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Can you perceive our political system works? It could be along the lines of this. We elect MPs. They legislate on bills. When a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. End of story. However, that used to be how it operated in the past. No longer.

The Emergence of Offshore Tribunals

Today, foreign corporations, or the wealthy individuals behind them, have the power to sue elected administrations for the policies they pass, at private courts staffed by commercial attorneys. The cases take place away from public scrutiny. Differing from national judiciaries, these bodies allow no opportunity to appeal or oversight by judges. You or I cannot take a case to them, just as our government, or even businesses operating from this country. Access is granted solely for entities based overseas.

Should an arbitration panel rules that a law or policy could harm the corporation’s projected profits, it can award financial penalties of hundreds of millions, even billions.

These sums constitute not tangible damages but funds the panel members determine the company could potentially have made. The state could be forced to rescind the measure. It will be hesitant to introducing similar legislation of a similar nature, for fear of being sued.

A System Running Rampant

Unprecedented levels of legal actions are being initiated, as firms take cues from each other, and private equity fund legal actions in return for a cut of the takings. The result? Sovereignty and popular rule are now prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to override domestic law and the decisions taken by elected bodies is that this stipulation has been incorporated – absent public approval, and frequently under conditions of extreme secrecy – into bilateral investment treaties.

A Specific Instance: The UK Coal Mine

Last year, a conservation group achieved a major legal triumph at the senior court. The presiding officer determined that plans to dig the first deep coalmine in the UK for 30 years, in northwest England, were found to be wrongly permitted by the previous government, which had accepted the questionable argument that the mine would have had no consequence on national carbon targets. The Labour government later cancelled the permission the previous administration had approved. Today, this victory is under threat by an secret arbitration panel answering to exclusively the corporations petitioning it.

During August, a company whose ultimate owners are based in the tax haven lodged a claim versus the UK government. Last week a arbitration panel in Washington DC was set up to consider the case.

The company is seeking compensation from the UK for the revenue it might have made if the mine had received permission to go ahead. The public has no clear indication how much this might be. What legal team is acting on its behalf challenging the British government? A member of parliament, and former attorney-general in the previous government, the self-proclaimed patriot the MP. The government passes a law, the domestic court supports it, then a overseas corporation disputes it through an unaccountable private court, and a sitting MP represents its behalf.

An Oligarch's Case

Concurrently that the tribunal on the coal mine dispute was appointed, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. We know little of the case to date, but it is highly possible that he’ll use the arbitration process to challenge the restrictions the UK imposed on him after the Russian aggression. He has already filed a claim against another European state with similar intent, claiming sixteen billion dollars: an amount representing half government’s annual revenue. Part of the counsel representing him there? a prominent lawyer, spouse of the previous PM.

Trade specialists contend that the EU’s procrastination in utilising seized oligarchs' funds as guarantee for its financial support package stems from apprehension in Brussels that it could be sued in the secret arbitration panels, under a trade agreement. This remarkable, undemocratic power over democratic administrations may be obstructing the money Ukraine desperately needs.

False Assurances and Mounting Threats

Politicians promised that these scenarios could not occur. Years ago, a former prime minister, advocating for the most significant and hazardous of all such treaties, told us: “The UK has signed trade agreement after trade deal and we have never seen a issue in the past.” An expert on this topic accused campaigners of “alarmism … the fact is, ISDS does not affect the UK much”. The general impression was crafted to be that exclusively weaker states should be concerned by ISDS claims. Cautionary notes that “once firms begin to understand the power they now possess, they will turn their attention from the poorer states to the developed economies” were dismissed with general mockery.

That warning is now a reality. This year, fossil fuel and resource corporations have initiated a record number of claims against nations both wealthy and developing, opposing – like the example of the Cumbrian coalmine – government attempts to prevent climate breakdown. Corporations have thus far won vast sums through ISDS, of which energy giants have secured $84bn. That equates to the combined GDP