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How do you perceive our political system works? Maybe similar to this. We elect MPs. They debate and pass bills. When a majority is achieved, the bills become law. Statutes are enforced by the courts. End of story. Yet, that was how it operated in the past. Those days are over.

The Rise of Secret Arbitration Panels

Nowadays, international firms, along with the billionaires that control them, have the power to sue nation states for the policies they pass, at secret arbitration panels staffed by business advocates. The cases are conducted away from public scrutiny. Differing from national judiciaries, these panels allow no avenue for appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, or even companies operating from this country. They are open only to entities operating from foreign soil.

Should an arbitration panel finds that a legislative action might diminish the corporation’s anticipated profits, it can award damages of hundreds of millions of pounds, running into billions.

This compensation are based not on tangible damages but compensation the panel members decide the company might otherwise have made. The administration may have to rescind the measure. It will be hesitant to enacting future policies of a similar nature, due to the risk of being sued.

A Process Running Rampant

Historically high figures of disputes are being filed, as companies observe each other, and hedge funds bankroll lawsuits for a share of a cut of the settlements. The result? Sovereignty and popular rule are turning into unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it is allowed to override national legislation and the choices made by parliaments is that this clause has been inserted – absent public approval, and often in an atmosphere of extreme secrecy – into bilateral investment treaties.

A Specific Instance: The UK Coalmine

A year ago, a conservation group achieved a major legal triumph at the senior court. The presiding officer found that schemes to excavate the first new deep coal mine in the UK for 30 years, in northwest England, were found to be wrongly permitted by the previous government, which had endorsed the questionable argument that the mine could have no consequence on our carbon budgets. The incoming administration subsequently revoked the licence the previous administration had approved. Currently, this legal outcome faces being overturned by an secret arbitration panel answering to exclusively the corporations filing the suit.

In August, a corporate entity whose beneficial owners reside in the Cayman Islands filed a lawsuit against the UK government. Recently a arbitration panel in the US capital was established to adjudicate on it.

The claimant is suing the UK for the profits it might have made if the mine had been allowed to commence operations. We have no clear indication how much this could amount to. Who is acting on its behalf against the state? A sitting MP, and ex-law officer in the outgoing administration, that great patriot Geoffrey Cox. The administration enacts a policy, the high court upholds it, then a foreign company challenges it through an undemocratic offshore tribunal, and a member of our parliament works for its behalf.

An Oligarch's Lawsuit

Concurrently that the panel on the coalmine case was convened, we learned from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, Mikhail Fridman. We know scarce of the case at present, but it seems likely that he may employ the ISDS mechanism to contest the restrictions the UK enacted against him subsequent to the Russian aggression. He has started suing another European state for this reason, seeking a colossal sum: equivalent to half of government’s annual revenue. Part of the lawyers on his side? a prominent lawyer, spouse of the former British prime minister.

Trade specialists argue that the EU’s delay in using frozen oligarchs' funds as guarantee for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the ISDS tribunals, under a investment pact. This remarkable, secretive influence over elected governments could be blocking the funds Ukraine desperately needs.

Empty Promises and Escalating Costs

The public was told that these scenarios could not occur. In 2014, a government leader, promoting the most significant and hazardous of all investment pacts, told us: “Britain has agreed to trade agreement after trade deal and we have never seen a problem in the past.” An adviser on this matter accused activists of “scaremongering … the fact is, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states should be concerned by these lawsuits. Predictions that “when companies start to realise the authority bestowed upon them, they will turn their attention from the poorer states to the strong ones” were dismissed with general mockery.

That warning has come to pass. Recently, fossil fuel and extraction companies have filed a unprecedented number of cases against nations across the economic spectrum, opposing – similar to the UK mine – government attempts to stop environmental catastrophe. Firms have so far won $114bn by using ISDS, of which fossil fuel companies have obtained $84bn. That equates to the combined GDP