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What is your perceive our system of government works? Maybe similar to this. Citizens choose MPs. They legislate on bills. When a majority is achieved, the bills pass into law. The law is upheld by the courts. That's it. Yet, that used to be how it operated in the past. No longer.

The Rise of Secret Arbitration Panels

Today, foreign corporations, or the billionaires that control them, are able to litigate against elected administrations for the regulations they pass, at secret arbitration panels made up of business advocates. The cases take place in secret. Unlike our courts, these panels allow no right of appeal or oversight by judges. You or I are barred from bringing a case to them, just as our government, including businesses based in this country. They are open solely for entities based overseas.

Should an arbitration panel finds that a law or policy may compromise the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions of pounds, even billions.

This compensation are based not on tangible damages but compensation the tribunal officials conclude the company would perhaps have made. The government might be compelled to rescind the measure. It is hesitant to passing future laws along the same lines, for fear of facing litigation.

A Mechanism Running Rampant

Record numbers of legal actions are being initiated, as companies take cues from each other, and hedge funds bankroll lawsuits in exchange for a cut of the settlements. The outcome? National sovereignty and democracy are turning into unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede a country's own laws and the rulings enacted by parliaments is that this stipulation has been incorporated – absent public approval, and often in a climate of profound opacity – within bilateral investment treaties.

A Specific Case: The Cumbrian Coalmine

Twelve months ago, environmental campaigners achieved a major legal triumph at the High Court. The justice ruled that schemes to open the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were illegally sanctioned by the outgoing administration, which had accepted the extraordinary assertion that the mine would have had no consequence on national carbon targets. The new government subsequently revoked the permission the former government had issued. Today, this legal outcome is under threat by an foreign court accountable to only the entities petitioning it.

During August, a firm whose ultimate owners reside in the offshore financial centre initiated proceedings versus the UK government. Recently a arbitration panel in the US capital was convened to adjudicate on it.

This firm is suing the UK for the money it would have generated if the mine had been allowed to proceed. Citizens have no idea how much this sum represents. Who is serving as its counsel against the British government? An elected representative, and previous senior legal advisor in the previous government, the noted patriot Geoffrey Cox. The government makes a decision, the domestic court supports it, then a international entity contests it through an unaccountable arbitration panel, and a elected official represents its behalf.

The Russian Challenge

Concurrently that the panel on the coalmine case was convened, it was revealed from a government response that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. Details are scarce of the case at present, but it appears probable that he’ll use the tribunal to fight the restrictions the UK enacted against him after the Russian aggression. He has already initiated proceedings against Luxembourg with similar intent, claiming $16bn: half that nation's annual revenue. Part of the counsel on his side? a prominent lawyer, wife of the previous PM.

International law scholars believe that the EU’s hesitation in utilising seized Russian assets as guarantee for its aid for Ukraine arises from concerns within Belgium that it could be sued in the secret arbitration panels, under a trade agreement. This remarkable, undemocratic power over elected governments might be preventing the funds Ukraine desperately needs.

Misleading Claims and Escalating Threats

The public was told that these scenarios could not occur. In 2014, a former prime minister, promoting the biggest and most dangerous of all these agreements, declared: “Britain has agreed to trade agreement upon trade deal and we have never seen a problem in the past.” A consultant on this issue accused activists of “alarmism … in reality, ISDS has little impact on the UK much”. The overall message was crafted to be that only poorer nations needed to fear these lawsuits. Predictions that “as corporations begin to understand the authority bestowed upon them, they will shift their focus from the weak nations to the developed economies” were greeted by scepticism.

That threat is now a reality. This year, fossil fuel and extraction companies have filed a record number of cases against nations both wealthy and developing, opposing – as in the case of the Cumbrian coalmine – government attempts to prevent environmental catastrophe. Corporations have so far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have been awarded $84bn. That is equivalent to the combined GDP