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Can you perceive our system of government works? Perhaps similar to this. We elect MPs. They debate and pass bills. If a majority is achieved, the bills pass into law. The law is maintained by the courts. That's it. However, that used to be how it operated in the past. Those days are over.

The Advent of Secret Arbitration Panels

Today, international firms, along with the billionaires that control them, can sue elected administrations for the regulations they pass, at offshore tribunals staffed by business advocates. These proceedings are conducted away from public scrutiny. Unlike our courts, these panels provide no opportunity to appeal or judicial review. You or I are barred from bringing a case to them, nor can our government, including enterprises based in this country. They are open exclusively to businesses operating from foreign soil.

If a tribunal rules that a legislative action may compromise the corporation’s anticipated profits, it can award financial penalties of hundreds of millions, potentially billions.

This compensation constitute not actual losses but money the panel members conclude the company might otherwise have made. The government could be forced to drop the legislation. It will be deterred from introducing similar legislation in that area, due to the risk of incurring a lawsuit.

A Mechanism Running Rampant

Historically high figures of cases are being initiated, as companies learn from each other, and hedge funds bankroll lawsuits in return for a portion of the awards. The outcome? Sovereignty and popular rule are turning into too costly.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to override a country's own laws and the decisions enacted by elected bodies is that this clause has been incorporated – absent public approval, and typically amid conditions of extreme secrecy – into trade treaties.

A Specific Example: The UK Coalmine

Twelve months ago, a conservation group won a great victory at the High Court. The judge ruled that proposals to excavate the first new deep coal mine in the UK for a generation, in Cumbria, had been unlawfully approved by the previous government, which had agreed to the bizarre claim that the mine would have no consequence on our carbon budgets. The Labour government subsequently revoked the permission the former government had approved. Now, this victory could be compromised by an secret arbitration panel reporting to only the companies petitioning it.

Last August, a corporate entity whose beneficial owners are based in the tax haven filed a lawsuit challenging the UK government. Recently a dispute settlement body in the US capital was established to hear it.

This firm is suing the UK for the profits it might have made if the mine had been allowed to go ahead. We have no clear indication how much this could amount to. What legal team is serving as its counsel challenging the British government? A member of parliament, and former attorney-general in the outgoing administration, that great patriot Sir Geoffrey Cox. The state enacts a policy, the national judiciary upholds it, then a international entity contests it through an secretive offshore tribunal, and a member of our parliament acts on its behalf.

A Sanctions Challenge

On the same day that the panel on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. We know little of the case so far, but it is highly possible that he’ll use the arbitration process to fight the penalties the UK levied against him after the Russian aggression. He has already started suing a small nation with similar intent, demanding sixteen billion dollars: half that state's annual revenue. Part of the legal team representing him there? the wife of a former prime minister, married to the ex-UK leader.

Trade specialists believe that the EU’s delay in using frozen oligarchs' funds as guarantee for its financial support package stems from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a investment pact. This unprecedented, undemocratic power over elected governments may be obstructing the money Ukraine desperately needs.

Misleading Claims and Mounting Threats

The public was told that these scenarios could not occur. Previously, a former prime minister, promoting the most significant and hazardous of all such treaties, stated: “Britain has agreed to investment treaty upon trade deal and we have never seen a case in the past.” An expert on this matter described campaigners of “scaremongering … the fact is, ISDS barely touches the UK much”. The overall message was crafted to be that solely developing countries should be concerned by these lawsuits. Cautionary notes that “once firms begin to understand the power they now possess, they will shift their focus from the poorer states to the wealthy nations” were met with scepticism.

That prediction has come to pass. Recently, oil and gas and extraction companies have filed a unprecedented number of claims against nations across the economic spectrum, contesting – as in the case of the UK mine – government attempts to halt environmental catastrophe. Corporations have so far won one hundred and fourteen billion dollars via ISDS, of which oil majors have been awarded eighty-four billion dollars. That represents the combined GDP