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Can you perceive our system of government operates? Maybe similar to this. Citizens choose MPs. They debate and pass bills. If a majority is obtained, the bills pass into law. Statutes are enforced by the courts. End of story. Yet, that’s how it once functioned. No longer.

The Rise of Offshore Arbitration Panels

Today, international firms, and the billionaires behind them, can sue governments for the laws they pass, at private courts composed of commercial attorneys. These proceedings are held away from public scrutiny. In contrast to domestic courts, these tribunals allow no opportunity to appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, just as our government, or even enterprises headquartered in this country. Access is granted only to corporations registered abroad.

When a secret court determines that a legislative action may compromise the corporation’s expected profits, it may order compensation of hundreds of millions of pounds, running into billions.

These awards are based not on real financial harm but compensation the panel members conclude the company might otherwise have made. The government could be forced to rescind the measure. It becomes discouraged from introducing similar legislation along the same lines, for fear of facing litigation.

A Process Running Rampant

Unprecedented levels of cases are being filed, as corporations learn from each other, and investment funds bankroll lawsuits in return for a portion of the takings. The result? Democratic sovereignty and popular rule are now too costly.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede a country's own laws and the decisions taken by parliaments is that this stipulation has been incorporated – without democratic mandate, and typically amid conditions of extreme secrecy – inside trade treaties.

A Specific Example: The Whitehaven Coal Mine

Last year, a conservation group secured a significant win at the high court. The judge found that proposals to open the first major coal mine in the UK for a generation, in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had endorsed the extraordinary assertion that the mine would have no impact on national carbon targets. The new government then withdrew the permission the former government had granted. Now, this legal outcome faces being overturned by an secret arbitration panel accountable to only the corporations bringing the case.

In August, a company whose ultimate owners reside in the Cayman Islands initiated proceedings challenging the UK government. The previous week a arbitration panel in Washington DC was established to consider the case.

The claimant is seeking compensation from the UK for the revenue it could have earned if the mine had been permitted to commence operations. We have no clear indication how much this could amount to. Who is representing it in opposition to the state? A member of parliament, and former attorney-general in the Conservative government, the self-proclaimed patriot the MP. The government passes a law, the national judiciary upholds it, then a foreign company challenges it through an undemocratic offshore tribunal, and a sitting MP works for its behalf.

An Oligarch's Lawsuit

Simultaneously that the tribunal on the coalmine case was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are nothing of the case to date, but it appears probable that he will utilise the ISDS mechanism to challenge the sanctions the UK enacted against him subsequent to the Russian aggression. He has previously started suing a small nation for this reason, seeking a colossal sum: equivalent to half of nation's yearly budget. Included in the lawyers representing him there? a prominent lawyer, married to the former British prime minister.

Legal experts argue that the EU’s procrastination in using frozen Russian assets as security for its financial support package arises from apprehension in Brussels that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, unaccountable authority over democratic administrations may be obstructing the funds Ukraine critically depends on.

Empty Promises and Growing Costs

We were assured that these scenarios wouldn’t happen. Previously, a senior politician, advocating for the most significant and hazardous of all these agreements, declared: “The UK has signed trade agreement after trade deal and there has not been a issue in the past.” An expert on this issue accused activists of “alarmism … in reality, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that solely developing countries needed to fear such legal actions. Warnings that “as corporations start to realise the authority they now possess, they will shift their focus from the weak nations to the strong ones” were met with widespread derision.

That prediction has now materialised. In the current period, energy and resource corporations have initiated a historic level of cases against nations rich and poor, challenging – similar to the UK mine – state efforts to stop global warming. Corporations have thus far won vast sums by using ISDS, of which oil majors have secured $84bn. That represents the combined GDP