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What is your perceive our system of government functions? Maybe similar to this. We elect MPs. They vote on bills. If a majority is achieved, the bills are enacted as law. The law is maintained by the courts. That's it. Yet, that used to be how it used to work. No longer.

The Advent of Secret Arbitration Panels

In the modern era, overseas companies, along with the wealthy individuals behind them, can sue elected administrations for the regulations they pass, at secret arbitration panels made up of business advocates. The cases are conducted away from public scrutiny. Unlike our courts, these tribunals allow no avenue for appeal or legal review. You or I cannot take a case to them, just as our government, including businesses operating from this country. The door is open exclusively to entities based overseas.

When a secret court determines that a legislative action could harm the corporation’s projected profits, it has the power to grant damages of vast sums, even billions.

This compensation are based not on tangible damages but funds the panel members decide the company would perhaps have made. The state could be forced to drop the legislation. It becomes hesitant to introducing similar legislation of a similar nature, worried about facing litigation.

A Process Growing Exponentially

Historically high figures of disputes are being initiated, as companies learn from each other, and private equity bankroll lawsuits in exchange for a cut of the awards. The consequence? Sovereignty and democracy are now prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The explanation it can override a country's own laws and the rulings made by legislatures is that this provision has been inserted – without public consent, and frequently under an atmosphere of extreme secrecy – into international trade agreements.

A Real-World Instance: The UK Coal Mine

A year ago, environmental campaigners secured a significant win at the senior court. The presiding officer determined that schemes to dig the first new deep coal mine in the UK for a generation, in northwest England, had been unlawfully approved by the outgoing administration, which had endorsed the extraordinary assertion that the mine would have had zero effect on our carbon budgets. The Labour government subsequently revoked the permission the Tories had granted. Now, this legal outcome is under threat by an secret arbitration panel reporting to only the companies petitioning it.

During August, a company whose ultimate owners are based in the offshore financial centre lodged a claim against the UK government. Recently a arbitration panel in Washington DC was set up to adjudicate on it.

The claimant is seeking compensation from the UK for the revenue it might have made if the mine had received permission to go ahead. Citizens have little idea how much this sum represents. Which individual is acting on its behalf against the British government? An elected representative, and ex-law officer in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The administration passes a law, the high court validates it, then a overseas corporation disputes it through an secretive private court, and a elected official represents its behalf.

The Russian Challenge

Simultaneously that the tribunal on the mining lawsuit was convened, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. We know nothing of the case to date, but it is highly possible that he’ll use the ISDS mechanism to challenge the penalties the UK levied against him following the Russian aggression. He has previously started suing Luxembourg with similar intent, seeking sixteen billion dollars: half that nation's yearly budget. Part of the counsel on his side? the wife of a former prime minister, wife of the former British prime minister.

Trade specialists believe that the EU’s delay in utilising seized oligarchs' funds as collateral for its financial support package is due to apprehension in Brussels that it could be sued in the offshore corporate courts, under a investment pact. This extraordinary, unaccountable authority over elected governments might be preventing the funds Ukraine desperately needs.

False Assurances and Growing Threats

Politicians promised that these events were not possible. Previously, a former prime minister, championing the largest and riskiest of all investment pacts, told us: “We’ve signed trade agreement upon trade deal and we have never seen a problem in the past.” A consultant on this matter described critics of “exaggeration … the fact is, ISDS does not affect the UK much”. The general impression seemed to be that only poorer nations had to worry about such legal actions. Predictions that “as corporations grasp the authority they now possess, they will turn their attention from the weak nations to the wealthy nations” were met with widespread derision.

That prediction is now a reality. This year, fossil fuel and resource corporations have initiated a record number of suits against nations across the economic spectrum, opposing – as in the case of the UK mine – state efforts to halt environmental catastrophe. Corporations have so far won vast sums via ISDS, of which oil majors have obtained $84bn. That equates to the combined GDP