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Can you understand our system of government works? Perhaps similar to this. Citizens choose MPs. They vote on bills. When a majority is obtained, the bills are enacted as law. Statutes is maintained by the courts. Simple as that. Yet, that was how it used to work. Those days are over.

The Rise of Shadow Arbitration Panels

Today, foreign corporations, or the billionaires behind them, have the power to sue nation states for the regulations they pass, at private courts composed of corporate lawyers. Such disputes take place in secret. Differing from national judiciaries, these tribunals grant no opportunity to appeal or legal review. Ordinary citizens are unable to file a case to them, nor can our government, or even enterprises headquartered in this country. Access is granted exclusively to businesses operating from foreign soil.

When a secret court rules that a law or policy may compromise the corporation’s projected profits, it may order damages of hundreds of millions, even billions.

These sums are based not on tangible damages but funds the arbitrators decide the company would perhaps have made. The state could be forced to drop the legislation. It becomes discouraged from passing future laws of a similar nature, for fear of incurring a lawsuit.

A Process Running Rampant

Historically high figures of disputes are being brought, as firms learn from each other, and hedge funds bankroll lawsuits in exchange for a share of the settlements. The result? Sovereignty and democracy are turning into prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede national legislation and the choices made by elected bodies is that this clause has been written – without democratic mandate, and frequently under an atmosphere of total confidentiality – within bilateral investment treaties.

A Concrete Case: The Whitehaven Coal Mine

A year ago, activists won a great victory at the High Court. The judge found that plans to open the first major coal mine in the UK for 30 years, in Cumbria, were illegally sanctioned by the Conservative government, which had endorsed the bizarre claim that the mine could have no consequence on national carbon targets. The incoming administration later cancelled the licence the Tories had granted. Currently, this victory is under threat by an secret arbitration panel reporting to no one but the companies petitioning it.

Last August, a company whose beneficial owners are located in the offshore financial centre filed a lawsuit challenging the UK government. Recently a arbitration panel in the United States was established to consider the case.

This firm is seeking compensation from the UK for the money it would have generated if the mine had been allowed to proceed. Citizens have no idea how much this could amount to. Who is serving as its counsel challenging the British government? An elected representative, and previous senior legal advisor in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The administration enacts a policy, the high court validates it, then a international entity challenges it through an unaccountable arbitration panel, and a elected official acts on its behalf.

The Russian Lawsuit

Concurrently that the tribunal on the coal mine dispute was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. Details are nothing of the case so far, but it is highly possible that he may employ the tribunal to contest the sanctions the UK levied against him following the invasion of Ukraine. He has already filed a claim against a small nation for this reason, seeking sixteen billion dollars: half that government’s annual revenue. Included in the lawyers representing him there? a prominent lawyer, spouse of the ex-UK leader.

Legal experts argue that the EU’s procrastination in utilising seized state funds as guarantee for its aid for Ukraine is due to concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This extraordinary, unaccountable authority over elected governments could be blocking the money Ukraine urgently requires.

Misleading Claims and Escalating Risks

The public was told that these scenarios were not possible. In 2014, a senior politician, championing the biggest and most dangerous of all investment pacts, told us: “We’ve signed investment treaty after trade deal and there has never been a issue in the past.” A consultant on this issue labelled critics of “exaggeration … in reality, ISDS does not affect the UK much”. The general impression was crafted to be that exclusively weaker states had to worry about such legal actions. Warnings that “as corporations begin to understand the power they’ve been granted, they will redirect their efforts from the weak nations to the strong ones” were greeted by scepticism.

That warning has now materialised. Recently, energy and mining firms have initiated a historic level of claims against nations across the economic spectrum, challenging – similar to the UK mine – government attempts to prevent global warming. Corporations have to date won $114bn via ISDS, of which energy giants have been awarded the majority. That is equivalent to the combined GDP