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With Brexit seen to threaten London’s prominent position in international finance, and European states beginning to establish English language courts, could the city see waning appeal as a place to do legal business? Sarah Garvey, a member of Allen & Overy’s dedicated Brexit team in London outlines the robust strengths of English courts, and offers straightforward advice for how government can help soothe Brexit jitters.
English law has been described by Philip Wood QC (Hon) as an ‘international public utility’. The choice of English law/courts is arguably the most popular selection in commercial contracts across global markets, especially in the financial
markets. The closest rival is New York law/courts. English law is often selected in deals with little or no connection with England because it is perceived as being predictable, commercial and with a good line of precedent.
English law and English courts are seen as a ‘package’. Commercial parties see the attraction of resolving disputes under English law documents before English judges in London. English courts are an attractive option because English judges
are held in high regard globally, they are considered experienced, independent and sophisticated. The English court system is also considered relatively efficient, with judges exercising case management powers effectively. English judgments are also
quite widely enforceable.
Built up around the London courts are a wealth of legal and litigation support services. The UK legal services industry is second only in size to the US. In addition, London has a good selection of support services including translators, experts, accountants.
Legal business—transaction and disputes work—is highly prized and makes a significant contribution to the UK economy, directly and indirectly. It is already a fiercely competitive international market. Increasingly, we see courts competing
for legal business, new business courts are opening (eg Singapore) and more courts are hearing disputes in English. Many of the recent reforms to English civil procedure (eg attempts to limit disclosure, reduce delays in the appeal process) have been
made at least partly with a view to maintaining London’s place as the jurisdiction of choice.
Post-Brexit, this competition is likely to intensify as other jurisdictions try to win work away from London, perhaps on the grounds of (perceived) legal uncertainty. Also, if financial business moves from the City to other jurisdictions, some of the
documentation generated by relocated entities may switch to be governed by local law.
As noted above, many of the recent reforms have sought to improve the attractiveness of London as a disputes centre. There continue to be concerns as to the costs of litigation and Lord Justice Jackson’s recently announced review of fixed recoverable
costs may be a helpful step in this regard.
There continues to be a need to articulate the benefits of English law and to restate the limited impact Brexit will have on such a choice of law. English contract law is largely unaffected by EU law so nothing changes on Brexit. The reasons why a party
may currently choose English law in a contract will remain unchanged post-Brexit. Member State courts will also continue to respect a choice of English law post-Brexit in the same way—the relevant rules (the Rome I Regulation (EC) 593/2008 and
Rome II Regulation (EC) 864/2007) specify that, subject to certain defined exceptions, the chosen law is to be applied to commercial contracts and that chosen law does not have to be a Member State law.
The London legal market should encourage the UK government to sign up to the Hague Convention on Choice of Court Agreements as soon as possible upon an exit from the EU. The UK can do so unilaterally. The UK is currently party to this convention as the
EU signed up on its behalf. Signing up to the Hague Convention will ensure respect for exclusive English jurisdiction clauses in other contracting states and the easy enforcement of any resulting judgments in those jurisdictions.
Lawyers should also encourage the UK government to seek agreement with the EU27 regarding the Brussels (recast) Regulation (EU) 1215/2012 because this is considered a helpful instrument which allows the easy enforcement of judgments across the EU.
Interviewed by Julian Sayarer. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
This was originally published Lexis®PSL on 5 December 2016. Discover how Lexis®PSL can help you stay on top of the latest developments and find the answers you need fast, click here for a free trial to access.
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