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How do you understand our political system functions? Perhaps similar to this. The public votes for MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. That's it. Well, that’s how it used to work. Not anymore.

The Advent of Secret Arbitration Panels

Today, foreign corporations, or the billionaires that control them, have the power to sue governments for the policies they pass, at private courts made up of commercial attorneys. The cases are held in secret. Unlike our courts, these panels grant no opportunity to appeal or judicial review. Ordinary citizens are barred from bringing a case to them, and neither can our government, or even enterprises based in this country. Access is granted only to businesses operating from foreign soil.

Should an arbitration panel rules that a law or policy may compromise the corporation’s expected profits, it has the power to grant financial penalties of hundreds of millions of pounds, running into billions.

This compensation are based not on tangible damages but money the tribunal officials decide the company would perhaps have made. The government might be compelled to abandon its policy. It is deterred from passing future laws of a similar nature, worried about incurring a lawsuit.

A Mechanism Running Rampant

Record numbers of disputes are being initiated, as corporations observe each other, and private equity bankroll lawsuits for a share of a share of the awards. The outcome? Sovereignty and democracy are becoming unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it can override domestic law and the rulings made by elected bodies is that this provision has been written – without democratic mandate, and often in an atmosphere of extreme secrecy – into trade treaties.

A Concrete Example: The Whitehaven Coal Mine

A year ago, a conservation group achieved a major legal triumph at the high court. The judge found that proposals to open the first deep coalmine in the UK for 30 years, in northwest England, were found to be unlawfully approved by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have had no consequence on our carbon budgets. The new government then withdrew the permission the Tories had issued. Now, this victory could be compromised by an foreign court accountable to exclusively the entities bringing the case.

During August, a firm whose beneficial owners reside in the offshore financial centre initiated proceedings challenging the UK government. Last week a tribunal in Washington DC was established to hear it.

The company is litigating against the UK for the money it could have earned if the mine had been permitted to proceed. The public has little idea how much this could amount to. Who is representing it against the British government? A sitting MP, and former attorney-general in the Conservative government, the self-proclaimed patriot the MP. The state passes a law, the high court supports it, then a foreign company challenges it through an undemocratic offshore tribunal, and a elected official works for its behalf.

An Oligarch's Challenge

On the same day that the court on the coal mine dispute was established, we learned from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows little of the case to date, but it appears probable that he may employ the arbitration process to contest the sanctions the UK levied against him after the Russian aggression. He has already filed a claim against a small nation for this reason, seeking $16bn: half that state's yearly income. Part of the legal team acting for him in that case? Cherie Blair, spouse of the previous PM.

Trade specialists argue that the EU’s procrastination in leveraging immobilised Russian assets 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 democratic administrations could be blocking the money Ukraine desperately needs.

Empty Promises and Growing Risks

We were assured that such things could not occur. Years ago, a senior politician, championing the largest and riskiest of all these agreements, stated: “The UK has signed investment treaty after trade deal and we have never seen a problem in the past.” An expert on this topic accused activists of “exaggeration … the fact is, ISDS has little impact on the UK much”. The overall message appeared to be that solely developing countries should be concerned by ISDS claims. Warnings that “once firms begin to understand the influence they’ve been granted, they will turn their attention from the poorer states to the developed economies” were met with widespread derision.

That threat has come to pass. Recently, fossil fuel and mining firms have filed a unprecedented number of claims against nations across the economic spectrum, opposing – like the example of the Whitehaven project – official measures to stop environmental catastrophe. Companies have to date won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That represents the combined GDP