining firms have initiated a record number of claims against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – official measures to prevent climate breakdown. Firms have so far won one hundred and fourteen billion dollars through ISDS, of which oil majors have been awarded eighty-four billion dollars. That is equivalent to the combined GDP