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What is your understand our system of government functions? Maybe along the lines of this. Citizens choose MPs. They legislate on bills. When a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. That's it. However, that was how it operated in the past. No longer.

The Advent of Offshore Arbitration Panels

Today, international firms, along with the oligarchs that control them, have the power to sue elected administrations for the policies they pass, at offshore tribunals composed of 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, or even companies based in this country. The door is open solely for businesses operating from foreign soil.

When a secret court rules that a legislative action may compromise the corporation’s projected profits, it may order financial penalties of vast sums, even billions.

These sums constitute not real financial harm but money the arbitrators decide the company could potentially have made. The administration might be compelled to drop the legislation. It will be hesitant to enacting future policies along the same lines, for fear of incurring a lawsuit.

A System Spiralling Out of Control

Unprecedented levels of legal actions are being brought, as firms observe each other, and investment funds finance suits for a share of a cut of the awards. The result? National sovereignty and popular rule are turning into too costly.

This mechanism is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump domestic law and the choices made by elected bodies is that this stipulation has been incorporated – without public consent, and often in an atmosphere of extreme secrecy – inside trade treaties.

A Real-World Case: The Whitehaven Coalmine

Twelve months ago, a conservation group achieved a major legal triumph at the High Court. The justice determined that proposals to excavate the first major coal mine in the UK for a generation, in Cumbria, were illegally sanctioned by the Conservative government, which had agreed to the questionable argument that the mine could have no consequence on national carbon targets. The Labour government subsequently revoked the consent the previous administration had granted. Today, this success could be compromised by an foreign court accountable to no one but the entities petitioning it.

Last August, a firm whose ultimate owners are based in the Cayman Islands filed a lawsuit versus the UK government. The previous 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. Citizens have little idea how much this could amount to. Which individual is serving as its counsel challenging the state? A member of parliament, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The government makes a decision, the domestic court supports it, then a international entity disputes it through an undemocratic private court, and a member of our parliament acts on its behalf.

A Sanctions Challenge

Simultaneously that the tribunal on the coalmine case was appointed, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. We know nothing of the case to date, but it seems likely that he will utilise the tribunal to fight the penalties the UK imposed on him after the Russian aggression. He has already started suing a small nation on these grounds, demanding sixteen billion dollars: half that state's yearly budget. Part of the counsel acting for him in that case? a prominent lawyer, spouse of the ex-UK leader.

Trade specialists contend that the EU’s delay in using frozen Russian assets as security for its loan to Ukraine stems from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, unaccountable authority over sovereign states could be blocking the funds Ukraine critically depends on.

Empty Promises and Escalating Threats

Politicians promised that such things were not possible. In 2014, a senior politician, promoting the most significant and hazardous of all such treaties, told us: “Britain has agreed to trade agreement upon trade deal and there has not been a issue in the past.” An adviser on this topic labelled critics of “alarmism … the fact is, ISDS barely touches the UK much”. The general impression was crafted to be that exclusively weaker states had to worry about ISDS claims. Warnings that “when companies start to realise the authority they’ve been granted, they will redirect their efforts from the weak nations to the strong ones” were greeted by widespread derision.

That warning is now a reality. This year, energy and extraction companies have lodged a historic level of suits against nations across the economic spectrum, challenging – similar to the Whitehaven project – official measures to prevent environmental catastrophe. Firms have so far won $114bn via ISDS, of which oil majors have been awarded the majority. That represents the combined GDP