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What is your perceive our political system operates? Maybe similar to this. The public votes for MPs. They debate and pass bills. When a majority is secured, the bills become law. Statutes is upheld by the courts. End of story. However, that used to be how it once functioned. No longer.

The Emergence of Shadow Arbitration Panels

Nowadays, international firms, and the billionaires that control them, have the power to sue nation states for the regulations they pass, at secret arbitration panels composed of corporate lawyers. Such disputes are conducted in secret. Unlike our courts, these panels allow no avenue for appeal or judicial review. You or I cannot take a case to them, and neither can our government, including enterprises headquartered in this country. They are open exclusively to corporations registered abroad.

If a tribunal finds that a law or policy might diminish the corporation’s projected profits, it can award financial penalties of vast sums, running into billions.

These sums are based not on tangible damages but funds the arbitrators conclude the company could potentially have made. The administration could be forced to abandon its policy. It is hesitant to introducing similar legislation of a similar nature, for fear of incurring a lawsuit.

A Process Spiralling Out of Control

Record numbers of legal actions are being brought, as companies take cues from each other, and investment funds finance suits for a share of a portion of the settlements. The result? Sovereignty and popular rule are becoming unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump national legislation and the rulings taken by parliaments is that this stipulation has been inserted – without public consent, and often in conditions of extreme secrecy – within trade treaties.

A Specific Case: The Whitehaven Coalmine

A year ago, activists achieved a major legal triumph at the high court. The presiding officer ruled that plans to open the first deep coalmine in the UK for three decades, in Cumbria, were found to be wrongly permitted by the outgoing administration, which had endorsed the extraordinary assertion that the mine could have no consequence on climate commitments. The Labour government later cancelled the permission the Tories had issued. Currently, this legal outcome could be compromised by an foreign court accountable to only the entities petitioning it.

In August, a corporate entity whose final controllers reside in the tax haven filed a lawsuit challenging the UK government. Recently a dispute settlement body in the United States was convened to hear it.

The claimant is seeking compensation from the UK for the revenue it could have earned if the mine had been allowed to proceed. Citizens have no clear indication how much this sum represents. Who is serving as its counsel against the UK administration? A sitting MP, and ex-law officer in the outgoing administration, the noted patriot the MP. The government enacts a policy, the high court supports it, then a overseas corporation challenges it through an secretive private court, and a member of our parliament works for its behalf.

The Russian Lawsuit

Simultaneously that the panel on the coal mine dispute was appointed, information emerged from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. We know little of the case so far, but it appears probable that he may employ the arbitration process to challenge the restrictions the UK imposed on him subsequent to the war in Ukraine. He has already started suing Luxembourg on these grounds, seeking a colossal sum: half that nation's annual revenue. Included in the lawyers acting for him in that case? the wife of a former prime minister, spouse of the previous PM.

International law scholars contend that the EU’s hesitation in using frozen state funds as security for its loan to Ukraine stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This remarkable, secretive influence over democratic administrations might be preventing the finance Ukraine urgently requires.

False Assurances and Mounting Costs

We were assured that these scenarios could not occur. Previously, a government leader, advocating for the most significant and hazardous of all such treaties, stated: “The UK has signed trade deal after trade deal and there has never been a problem in the past.” An expert on this matter labelled activists of “exaggeration … the truth is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that solely developing countries should be concerned by ISDS claims. Warnings that “once firms grasp the authority they now possess, they will turn their attention from the vulnerable countries to the wealthy nations” were dismissed with general mockery.

That threat has come to pass. In the current period, energy and resource corporations have filed a record number of claims against nations rich and poor, challenging – like the example of the Cumbrian coalmine – government attempts to prevent environmental catastrophe. Corporations have so far won vast sums by using ISDS, of which energy giants have secured $84bn. That is equivalent to the combined GDP