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Can you perceive our political system operates? Maybe similar to this. We elect MPs. They legislate on bills. When a majority is obtained, the bills are enacted as law. The law are enforced by the courts. End of story. Well, that used to be how it operated in the past. No longer.

The Advent of Secret Arbitration Panels

Today, international firms, or the oligarchs who own them, have the power to sue governments for the regulations they pass, at offshore tribunals staffed by commercial attorneys. The cases take place away from public scrutiny. Differing from national judiciaries, these panels allow no opportunity to appeal or legal review. You or I are unable to file a case to them, just as our government, including businesses operating from this country. Access is granted exclusively to businesses registered abroad.

If a tribunal rules that a legislative action might diminish the corporation’s projected profits, it may order damages of hundreds of millions of pounds, even billions.

This compensation represent not real financial harm but compensation the panel members conclude the company would perhaps have made. The administration could be forced to drop the legislation. It will be hesitant to passing future laws along the same lines, worried about facing litigation.

A System Growing Exponentially

Historically high figures of disputes are being filed, as corporations take cues from each other, and private equity fund legal actions in exchange for a cut of the takings. The consequence? Democratic sovereignty and democracy are now unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it is permitted to override domestic law and the decisions enacted by parliaments is that this stipulation has been incorporated – without democratic mandate, and frequently under an atmosphere of extreme secrecy – within trade treaties.

A Specific Instance: The UK Coalmine

A year ago, activists achieved a major legal triumph at the High Court. The judge determined that proposals to dig the first new deep coal mine in the UK for a generation, in Cumbria, were unlawfully approved by the previous government, which had endorsed the questionable argument that the mine could have no consequence on climate commitments. The new government subsequently revoked the consent the former government had issued. Now, this success is under threat by an secret arbitration panel accountable to no one but the entities filing the suit.

During August, a corporate entity whose beneficial owners are located in the Cayman Islands filed a lawsuit versus the UK government. The previous week a arbitration panel in the United States was set up to adjudicate on it.

The claimant is litigating against the UK for the profits it could have earned if the mine had received permission to commence operations. Citizens have little idea how much this could amount to. What legal team is representing it challenging the British government? A sitting MP, and ex-law officer in the outgoing administration, that great patriot the MP. The administration makes a decision, the domestic court upholds it, then a overseas corporation disputes it through an unaccountable offshore tribunal, and a member of our parliament acts on its behalf.

An Oligarch's Case

Simultaneously that the panel on the coalmine case was convened, information emerged from a government response that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. We know nothing of the case to date, but it is highly possible that he may employ the ISDS mechanism to contest the penalties the UK enacted against him after the Russian aggression. He has started suing Luxembourg on these grounds, seeking a colossal sum: half that state's annual revenue. Among the counsel on his side? Cherie Blair, married to the ex-UK leader.

Trade specialists contend that the EU’s procrastination in utilising seized oligarchs' funds as guarantee for its financial support package arises from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a investment pact. This remarkable, secretive influence over elected governments may be obstructing the finance Ukraine desperately needs.

Empty Promises and Growing Threats

We were assured that such things could not occur. Previously, a former prime minister, advocating for the biggest and most dangerous of all investment pacts, declared: “The UK has signed trade deal after trade deal and there has not been a problem in the past.” An expert on this matter labelled activists of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message seemed to be that exclusively weaker states had to worry about these lawsuits. Predictions that “once firms start to realise the power they now possess, they will redirect their efforts from the vulnerable countries to the strong ones” were greeted by widespread derision.

That prediction is now a reality. In the current period, oil and gas and mining firms have filed a unprecedented number of cases against nations both wealthy and developing, challenging – as in the case of the UK mine – state efforts to stop environmental catastrophe. Corporations have to date won $114bn through ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP