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How do you reckon our political system operates? Perhaps something like this. We elect MPs. They vote on bills. Should a majority is secured, the bills become law. Statutes are enforced by the courts. That's it. However, that used to be how it once functioned. No longer.

The Emergence of Shadow Arbitration Panels

In the modern era, foreign corporations, and the wealthy individuals that control them, have the power to sue elected administrations for the policies they pass, at private courts made up of commercial attorneys. Such disputes are held behind closed doors. Unlike our courts, these bodies grant no right of appeal or legal review. Ordinary citizens are barred from bringing a case to them, and neither can our government, including businesses headquartered in this country. Access is granted exclusively to businesses registered abroad.

When a secret court determines that a law or policy might diminish the corporation’s anticipated profits, it may order damages of hundreds of millions of pounds, running into billions.

These sums constitute not real financial harm but money the tribunal officials determine the company would perhaps have made. The administration could be forced to abandon its policy. It becomes deterred from passing future laws in that area, for fear of being sued.

A Mechanism Running Rampant

Historically high figures of cases are being initiated, as corporations learn from each other, and investment funds bankroll lawsuits in return for a share of the awards. The consequence? Sovereignty and democracy are now unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump national legislation and the rulings enacted by elected bodies is that this stipulation has been incorporated – without democratic mandate, and frequently under a climate of profound opacity – within international trade agreements.

A Real-World Case: The Whitehaven Coalmine

Last year, a conservation group won a great victory at the High Court. The presiding officer determined that proposals to dig the first new deep coal mine in the UK for three decades, in Cumbria, had been unlawfully approved by the previous government, which had agreed to the questionable argument that the mine would have had no impact on our carbon budgets. The Labour government subsequently revoked the licence the previous administration had granted. Now, this success could be compromised by an offshore tribunal reporting to only the corporations filing the suit.

In August, a company whose beneficial owners reside in the Cayman Islands filed a lawsuit versus the UK government. The previous week a tribunal in the United States was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the profits it might have made if the mine had received permission to go ahead. Citizens have little idea how much this sum represents. What legal team is acting on its behalf against the state? An elected representative, and former attorney-general in the Conservative government, the noted patriot Sir Geoffrey Cox. The administration passes a law, the national judiciary validates it, then a foreign company challenges it through an secretive private court, and a elected official works for its behalf.

A Sanctions Lawsuit

On the same day that the tribunal on the coal mine dispute was appointed, information emerged from a government response that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. We know scarce of the case to date, but it is highly possible that he will utilise the arbitration process to fight the sanctions the UK imposed on him subsequent to the Russian aggression. He has started suing another European state for this reason, claiming a colossal sum: an amount representing half nation's yearly budget. Among the legal team 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 delay in using frozen oligarchs' funds as collateral for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a investment pact. This unprecedented, secretive influence over democratic administrations might be preventing the money Ukraine critically depends on.

False Assurances and Mounting Threats

The public was told that these events were not possible. In 2014, a senior politician, championing the largest and riskiest of all investment pacts, declared: “We’ve signed trade deal after trade deal and there has never been a issue in the past.” An adviser on this matter described activists of “alarmism … in reality, ISDS has little impact on the UK much”. The general impression was crafted to be that only poorer nations had to worry about such legal actions. Cautionary notes that “when companies grasp the influence bestowed upon them, they will shift their focus from the vulnerable countries to the strong ones” were met with widespread derision.

That threat has come to pass. Recently, oil and gas and extraction companies have lodged a unprecedented number of cases against nations across the economic spectrum, contesting – as in the case of the Whitehaven project – state efforts to stop global warming. Companies have to date won vast sums through ISDS, of which oil majors have obtained eighty-four billion dollars. That equates to the combined GDP