Brexit – is it going to have an impact on litigation and arbitration in London?

Preparing for No Deal Brexit | BDM Blog | BDM Law

Perhaps not unsurprisingly we get asked this question a lot. Many clients are interested in Brexit and all that goes with it. The real answer is that no-one can say for sure if Brexit is going to have a positive or negative impact on England (and London in particular) as an arbitration and litigation centre. However, our opinion is that it’s unlikely to have any significant adverse impact. The key points as we see them are:

  1. Brexit is irrelevant for clients who want to resolve international disputes by arbitration. Nothing in Brexit affects arbitration. That’s not just our view. It’s the view of the Commercial Bar Association who have been asked to report to the UK Ministry of Justice. Click here to read their report.
  2. Those who think that Brexit is going to adversely impact English law, English jurisdiction and English arbitration should click here to read Mr Justice Hamblen’s speech “The Myths of Brexit”. His conclusion is that Brexit will have no real adverse impact on English law and on London’s thriving arbitration and litigation business. If that was not enough, the Lord Chief Justice shared pretty much the same view in his speech in Beijing in 2017. Click here to read what he said about Brexit.
  3. In most areas (save perhaps for consumer and regulatory legislation) English law has nothing to do with EU law. Consequently it stands to reason that leaving the EU should have no real impact. As Mr Justice Hamblen puts it: “the river of the common law of contract will flow on regardless” of whether the UK remains a member of the EU.
  4. English law has evolved over hundreds of years. At its core is the right of parties to choose how they wish to contract. English law is based on precedent which means that parties can consider similar past cases and form a view as to how a judge or arbitrator will resolve the dispute. In effect, it gives clients certainty and that is what they want when drafting their contracts. The precedent system also means that English law can evolve to deal with new business practices: it doesn’t need to be re-drafted or updated.
  5. The English Courts act as an important regulator of arbitration ensuring that mistakes are corrected and errors of law put right. One of the reasons why England is so popular as an arbitration centre is the supporting role played by the English Court under the English Arbitration Act. About a quarter of the English Commercial Court’s business consists of arbitration claims which indicates how important English arbitration is for the English Courts.
  6. English judges are completely independent and impartial. One needs look no further than the Miller and Dos Santos case where the Supreme Court held that the government could not enact Article 50 without a vote in parliament. The separation between judiciary and government is a vital part of the attraction of the English legal system.
  7. London has evolved as a litigation powerhouse with many specialist courts. We are users of the Admiralty Court, Commercial Court and the Companies Court but there are many others. Specialist courts ensure that specialist judges hear the case and this leads to certainty of outcome. Court procedures are also flexible and responsive. We now have document imaging, pre-action protocols, fast track litigation and costs budgeting. Everything is designed to ensure that cases run smoothly and efficiently, notwithstanding the preponderance of evidence in today’s digital world. There is also an established and efficient system of appeal courts which gives clients the best chance of obtaining justice.
  8. Surrounding the judiciary is an army of experienced professionals. We play our role as specialist solicitors but there are also barristers, insolvency practitioners, arbitrators, mediators, translators, experts and IT professionals. Litigation and arbitration is an industry in itself in London. There are hundreds of law firms operating in London ranging from large international firms to specialist boutiques. This means that clients should have no problem in shopping around to find the right experienced professionals to represent them on any particular matter. No other jurisdiction can offer that depth of knowledge and expertise. The attraction of London is driven by inertia. Every year more firms open in London, more specialist boutiques appear and this all reinforces client perceptions of English law and London as their preferred option.
  9. Although there is competition from other cities, London is clearly the most popular arbitration centre in the world. In terms of arbitration business alone, there are more arbitrations seated in London each year than in Singapore, Paris, Stockholm, Geneva, Dubai and Hong Kong combined. London’s closest rival in terms of maritime arbitration is probably Singapore but they are way behind London. According to recent figures, Singapore handles less than 10% of the total number of maritime references handled each year in London.
  10. There is nothing to suggest that EU member states will not give effect to English governing law clauses after Brexit. Under the Rome I Regulation EU courts are required to give effect to governing law clauses even if that clause specifies the laws of a non-member state. In any event, the British Government has already said that it will adopt the principles of the Rome I Regulation into English law.
  11. To the extent that there are changes, we may see this in relation to enforcement. Arbitration awards are of course unaffected by Brexit but the position with English jurisdiction clauses and English judgments is a bit more complicated. After Brexit, the Recast Brussels Regulation, which provides for mutual recognition and enforcement of jurisdiction clauses and civil judgments between EU member states, will cease to operate in relation to the UK. It is suggested that this of itself is likely to deter clients from choosing the English Courts as the forum for disputes under their contracts. This ignores however the UK Government’s stated intention to adopt all EU legislation on leaving the EU and thereafter to adopt a framework of civil judicial cooperation with the EU that mirrors the current system. Furthermore, the UK Government has also stated that it intends to accede to the 2005 Hague Convention and the 2007 Lugano Conventions when it leaves the EU. This regime provides for the recognition and enforcement of exclusive jurisdiction clauses by all contracting states in the EU and EFTA.
  12. Some commentators have said that the English Court will get its teeth back after Brexit. There is no doubt that the EU principles of equivalence of national Courts has caused problems in the past. Parties will no longer be able to invoke the jurisdiction of their home EU Court to stymie a claimant’s right to proceed under an agreed English jurisdiction clause. The Anti-Suit injunction may return to favour – good news for clients who use jurisdiction clauses to avoid being side tracked into frivolous EU proceedings by their counterpart. Against this, the role of the European Court of Justice post Brexit is still unclear and some say that the UK may concede its superiority

Our view is that the UK will retain its position as the leading international dispute resolution centre post Brexit at least in relation to shipping and trade. If anything we think that London will become even more popular as a dispute centre post Brexit. For one thing, the process of Brexit itself is likely to lead to more disputes under existing contracts which are already subject to English law and jurisdiction. There is also likely to be a boom in disputes arising in the finance and technology sectors in connection with data protection laws and internet security.

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