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Can you reckon our political system operates? Perhaps something like this. We elect MPs. They vote on bills. When a majority is obtained, the bills pass into law. Statutes are enforced by the courts. Simple as that. Yet, that’s how it once functioned. No longer.

The Emergence of Secret Arbitration Panels

Today, international firms, and the oligarchs who own them, are able to litigate against nation states for the laws they pass, at private courts composed of commercial attorneys. Such disputes are held behind closed doors. Differing from national judiciaries, these tribunals allow no right of appeal or legal review. You or I are barred from bringing a case to them, nor can our government, or even enterprises operating from this country. The door is open solely for corporations operating from foreign soil.

If a tribunal determines that a legislative action might diminish the corporation’s projected profits, it can award compensation of hundreds of millions, even billions.

These sums are based not on real financial harm but compensation the arbitrators conclude the company would perhaps have made. The administration might be compelled to abandon its policy. It is discouraged from introducing similar legislation of a similar nature, for fear of facing litigation.

A Process Running Rampant

Historically high figures of disputes are being initiated, as firms learn from each other, and private equity bankroll lawsuits for a share of a share of the settlements. The result? National sovereignty and popular rule are now too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it can override domestic law and the decisions enacted by parliaments is that this stipulation has been written – absent public approval, and often in conditions of total confidentiality – into international trade agreements.

A Concrete Example: The Whitehaven Coal Mine

A year ago, a conservation group won a great victory at the senior court. The judge determined that plans to excavate the first new deep coal mine in the UK for three decades, in Cumbria, were unlawfully approved by the previous government, which had agreed to the extraordinary assertion that the mine would have no consequence on our carbon budgets. The new government subsequently revoked the permission the former government had approved. Now, this legal outcome could be compromised by an foreign court accountable to no one but the entities filing the suit.

Last August, a company whose beneficial owners are based in the tax haven initiated proceedings versus the UK government. The previous week a dispute settlement body in the US capital was convened to consider the case.

This firm is seeking compensation from the UK for the revenue it might have made if the mine had been allowed to go ahead. We have no clear indication how much this could amount to. Which individual is acting on its behalf challenging the British government? An elected representative, and former attorney-general in the previous government, the noted patriot Sir Geoffrey Cox. The government passes a law, the national judiciary supports it, then a overseas corporation disputes it through an unaccountable offshore tribunal, and a member of our parliament acts on its behalf.

A Sanctions Challenge

On the same day that the panel on the coalmine case was established, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. We know little of the case so far, but it seems likely that he’ll use the ISDS mechanism to contest the sanctions the UK enacted against him after the Russian aggression. He has initiated proceedings against a small nation on these grounds, demanding sixteen billion dollars: an amount representing half state's yearly budget. Among the lawyers acting for him in that case? Cherie Blair, wife of the former British prime minister.

Trade specialists contend that the EU’s delay in using frozen oligarchs' funds as security for its aid for Ukraine is due to concerns within Belgium that it could be sued in the ISDS tribunals, under a trade agreement. This remarkable, secretive influence over elected governments may be obstructing the funds Ukraine critically depends on.

Misleading Claims and Growing Risks

The public was told that these scenarios wouldn’t happen. Years ago, a senior politician, advocating for the largest and riskiest of all such treaties, declared: “The UK has signed trade deal upon trade deal and we have never seen a issue in the past.” An adviser on this matter labelled activists of “alarmism … in reality, ISDS does not affect the UK much”. The general impression seemed to be that exclusively weaker states needed to fear ISDS claims. Predictions that “when companies begin to understand the power they now possess, they will turn their attention from the weak nations to the wealthy nations” were met with widespread derision.

That prediction has come to pass. Recently, energy and mining firms have lodged a historic level of claims against nations across the economic spectrum, opposing – as in the case of the Cumbrian coalmine – official measures to stop global warming. Corporations have thus far won vast sums via ISDS, of which oil majors have secured $84bn. That represents the combined GDP