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What is your perceive our political system operates? Perhaps something like this. The public votes for MPs. They debate and pass bills. Should a majority is obtained, the bills pass into law. The law is upheld by the courts. End of story. Yet, that was how it once functioned. No longer.

The Emergence of Shadow Arbitration Panels

In the modern era, foreign corporations, along with the wealthy individuals who own them, are able to litigate against nation states for the policies they pass, at secret arbitration panels composed of corporate lawyers. The cases are held behind closed doors. Unlike our courts, these tribunals provide no opportunity to appeal or legal review. You or I are barred from bringing a case to them, just as our government, including businesses headquartered in this country. The door is open solely for corporations registered abroad.

When a secret court determines that a legislative action may compromise the corporation’s projected profits, it has the power to grant compensation of vast sums, running into billions.

This compensation constitute not real financial harm but money the arbitrators conclude the company would perhaps have made. The state could be forced to drop the legislation. It becomes hesitant to passing future laws in that area, for fear of being sued.

A Mechanism Spiralling Out of Control

Historically high figures of legal actions are being filed, as firms observe each other, and investment funds fund legal actions in return for a cut of the takings. The result? National sovereignty and popular rule are becoming prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede a country's own laws and the choices taken by parliaments is that this provision has been inserted – absent public approval, and often in an atmosphere of extreme secrecy – inside international trade agreements.

A Specific Case: The UK Coalmine

Last year, environmental campaigners secured a significant win at the high court. The judge found that proposals to open the first deep coalmine in the UK for a generation, in northwest England, had been wrongly permitted by the outgoing administration, which had endorsed the bizarre claim that the mine could have no impact on national carbon targets. The new government then withdrew the permission the previous administration had approved. Today, this victory could be compromised by an offshore tribunal accountable to only the companies filing the suit.

During August, a corporate entity whose beneficial owners are located in the Cayman Islands lodged a claim versus the UK government. The previous week a arbitration panel in the US capital was convened to adjudicate on it.

This firm is seeking compensation from the UK for the revenue it could have earned if the mine had been allowed to go ahead. We have no clear indication how much this sum represents. Who is serving as its counsel challenging the British government? A member of parliament, and former attorney-general in the previous government, that great patriot Sir Geoffrey Cox. The government passes a law, the domestic court upholds it, then a international entity contests it through an unaccountable offshore tribunal, and a member of our parliament represents its behalf.

An Oligarch's Case

Concurrently that the tribunal on the coalmine case was appointed, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. The public knows nothing of the case so far, but it appears probable that he’ll use the arbitration process to contest the penalties the UK levied against him subsequent to the Russian aggression. He has already started suing Luxembourg on these grounds, seeking sixteen billion dollars: half that state's annual revenue. Part of the lawyers acting for him in that case? Cherie Blair, wife of the ex-UK leader.

International law scholars argue that the EU’s delay in leveraging immobilised Russian assets as security for its loan to Ukraine is due to apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a investment pact. This extraordinary, undemocratic power over elected governments could be blocking the funds Ukraine desperately needs.

Misleading Claims and Growing Costs

The public was told that such things wouldn’t happen. Years ago, a government leader, promoting the largest and riskiest of all such treaties, declared: “The UK has signed trade agreement upon trade deal and there has never been a case in the past.” A consultant on this matter accused campaigners of “exaggeration … the fact is, ISDS does not affect the UK much”. The overall message was crafted to be that only poorer nations had to worry about these lawsuits. Warnings that “once firms grasp the influence they now possess, they will redirect their efforts from the vulnerable countries to the wealthy nations” were met with widespread derision.

That threat has now materialised. This year, fossil fuel and mining firms have filed a unprecedented number of cases against nations rich and poor, opposing – similar to the Cumbrian coalmine – government attempts to stop climate breakdown. Firms have so far won vast sums by using ISDS, of which oil majors have been awarded $84bn. That equates to the combined GDP