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Can you perceive our system of government works? Maybe along the lines of this. Citizens choose MPs. They vote on bills. If a majority is achieved, the bills are enacted as law. Statutes are enforced by the courts. That's it. Yet, that used to be how it operated in the past. Those days are over.

The Advent of Shadow Arbitration Panels

In the modern era, foreign corporations, and the billionaires behind them, have the power to sue elected administrations for the policies they pass, at private courts made up of corporate lawyers. These proceedings are held in secret. Differing from national judiciaries, these bodies grant no avenue for appeal or judicial review. The general public are barred from bringing a case to them, and neither can our government, or even enterprises based in this country. Access is granted exclusively to entities operating from foreign soil.

When a secret court finds that a legislative action might diminish the corporation’s anticipated profits, it can award financial penalties of vast sums, even billions.

These awards are based not on tangible damages but funds the panel members decide the company could potentially have made. The state may have to rescind the measure. It is hesitant to introducing similar legislation along the same lines, worried about incurring a lawsuit.

A Process Running Rampant

Record numbers of legal actions are being filed, as corporations take cues from each other, and private equity fund legal actions in return for a cut of the settlements. The result? Sovereignty and popular rule are becoming prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The reason it can supersede domestic law and the choices taken by legislatures is that this stipulation has been incorporated – absent public approval, and frequently under a climate of total confidentiality – within trade treaties.

A Real-World Example: The Cumbrian Coalmine

Last year, environmental campaigners secured a significant win at the High Court. The presiding officer ruled that plans to excavate the first deep coalmine in the UK for three decades, in northwest England, were found to be unlawfully approved by the previous government, which had agreed to the bizarre claim that the mine could have no impact on our carbon budgets. The incoming administration later cancelled the licence the previous administration had granted. Today, this success faces being overturned by an offshore tribunal reporting to no one but the companies filing the suit.

In August, a firm whose ultimate owners are located in the Cayman Islands initiated proceedings versus the UK government. The previous week a arbitration panel in the US capital was convened to consider the case.

The claimant is litigating against the UK for the revenue it could have earned if the mine had been allowed to commence operations. The public has no clear indication how much this might be. Who is serving as its counsel in opposition to the state? An elected representative, and former attorney-general in the Conservative government, the noted patriot Geoffrey Cox. The government passes a law, the national judiciary upholds it, then a overseas corporation challenges it through an secretive private court, and a elected official represents its behalf.

An Oligarch's Case

On the same day that the panel on the coalmine case was convened, we learned from a government response that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. We know nothing of the case to date, but it is highly possible that he will utilise the arbitration process to fight the restrictions the UK levied against him subsequent to the Russian aggression. He has previously filed a claim against another European state with similar intent, demanding a colossal sum: an amount representing half government’s yearly income. Included in the counsel on his side? the wife of a former prime minister, married to the previous PM.

Trade specialists believe that the EU’s procrastination in utilising seized Russian assets as security for its loan to Ukraine arises from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a investment pact. This unprecedented, undemocratic power over elected governments may be obstructing the funds Ukraine desperately needs.

Empty Promises and Escalating Threats

The public was told that such things were not possible. Years ago, a government leader, promoting the biggest and most dangerous of all investment pacts, told us: “We’ve signed investment treaty after trade deal and there has not been a issue in the past.” A consultant on this matter accused campaigners of “scaremongering … the fact is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that solely developing countries had to worry about such legal actions. Cautionary notes that “when companies grasp the influence they’ve been granted, they will shift their focus from the poorer states to the strong ones” were dismissed with widespread derision.

That warning is now a reality. This year, energy and mining firms have lodged a unprecedented number of claims against nations both wealthy and developing, opposing – as in the case of the UK mine – government attempts to stop climate breakdown. Companies have thus far won one hundred and fourteen billion dollars via ISDS, of which oil majors have secured $84bn. That is equivalent to the combined GDP