five hundred magazine > The Big Issue: Disputes > Where next for London as a disputes centre?

Where next for London as a disputes centre?

The capital must not rest on its laurels, as other innovative disputes hubs seek to take advantage of Brexit, writes Peter Hirst, partner and co-chair of Clyde & Co.’s global arbitration group

The first London International Disputes Week took place in May and successfully served to highlight why London is likely to remain a leading international disputes hub in the years to come – a huge concentration of talent across disputes disciplines, a favourable, popular and flexible legal system, the power of the English language, and much more.

What it also did was allow the disputes community to consider some of the very real threats to that leading position. While it’s not fair to suggest that London’s position as a key disputes hub is in grave danger, now more than ever it must not rest on its laurels, as other disputes hubs innovate quickly and seek to take advantage of Brexit.

The threat to London’s position from Brexit is often overblown, but it certainly isn’t to be overlooked. The now seemingly dead-in-the-water withdrawal agreement and political declaration do not even mention the UK’s and EU’s long-term relations where commercial disputes are concerned. This leaves open the question of whether UK jurisdiction agreements will be supported by EU or EFTA rules after Brexit, and whether those rules will guarantee the enforceability of UK judgments in Europe.

The immediate question is, will this uncertainty really affect parties’ willingness to choose London courts as the forum for their disputes? Whatever happens with Brexit, London’s greatest strength is that England has established itself as the leading commercial jurisdiction largely because of its highly evolved common law, which is not fundamentally affected by EU legal principles, and so won’t change.

Crucially, the choice of English law will also be unaffected by Brexit, since EU rules (which will be copied into the UK statute book) respect parties’ choice of law wherever that law originates. This is the principle of ‘universal application’ enshrined in the Rome Regulations. Once a party decides that it wants its rights and obligations to be defined and governed by English law, it is logical for it to choose English courts or arbitration too. London has a leading reputation in any event, based on the impartiality, commercial-mindedness and experience of its arbitrators and judges.

In a way, Brexit might even help. As long as the UK was part of the EU, its courts were not permitted to issue injunctions prohibiting litigation in other Member States in breach of a jurisdiction or arbitration clause. If the UK leaves the EU’s jurisdiction and enforcement regime, that will change. Parties have a right in common law to sue an offending party for loss caused by the breach, and litigation overseas will not usually stop an English court trying a case where the parties have given it exclusive jurisdiction.

Brexit is serving to focus the UK on becoming more competitive, not only in Europe but globally, as other international disputes hubs emerge and innovate in Asia and elsewhere. This is to some extent a matter of money. Litigation and arbitration in London come at a cost (albeit a reduced one thanks to the weak pound), and lawyers in competing jurisdictions were always ready to say that they could try disputes more cheaply. Now several EU jurisdictions are offering English language courts too.

To address this, the judiciary is making strenuous efforts to transform English court procedure so that costs are kept strictly under control. First, costs management was introduced by Lord Justice Jackson in 2013, and the disclosure/discovery of documents (the main driver of litigation costs) was reformed in January 2019, so that in many courts parties are forced to limit the documents they disclose (or ask to see) to those needed to resolve the specific issues in dispute. This mimics international arbitration, without losing the benefits of the distinctive English courts’ ‘cards on the table’ approach to documents and evidence generally.

The reforms have also given a boost to document review technology, which increasingly allows computers to take the strain of document review. And London also has a ready availability of third party funding for both litigation and arbitration which makes legal proceedings in England financially more manageable than before.

Money, however, is not everything. Choice, specialisation, and innovation are key. London has enhanced its reputation in this regard by setting up a Financial List – in effect a new court with the ability (among other things) to try test cases involving issues of general importance to the financial and other markets. Finally, the physical infrastructure of dispute resolution in London is being transformed, with the opening of the Rolls Building for high value and complex litigation eight years ago, and the state-of-the-art International Arbitration Centre opening earlier this year in the heart of London’s legal quarter.

These moves are a key bulwark against the challenge posed from elsewhere, with stiff competition coming from new international commercial courts in Singapore, Astana, and China. Other arbitration hubs are building their own impressive infrastructure too – the Seoul arbitration centre, which opened last year, is reportedly the largest in the world.

With China very focused on becoming the home of Belt and Road related disputes and the growing economies of the ASEAN region naturally looking to their near neighbours, London has to be competitive to pick up this new work. However, what London International Disputes Week should do is give London every confidence that it can continue to compete as long as it maintains its inherent advantages while continuing to evolve and develop at pace.