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Can you understand our system of government functions? It could be similar to this. We elect MPs. They debate and pass bills. Should a majority is secured, the bills become law. Statutes is maintained by the courts. That's it. However, that used to be how it operated in the past. Not anymore.

The Rise of Secret Arbitration Panels

Nowadays, foreign corporations, and the billionaires that control them, can sue governments for the regulations they pass, at secret arbitration panels staffed by corporate lawyers. Such disputes are held away from public scrutiny. Unlike our courts, these panels allow no avenue for appeal or oversight by judges. The general public cannot take a case to them, and neither can our government, or even businesses based in this country. Access is granted solely for businesses operating from foreign soil.

Should an arbitration panel determines that a law or policy could harm the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions of pounds, potentially billions.

This compensation represent not tangible damages but money the panel members decide the company might otherwise have made. The state could be forced to drop the legislation. It becomes discouraged from enacting future policies along the same lines, worried about facing litigation.

A Process Spiralling Out of Control

Historically high figures of cases are being initiated, as corporations take cues from each other, and private equity bankroll lawsuits for a share of a portion of the takings. The consequence? National sovereignty and popular rule are turning into unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it can override domestic law and the rulings enacted by parliaments is that this clause has been incorporated – absent public approval, and typically amid an atmosphere of total confidentiality – into international trade agreements.

A Concrete Example: The Whitehaven Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the senior court. The presiding officer found that proposals to dig the first major coal mine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had accepted the questionable argument that the mine could have no consequence on national carbon targets. The new government later cancelled the consent the former government had approved. Today, this success faces being overturned by an foreign court reporting to exclusively the companies bringing the case.

Last August, a firm whose final controllers are based in the tax haven initiated proceedings challenging the UK government. The previous week a dispute settlement body in Washington DC was established to adjudicate on it.

The company is litigating against the UK for the profits it could have earned if the mine had been permitted to proceed. Citizens have no clear indication how much this might be. What legal team is serving as its counsel challenging the UK administration? A sitting MP, and former attorney-general in the Conservative government, the noted patriot the MP. The government passes a law, the domestic court supports it, then a overseas corporation challenges it through an undemocratic offshore tribunal, and a elected official works for its behalf.

A Sanctions Lawsuit

Simultaneously that the tribunal on the coal mine dispute was convened, it was revealed from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. The public knows little of the case so far, but it appears probable that he may employ the tribunal to contest the restrictions the UK imposed on him following the Russian aggression. He has already filed a claim against a small nation for this reason, demanding a colossal sum: half that government’s yearly budget. Included in the legal team on his side? a prominent lawyer, wife of the former British prime minister.

International law scholars argue that the EU’s procrastination in utilising seized oligarchs' funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This extraordinary, secretive influence over democratic administrations might be preventing the finance Ukraine desperately needs.

False Assurances and Mounting Threats

Politicians promised that these scenarios could not occur. Years ago, a former prime minister, advocating for the most significant and hazardous of all these agreements, stated: “Britain has agreed to investment treaty after trade deal and there has not been a problem in the past.” A consultant on this matter described campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The general impression was crafted to be that only poorer nations needed to fear ISDS claims. Cautionary notes that “as corporations begin to understand the influence they’ve been granted, they will turn their attention from the vulnerable countries to the developed economies” were dismissed with scepticism.

That warning is now a reality. In the current period, energy and mining firms have lodged a unprecedented number of suits against nations rich and poor, contesting – as in the case of the UK mine – government attempts to prevent global warming. Corporations have thus far won vast sums through ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That is equivalent to the combined GDP