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How do you perceive our political system operates? It could be similar to this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. Statutes is maintained by the courts. End of story. Yet, that’s how it used to work. No longer.

The Rise of Secret Arbitration Panels

Nowadays, international firms, or the oligarchs that control them, are able to litigate against governments for the policies they pass, at secret arbitration panels staffed by business advocates. Such disputes are held in secret. Unlike our courts, these tribunals allow no opportunity to appeal or judicial review. Ordinary citizens are barred from bringing a case to them, just as our government, or even companies operating from this country. They are open exclusively to entities registered abroad.

When a secret court determines that a legislative action may compromise the corporation’s projected profits, it can award damages of hundreds of millions of pounds, running into billions.

These awards constitute not real financial harm but compensation the panel members determine the company could potentially have made. The administration could be forced to drop the legislation. It is hesitant to enacting future policies along the same lines, due to the risk of incurring a lawsuit.

A Process Running Rampant

Historically high figures of legal actions are being brought, as companies observe each other, and hedge funds fund legal actions for a share of a portion of the takings. The consequence? Democratic sovereignty and democracy are becoming unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to override national legislation and the decisions made by parliaments is that this stipulation has been incorporated – absent public approval, and typically amid an atmosphere of profound opacity – into trade treaties.

A Concrete Example: The Cumbrian Coal Mine

A year ago, activists secured a significant win at the High Court. The presiding officer determined that schemes to excavate the first new deep coal mine in the UK for three decades, in northwest England, were found to be wrongly permitted by the previous government, which had agreed to the questionable argument that the mine would have zero effect on our carbon budgets. The Labour government subsequently revoked the consent the previous administration had approved. Today, this victory is under threat by an foreign court reporting to only the companies petitioning it.

During August, a firm whose beneficial owners reside in the Cayman Islands filed a lawsuit challenging the UK government. Recently a arbitration panel in the US capital was convened to consider the case.

This firm is litigating against the UK for the money it could have earned if the mine had received permission to proceed. The public has little idea how much this might be. Which individual is representing it challenging the state? A member of parliament, and former attorney-general in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The administration enacts a policy, the high court validates it, then a foreign company contests it through an undemocratic arbitration panel, and a elected official acts on its behalf.

An Oligarch's Challenge

Concurrently that the tribunal 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. We know nothing of the case to date, but it seems likely that he will utilise the ISDS mechanism to challenge the penalties the UK levied against him after the Russian aggression. He has previously filed a claim against another European state on these grounds, claiming a colossal sum: half that state's annual revenue. Included in the counsel acting for him in that case? Cherie Blair, married to the previous PM.

Trade specialists believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as security for its loan to Ukraine is due to Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This unprecedented, unaccountable authority over elected governments could be blocking the finance Ukraine urgently requires.

False Assurances and Escalating Threats

The public was told that these events wouldn’t happen. Previously, a former prime minister, promoting the biggest and most dangerous of all such treaties, told us: “We’ve signed trade agreement after trade deal and we have never seen a case in the past.” An adviser on this matter described campaigners of “exaggeration … the truth is, ISDS has little impact on the UK much”. The general impression appeared to be that only poorer nations needed to fear these lawsuits. Predictions that “once firms grasp the power they’ve been granted, they will shift their focus from the poorer states to the developed economies” were met with scepticism.

That prediction has now materialised. Recently, oil and gas and resource corporations have filed a historic level of claims against nations rich and poor, opposing – similar to the Cumbrian coalmine – state efforts to halt environmental catastrophe. Firms have so far won $114bn via ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That equates to the combined GDP