London backed to remain a major hub for international dispute resolution post-Brexit

Michael Fenn of Pinsent Masons, the law firm behind Out-Law.com, was reacting to a recent report which suggested Brexit poses a risk to London's status as a leading centre for dispute resolution.

The annual Commercial Courts Report 2018 (4-page / 413KB PDF) by Portland Communications highlighted the "increasingly international" nature of commercial cases before London's courts.

According to the report, litigants from 69 countries participated in cases before the London courts between March 2017 and April 2018. This marked a 10% increase over the past three years, it said.

However, the report suggested Brexit could reduce the attractiveness of London as a dispute resolution centre for litigants.

"If following a so-called ‘hard-Brexit’ the Recast Brussels I Regulation is not kept, rulings made in the London commercial courts will no longer be enforceable in the European Union," the report said. "This could in turn make London a less attractive litigation destination. Potential litigants may look to other European Union courts for relief."

However, Fenn said it is important that the threat posed by Brexit to the enforceability of UK judgments is not overstated. 

"The likelihood is that in many, if not all, cases, such judgments will remain enforceable outside the UK in the EU post-Brexit, whether under alternative reciprocity arrangements which may be entered into as the UK negotiates its exit from the EU or under the local law of the relevant jurisdiction, as is currently – and will remain - the case when seeking to enforce a UK judgment in a non-EU member state," Fenn said. "It is possible that some of the simplicity of the current system for reciprocal enforcement within the EU will be lost, but it is inaccurate to say that UK judgments will stop being enforceable in the EU."

Fenn acknowledged that there is currently some uncertainty as to how enforcement will operate post-Brexit, but said he does not anticipate that this will deter large numbers of litigants from choosing the UK courts to resolve their disputes.

"Overseas litigants are attracted to the UK judicial system for a number of reasons other than enforcement," he said. "The reputation of London and the UK courts as offering a high-quality, effective, fair and relatively predictable forum for resolving complex commercial disputes will remain a vital factor that potential litigants will continue to consider when commencing proceedings."

"It will, however, be important for parties who anticipate that enforcement may be an issue for them to consider the position carefully with the benefit of specialist legal advice, whether at the stage of incorporating jurisdiction clauses or other dispute resolution machinery, such as arbitration provisions, which will not be negatively affected by Brexit, into their contracts, or when deciding where to issue proceedings post-Brexit. This may involve taking local law advice on the approach of the jurisdictions in which enforcement is likely to need to take place," he said.

"Parties can also take some comfort from the fact that, as the Brexit negotiations have progressed, there now appears to be a measure of consensus between the EU and UK that if proceedings are instigated in the UK pre-Brexit, and probably before the agreed transitional end-date of 30 December 2020, parties will benefit from the current reciprocal enforcement regime, meaning that there is some time for a revised enforcement regime to be put in place and many of its implications considered," Fenn said.

According to the report "Paris, Dublin, Amsterdam, Brussels and Frankfurt … have announced the potential launch of, or increased funding for, English-speaking courts with common law features". London's commercial court system also faces competition from the likes of the Dubai International Financial Centre Courts (DIFC), the Qatar International Court (QIC), the Abu Dhabi Global Market Courts (ADGMC) and the Singapore International Commercial Court (SICC), it said.

Fenn said: "Whilst such initiatives illustrate the increasing trend, in Europe and throughout the world, to seek to establish leverage following Brexit, the UK will still remain a major forum for resolving international disputes."