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Can you perceive our system of government operates? Maybe along the lines of this. The public votes for MPs. They debate and pass bills. If a majority is achieved, the bills become law. The law are enforced by the courts. That's it. However, that was how it once functioned. No longer.

The Rise of Shadow Arbitration Panels

In the modern era, overseas companies, along with the billionaires who own them, have the power to sue nation states for the policies they pass, at secret arbitration panels staffed by corporate lawyers. The cases are conducted in secret. Differing from national judiciaries, these bodies grant no avenue for appeal or judicial review. You or I are unable to file a case to them, and neither can our government, or even businesses based in this country. Access is granted solely for corporations operating from foreign soil.

When a secret court finds that a legislative action may compromise the corporation’s anticipated profits, it can award compensation of vast sums, even billions.

This compensation are based not on tangible damages but compensation the tribunal officials conclude the company would perhaps have made. The government could be forced to abandon its policy. It is hesitant to introducing similar legislation of a similar nature, due to the risk of being sued.

A Process Running Rampant

Unprecedented levels of cases are being brought, as corporations observe each other, and hedge funds bankroll lawsuits in exchange for a cut of the settlements. The result? Democratic sovereignty and popular rule are turning into unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede domestic law and the choices made by elected bodies is that this stipulation has been incorporated – without democratic mandate, and typically amid conditions of profound opacity – within bilateral investment treaties.

A Specific Example: The UK Coal Mine

A year ago, a conservation group won a great victory at the senior court. The presiding officer determined that proposals to open the first deep coalmine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had accepted the bizarre claim that the mine would have had no consequence on our carbon budgets. The Labour government later cancelled the permission the former government had granted. Currently, this victory is under threat by an secret arbitration panel accountable to only the entities bringing the case.

In August, a firm whose beneficial owners are located in the offshore financial centre lodged a claim against the UK government. The previous week a dispute settlement body in the United States was convened to adjudicate on it.

This firm is suing the UK for the revenue it could have earned if the mine had been permitted to proceed. Citizens have little idea how much this might be. What legal team is serving as its counsel in opposition to the state? An elected representative, and former attorney-general in the previous government, the noted patriot the MP. The government makes a decision, the domestic court upholds it, then a overseas corporation disputes it through an unaccountable private court, and a elected official acts on its behalf.

The Russian Case

Simultaneously that the panel on the coalmine case was convened, it was revealed from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. The public knows nothing of the case to date, but it seems likely that he’ll use the ISDS mechanism to challenge the penalties the UK enacted against him after the Russian aggression. He has previously filed a claim against a small nation with similar intent, seeking sixteen billion dollars: half that nation's yearly income. Part of the counsel on his side? Cherie Blair, spouse of the former British prime minister.

Trade specialists believe that the EU’s delay in utilising seized Russian assets as collateral for its aid for Ukraine stems from concerns within Belgium that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, undemocratic power over elected governments could be blocking the money Ukraine urgently requires.

Empty Promises and Escalating Costs

The public was told that these events were not possible. Years ago, a former prime minister, advocating for the most significant and hazardous of all these agreements, declared: “We’ve signed trade agreement after trade deal and we have never seen a issue in the past.” An expert on this matter accused critics of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message seemed to be that solely developing countries should be concerned by such legal actions. Warnings that “when companies begin to understand the authority they now possess, they will shift their focus from the weak nations to the strong ones” were met with widespread derision.

That warning has come to pass. In the current period, oil and gas and mining firms have initiated a unprecedented number of cases against nations across the economic spectrum, opposing – similar to the Whitehaven project – government attempts to prevent climate breakdown. Companies have to date won $114bn through ISDS, of which energy giants have obtained the majority. That is equivalent to the combined GDP