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What is your perceive our system of government operates? It could be similar to this. We elect MPs. They vote on bills. Should a majority is obtained, the bills are enacted as law. The law is upheld by the courts. End of story. However, that’s how it operated in the past. Not anymore.

The Rise of Secret Arbitration Panels

In the modern era, overseas companies, and the billionaires behind them, can sue nation states for the policies they pass, at offshore tribunals composed of commercial attorneys. These proceedings take place away from public scrutiny. Unlike our courts, these panels grant no opportunity to appeal or judicial review. Ordinary citizens are unable to file a case to them, and neither can our government, including businesses based in this country. They are open exclusively to entities registered abroad.

When a secret court determines that a law or policy could harm the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions, running into billions.

This compensation constitute not real financial harm but compensation the panel members conclude the company might otherwise have made. The state may have to drop the legislation. It will be deterred from introducing similar legislation along the same lines, for fear of being sued.

A Mechanism Growing Exponentially

Record numbers of disputes are being initiated, as firms take cues from each other, and private equity bankroll lawsuits in exchange for a cut of the awards. The result? National sovereignty and popular rule are now too costly.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede national legislation and the decisions enacted by legislatures is that this provision has been incorporated – without democratic mandate, and typically amid a climate of extreme secrecy – into international trade agreements.

A Concrete Instance: The Cumbrian Coal Mine

A year ago, a conservation group won a great victory at the high court. The judge found that schemes to excavate the first deep coalmine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the previous government, which had accepted the questionable argument that the mine would have no impact on national carbon targets. The new government later cancelled the consent the previous administration had approved. Now, this legal outcome faces being overturned by an secret arbitration panel accountable to exclusively the companies filing the suit.

During August, a corporate entity whose ultimate owners reside in the offshore financial centre filed a lawsuit versus the UK government. Recently a tribunal in the United States was convened to adjudicate on it.

This firm is litigating against the UK for the money it could have earned if the mine had received permission to proceed. We have little idea how much this sum represents. Which individual is acting on its behalf challenging the British government? A member of parliament, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The government makes a decision, the domestic court validates it, then a overseas corporation contests it through an secretive arbitration panel, and a elected official represents its behalf.

An Oligarch's Lawsuit

On the same day that the tribunal on the mining lawsuit was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. Details are little of the case so far, but it appears probable that he may employ the arbitration process to fight the restrictions the UK enacted against him following the Russian aggression. He has previously initiated proceedings against a small nation on these grounds, seeking $16bn: an amount representing half state's yearly income. Part of the lawyers representing him there? Cherie Blair, wife of the former British prime minister.

Trade specialists believe that the EU’s delay in utilising seized oligarchs' funds as security for its loan to Ukraine arises from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a trade agreement. This extraordinary, unaccountable authority over sovereign states might be preventing the finance Ukraine urgently requires.

Misleading Claims and Escalating Risks

We were assured that such things could not occur. Previously, a former prime minister, advocating for the largest and riskiest of all such treaties, told us: “Britain has agreed to trade deal upon trade deal and there has not been a case in the past.” A consultant on this issue labelled campaigners of “scaremongering … the truth is, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries had to worry about such legal actions. Predictions that “as corporations start to realise the authority bestowed upon them, they will shift their focus from the poorer states to the strong ones” were dismissed with general mockery.

That threat has now materialised. In the current period, energy and resource corporations have initiated a record number of claims against nations both wealthy and developing, challenging – like the example of the Whitehaven project – official measures to halt climate breakdown. Firms have thus far won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have secured the majority. That is equivalent to the combined GDP