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What is your reckon our political system functions? It could be similar to this. The public votes for MPs. They legislate on bills. If a majority is obtained, the bills are enacted as law. The law are enforced by the courts. End of story. However, that used to be how it operated in the past. Not anymore.

The Advent of Shadow Arbitration Panels

Nowadays, international firms, or the oligarchs behind them, can sue governments for the policies they pass, at offshore tribunals composed of corporate lawyers. These proceedings are held in secret. Differing from national judiciaries, these bodies grant no avenue for appeal or oversight by judges. Ordinary citizens cannot take a case to them, just as our government, or even companies headquartered in this country. They are open only to corporations based overseas.

When a secret court determines that a law or policy could harm the corporation’s expected profits, it may order damages of hundreds of millions, potentially billions.

These sums constitute not tangible damages but funds the panel members determine the company would perhaps have made. The government might be compelled to drop the legislation. It is hesitant to enacting future policies of a similar nature, due to the risk of being sued.

A Mechanism Running Rampant

Historically high figures of legal actions are being brought, as firms observe each other, and private equity bankroll lawsuits for a share of a cut of the takings. The result? Sovereignty and democracy are now too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it can trump a country's own laws and the choices enacted by parliaments is that this provision has been incorporated – without public consent, and typically amid an atmosphere of profound opacity – within trade treaties.

A Specific Example: The Whitehaven Coal Mine

Last year, environmental campaigners achieved a major legal triumph at the senior court. The judge determined that plans to open the first deep coalmine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the Conservative government, which had endorsed the extraordinary assertion that the mine could have no impact on our carbon budgets. The Labour government later cancelled the permission the Tories had approved. Now, this legal outcome could be compromised by an secret arbitration panel answering to no one but the entities bringing the case.

During August, a firm whose ultimate owners are located in the Cayman Islands lodged a claim challenging the UK government. Last week a dispute settlement body in the US capital was set up to hear it.

The claimant is litigating against the UK for the money it would have generated if the mine had received permission to proceed. We have no clear indication how much this could amount to. What legal team is representing it against the UK administration? A member of parliament, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The government passes a law, the high court supports it, then a foreign company challenges it through an secretive offshore tribunal, and a sitting MP represents its behalf.

An Oligarch's Challenge

On the same day that the panel on the coalmine case was convened, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case at present, but it is highly possible that he’ll use the tribunal to challenge the penalties the UK imposed on him following the Russian aggression. He has previously initiated proceedings against Luxembourg on these grounds, demanding a colossal sum: an amount representing half state's annual revenue. Included in the legal team representing him there? Cherie Blair, spouse of the former British prime minister.

Legal experts believe that the EU’s procrastination in leveraging immobilised state funds as security for its loan to Ukraine is due to Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a investment pact. This remarkable, unaccountable authority over democratic administrations may be obstructing the money Ukraine desperately needs.

Empty Promises and Mounting Costs

Politicians promised that these events wouldn’t happen. Years ago, a former prime minister, promoting the largest and riskiest of all these agreements, declared: “Britain has agreed to trade agreement after trade deal and there has never been a problem in the past.” An adviser on this topic described critics of “scaremongering … in reality, ISDS barely touches the UK much”. The general impression seemed to be that exclusively weaker states should be concerned by these lawsuits. Cautionary notes that “once firms grasp the power they now possess, they will turn their attention from the weak nations to the developed economies” were dismissed with scepticism.

That warning is now a reality. This year, oil and gas and mining firms have initiated a historic level of cases against nations across the economic spectrum, contesting – like the example of the Cumbrian coalmine – government attempts to halt climate breakdown. Companies have thus far won one hundred and fourteen billion dollars by using ISDS, of which energy giants have been awarded eighty-four billion dollars. That equates to the combined GDP