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What is your reckon our political system works? Maybe something like this. Citizens choose MPs. They debate and pass bills. Should a majority is obtained, the bills are enacted as law. Legislation is maintained by the courts. Simple as that. Well, that’s how it once functioned. Not anymore.

The Rise of Shadow Arbitration Panels

Nowadays, international firms, along with the oligarchs behind them, have the power to sue nation states for the laws they pass, at secret arbitration panels made up of commercial attorneys. Such disputes are held in secret. In contrast to domestic courts, these bodies allow no opportunity to appeal or judicial review. Ordinary citizens are unable to file a case to them, nor can our government, or even enterprises based in this country. The door is open solely for entities based overseas.

When a secret court rules that a law or policy could harm the corporation’s anticipated profits, it may order damages of vast sums, potentially billions.

These awards represent not real financial harm but funds the panel members conclude the company could potentially have made. The government could be forced to abandon its policy. It will be hesitant to introducing similar legislation along the same lines, for fear of being sued.

A System Growing Exponentially

Record numbers of legal actions are being initiated, as firms take cues from each other, and hedge funds finance suits in return for a portion of the settlements. The result? National sovereignty and popular rule are becoming unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it can trump national legislation and the decisions taken by elected bodies is that this clause has been inserted – without public consent, and often in conditions of extreme secrecy – within trade treaties.

A Concrete Instance: The Cumbrian Coalmine

A year ago, environmental campaigners secured a significant win at the high court. The presiding officer ruled that schemes to excavate the first new deep coal mine in the UK for a generation, in northwest England, had been illegally sanctioned by the previous government, which had accepted the questionable argument that the mine could have zero effect on our carbon budgets. The incoming administration then withdrew the licence the former government had issued. Now, this victory could be compromised by an secret arbitration panel reporting to exclusively the corporations bringing the case.

During August, a company whose final controllers reside in the offshore financial centre initiated proceedings versus the UK government. Last week a dispute settlement body in Washington DC was established to consider the case.

This firm is litigating against the UK for the revenue it might have made if the mine had been allowed to go ahead. We have no idea how much this could amount to. Who is acting on its behalf in opposition to the UK administration? A member of parliament, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The government makes a decision, the domestic court upholds it, then a foreign company disputes it through an undemocratic offshore tribunal, and a member of our parliament acts on its behalf.

A Sanctions Lawsuit

Concurrently that the tribunal on the coal mine dispute was convened, information emerged from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. We know nothing of the case to date, but it is highly possible that he will utilise the arbitration process to challenge the penalties the UK levied against him after the war in Ukraine. He has previously started suing a small nation on these grounds, demanding a colossal sum: half that government’s yearly income. Part of the lawyers on his side? a prominent lawyer, married to the previous PM.

Trade specialists contend that the EU’s hesitation in using frozen state funds as collateral for its aid for Ukraine is due to concerns within Belgium that it could be sued in the secret arbitration panels, under a investment pact. This remarkable, secretive influence over sovereign states might be preventing the money Ukraine critically depends on.

False Assurances and Mounting Risks

The public was told that these events wouldn’t happen. In 2014, a former prime minister, advocating for the most significant and hazardous of all these agreements, declared: “We’ve signed trade deal after trade deal and there has never been a issue in the past.” An adviser on this issue labelled campaigners of “exaggeration … in reality, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that only poorer nations should be concerned by these lawsuits. Warnings that “as corporations begin to understand the power bestowed upon them, they will shift their focus from the vulnerable countries to the strong ones” were dismissed with widespread derision.

That prediction is now a reality. This year, oil and gas and mining firms have lodged a unprecedented number of cases against nations across the economic spectrum, contesting – like the example of the Cumbrian coalmine – government attempts to prevent global warming. Companies have so far won one hundred and fourteen billion dollars through ISDS, of which energy giants have secured $84bn. That represents the combined GDP