Brexit, the courts and arbitration

November 10, 2017

  • English law and UK judges will continue to be highly valued by parties here and abroad who wish to have their commercial disputes resolved fairly and impartially in accordance with the rule of law.
  • London will continue to provide unparalleled legal services, whether for domestic matters or substantial cross-border projects.
  • London’s historic position as the centre of international arbitration will remain the same, especially since Brexit does not affect the enforcement of arbitral awards.
  • Given the ongoing negotiations on close judicial cooperation, the procedure for enforcing UK judgments within the EU may well remain unchanged, whilst enforcement outside the EU will not be affected by Brexit.

As the Brexit negotiations enter a further round of talks, the UK and the EU’s focus will be turning to the mutual recognition of legal qualifications and ‘close and comprehensive arrangements for civil judicial co-operation’ in cross-border legal disputes. Whilst these outward-looking frameworks would shape the UK’s interaction with other European jurisdictions, it is worth taking a brief moment to look at the position on the home front – will the unique strengths and qualities of the UK’s courts and legal services persist in their own right after Brexit?

To this end, the Judiciary of England and Wales (with the support of the Bar Council, COMBAR, TECBAR, CHBA, the Law Society, the City London Law Society, and TheCityUK) has recently published a memorandum entitled ‘English Law, UK Courts and UK Legal Services After Brexit’, which comprehensively answers that question. Six key points can be distilled from the memorandum and are worth bearing in mind by practitioners and clients alike:

‘English law is and will remain the golden standard’ – international parties have long chosen English law to govern their contracts because of its unique balance between certainty and flexibility, which upholds parties’ freedom of contract and intentions. As Lord Hodge recently put it in Wood v Capita Insurance Services Ltd [2017] UKSC 24 at [15], ‘one of the attractions of English law as a legal system of choice in commercial matters is its stability and continuity, particularly in contractual interpretation’.

‘The UK’s judges are and will remain of the highest calibre’ – the recently rechristened ‘Business and Property Courts of England and Wales’ will remain in the hands of judges who are intellectually outstanding, independent, and experienced in the widest range of commercial sectors. As the late Lord Goff observed extra-judicially in “Commercial Contracts and the Commercial Court” [1984] LMCLQ 382 at 391, English judges ‘are there to help businessmen, not to hinder them… to give effect to their transactions, not to frustrate them’.

‘London will continue to provide unrivalled access to high quality legal advice, contract drafting and dispute resolution services’ – London is still the home to many of the world’s leading international law firms, advocates/barristers, mediators, and arbitrators, offering unparalleled legal services to all clients. This echoes the observations of the President of the Law Society, Robert Bourns, in a speech in 2016: ‘We know our clients, their businesses and reputations, we seek to advise collaboratively, not only on the law but on wider risks and opportunities such as business and human rights’.

‘The UK is and will remain a global arbitration and ADR centre’ ­– as the world’s most commonly selected arbitral seat and home to the renowned London Court of International Arbitration (LCIA), London will remain as the centre of international arbitration. This was similarly pointed out by Professor Neil Andrews in a speech in 2016: ‘the capital provides experienced law firms, specialist advocates, a pro-arbitration supervisory court (the Commercial Court), a mass of niche commercial expertise in all sorts of fields, a good pool of arbitrators, translators, an arbitration statute which has performed well over 20 years… the tradition of English arbitration is not imperilled by “Brexit”’.

‘The enforceability of UK judgments and arbitration awards– the ongoing negotiations mentioned above mean that the procedure for enforcement of UK judgments within the EU may well stay the same. However, once the UK leaves the EU, the Recast Brussels Regulation will no longer apply to the UK and it is unknown what, if any, alternative arrangements the Government will seek in order to ensure that judgments remain enforceable across Europe. One possibility is that the UK could fall back on its membership of the conventions that preceded the Recast Brussels Regulation, such as the Lugano Convention. However, any rules on enforcement of judgments based on the Lugano Convention will almost certainly require the UK to at least take into account decisions of the Court of Justice of the EU (“CJEU”) in relation to them – which appears to be contrary to the Government’s stated objective to end the jurisdiction of the CJEU over the UK courts. It is therefore not clear what the post-Brexit position on the enforceability of UK court judgments in EU states will be.

Whatever the outcome, UK judgments will continue to be well respected and readily enforceable as in other foreign jurisdictions.

The international recognition and enforcement of international arbitration awards is governed by the New York Convention on the Recognition and Enforcement of Arbitral Awards 1958 (the "New York Convention"). Under the New York Convention, the courts of signatory states are required to automatically recognise and directly enforce arbitral awards made in other signatory states (subject to some limited exceptions). Indeed, because of the success of the New York Convention and the Model Law of arbitration, which has been ratified by 157 nation states (including all of the EU member states), the relevant EU laws and regulations excluded international arbitration from their ambit. Accordingly, the enforceability across the EU of arbitral awards rendered by a tribunal in England, will remain unaffected by Brexit - whether 'Hard' or 'Soft'.

Parties adopting English law, English jurisdiction dispute resolution provisions in contracts, should therefore seriously consider whether providing for arbitration in England would afford them greater certainty and be more suitable than litigating in the English courts – at least until the position regarding the enforceability of English court judgments across Europe is confirmed.

‘Brexit will not undermine the Rule of Law in the UK’ –­ the UK is the cradle of democracy, human rights, and the rule of law, and parties can continue to rely on English courts to decide every case fairly and impartially. This was clearly demonstrated by the high-profile ‘Brexit’ case, R (Miller) v Secretary of State for Exiting the European Union [2017] UKSC 5, in which the Supreme Court ruled against the Government by a clear majority and emphasised at [42]: ‘the role of the judiciary is to uphold and further the rule of law; more particularly, judges impartially identify and apply the law in every case brought before the courts’

None of the above should come as a surprise to lawyers and clients familiar with the UK’s legal system and legal services. The Chancellor of the High Court, Sir Geoffrey Vos, expressed this succinctly when speaking in Edinburgh: ‘however uncomfortable Brexit may become for lawyers, English law will remain a popular choice if not the gold standard. I say this because of its well-regarded and well-developed predictability, certainty, flexibility and commerciality.’

As practitioners in London, we see both UK and international clients continuing to seek out specialist advice and services in commercial dispute resolution and international arbitrations; English law is still the most popular governing law globally, and London is set to play a unique role in substantial cross-border projects.

None of these persisting strengths can be taken for granted, of course, and our legal profession would always have to keep itself up-to-date and relevant to the modern market. As far as Brexit is concerned, however, it is fair to say that there is little if any direct impact on the robustness of the UK’s legal system and legal services. As the former Lord Chief Justice, Lord Thomas, confidently declared in a speech back in April 2017: Brexit will have no effect on London’s key strengths… London remains and will remain to the fore as a centre of international dispute resolution.’


Related pages:

Arbitration: Our experience more

Brexit Lawyers more

International more

International Arbitration more

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