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What is your reckon our political system operates? Perhaps something like this. Citizens choose MPs. They legislate on bills. If a majority is obtained, the bills are enacted as law. Statutes is maintained by the courts. That's it. Yet, that’s how it used to work. Those days are over.

The Advent of Offshore Arbitration Panels

Today, foreign corporations, or the billionaires that control them, are able to litigate against governments for the policies they pass, at offshore tribunals staffed by corporate lawyers. The cases are held away from public scrutiny. Unlike our courts, these bodies provide no opportunity to appeal or oversight by judges. Ordinary citizens cannot take a case to them, nor can our government, or even enterprises operating from this country. The door is open exclusively to corporations operating from foreign soil.

When a secret court determines that a law or policy may compromise the corporation’s expected profits, it may order compensation of vast sums, running into billions.

This compensation are based not on tangible damages but compensation the tribunal officials determine the company could potentially have made. The state might be compelled to drop the legislation. It is discouraged from passing future laws of a similar nature, worried about facing litigation.

A Process Running Rampant

Unprecedented levels of disputes are being initiated, as firms observe each other, and private equity finance suits for a share of a portion of the awards. The outcome? Democratic sovereignty and popular rule are now unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it can override a country's own laws and the choices made by parliaments is that this provision has been written – without democratic mandate, and typically amid a climate of total confidentiality – inside bilateral investment treaties.

A Real-World Example: The UK Coal Mine

A year ago, environmental campaigners won a great victory at the High Court. The judge determined that proposals to excavate the first deep coalmine in the UK for three decades, in northwest England, were found to be unlawfully approved by the previous government, which had endorsed the questionable argument that the mine would have no consequence on climate commitments. The Labour government later cancelled the consent the Tories had approved. Today, this success faces being overturned by an secret arbitration panel accountable to exclusively the companies bringing the case.

In August, a company whose ultimate owners are located in the tax haven filed a lawsuit versus the UK government. Recently a tribunal in Washington DC was established to adjudicate on it.

This firm is seeking compensation from the UK for the money it could have earned if the mine had been allowed to proceed. We have no idea how much this could amount to. Which individual is acting on its behalf against the British government? A member of parliament, and former attorney-general in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The government makes a decision, the high court supports it, then a foreign company disputes it through an unaccountable arbitration panel, and a elected official represents its behalf.

The Russian Case

On the same day that the panel on the mining lawsuit was established, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. The public knows little of the case at present, but it appears probable that he will utilise the arbitration process to contest the restrictions the UK enacted against him after the invasion of Ukraine. He has previously filed a claim against Luxembourg for this reason, demanding a colossal sum: equivalent to half of nation's yearly income. Part of the lawyers on his side? the wife of a former prime minister, married to the ex-UK leader.

International law scholars believe that the EU’s procrastination in using frozen Russian assets as security for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This remarkable, unaccountable authority over sovereign states could be blocking the funds Ukraine urgently requires.

Empty Promises and Escalating Threats

We were assured that such things were not possible. Years ago, a government leader, advocating for the most significant and hazardous of all such treaties, told us: “The UK has signed investment treaty after trade deal and we have never seen a issue in the past.” An adviser on this topic described activists of “alarmism … the fact is, ISDS has little impact on the UK much”. The general impression appeared to be that exclusively weaker states should be concerned by such legal actions. Cautionary notes that “as corporations start to realise the authority bestowed upon them, they will redirect their efforts from the vulnerable countries to the wealthy nations” were met with scepticism.

That warning has come to pass. In the current period, oil and gas and mining firms have filed a unprecedented number of suits against nations both wealthy and developing, opposing – similar to the Whitehaven project – state efforts to prevent global warming. Corporations have to date won $114bn via ISDS, of which energy giants have been awarded $84bn. That equates to the combined GDP