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Can you understand our political system operates? Perhaps along the lines of this. The public votes for MPs. They vote on bills. If a majority is achieved, the bills become law. The law are enforced by the courts. That's it. However, that used to be how it once functioned. Not anymore.

The Rise of Secret Arbitration Panels

Nowadays, international firms, or the oligarchs behind them, can sue nation states for the regulations they pass, at private courts staffed by corporate lawyers. These proceedings take place away from public scrutiny. Unlike our courts, these bodies grant no avenue for appeal or judicial review. The general public are unable to file a case to them, just as our government, including companies headquartered in this country. Access is granted only to entities operating from foreign soil.

If a tribunal rules that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions, running into billions.

These awards represent not tangible damages but funds the panel members determine the company would perhaps have made. The administration may have to abandon its policy. It is deterred from enacting future policies in that area, worried about facing litigation.

A Process Spiralling Out of Control

Unprecedented levels of disputes are being filed, as companies observe each other, and private equity finance suits for a share of a portion of the settlements. The result? National sovereignty and democracy are turning into unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede domestic law and the decisions enacted by elected bodies is that this clause has been written – without democratic mandate, and typically amid a climate of total confidentiality – within trade treaties.

A Specific Example: The Whitehaven Coal Mine

Twelve months ago, activists achieved a major legal triumph at the high court. The judge found that proposals to excavate the first new deep coal mine in the UK for 30 years, in northwest England, were wrongly permitted by the outgoing administration, which had accepted the questionable argument that the mine would have no impact on national carbon targets. The incoming administration then withdrew the consent the previous administration had issued. Currently, this legal outcome could be compromised by an offshore tribunal answering to exclusively the companies filing the suit.

In August, a corporate entity whose final controllers reside in the offshore financial centre initiated proceedings challenging the UK government. Recently a arbitration panel in the United States was established to consider the case.

The company is seeking compensation from the UK for the money it could have earned if the mine had been allowed to commence operations. The public has no idea how much this might be. Which individual is serving as its counsel against the British government? A member of parliament, and ex-law officer in the Conservative government, that great patriot Geoffrey Cox. The administration enacts a policy, the high court validates it, then a international entity disputes it through an undemocratic arbitration panel, and a elected official represents its behalf.

A Sanctions Lawsuit

On the same day 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, a sanctioned individual. We know little of the case so far, but it appears probable that he may employ the ISDS mechanism to fight the restrictions the UK levied against him subsequent to the Russian aggression. He has previously initiated proceedings against another European state for this reason, claiming $16bn: an amount representing half government’s yearly budget. Part of the counsel acting for him in that case? a prominent lawyer, spouse of the ex-UK leader.

Trade specialists believe that the EU’s delay in utilising seized oligarchs' funds as security for its financial support package arises from concerns within Belgium that it could be sued in the secret arbitration panels, under a investment pact. This unprecedented, undemocratic power over democratic administrations may be obstructing the money Ukraine urgently requires.

False Assurances and Escalating Costs

Politicians promised that these scenarios could not occur. Previously, a former prime minister, championing the biggest and most dangerous of all investment pacts, stated: “Britain has agreed to trade deal after trade deal and we have never seen a case in the past.” An adviser on this issue described campaigners of “scaremongering … the truth is, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that exclusively weaker states needed to fear these lawsuits. Warnings that “as corporations start to realise the power they now possess, they will shift their focus from the vulnerable countries to the developed economies” were met with scepticism.

That prediction has come to pass. In the current period, oil and gas and extraction companies have filed a unprecedented number of claims against nations across the economic spectrum, contesting – similar to the UK mine – government attempts to halt environmental catastrophe. Firms have so far won $114bn by using ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That represents the combined GDP