Court short: Will Brexit loosen the UK’s legal grip?
Last Thursday, Russian oligarch Oleg Deripaska squared off against a fellow Russian businessman Vladimir Chernukhin in court 15 of London’s Rolls Building, while in court 28 two Romanian oil companies went toe-to-toe, and in Court 19 a Russian bank litigated against some of its former shareholders.
London has developed into a pre-eminent international dispute resolution centre, with businesses and billionaires alike settling their arguments in the capital’s courtrooms.
Research by TheCityUK showed that in 2017 17,193 cases were issued in the business, property and commercial court centre in London, with 76 per cent of the cases in the commercial court involving at least one international party in the year to July.
However, courts around the world in centres such as Dubai, Dublin and Paris are competing to get a slice of that work, with Brexit seen as an opportunity to supplant London as the world’s dispute resolution centre.
A no deal Brexit would “inject a huge dollop of uncertainty” into the system, says Law Society vice-chair and Clifford Chance litigation partner Simon Davis.
Addleshaw Goddard head of commercial disputes Mark Molyneux explaining the potential difficulties, says: “At the moment we have a very strong reciprocal enforcement regime. If you know the company has assets in Europe, you are relaxed about issuing proceedings here because you feel comfortable that the likelihood is most EU jurisdictions will then enforce the English judgment. But if we end up in a hard Brexit that all falls away.”
While hard Brexit remains a possibility, even the recently agreed political declaration and withdrawal agreement which set out the future relationship between the UK and the EU failed to mention the mutual enforcement of court judgments.
In a speech last week at the offices of law firm Herbert Smith Freehills, justice minister David Gauke urged support for Theresa May’s deal saying it established the parameters of an “ambitious, broad, deep and mutually beneficial future relationship across trade and economic cooperation, law enforcement and criminal justice, foreign and security policy and wider areas of cooperation”.
Speaking at the same event, leading judge and Chancellor of the High Court Geoffrey Vos said the English legal system was at a “critical moment in its history”, adding: “We must remind the world of our unique selling points.”
Despite the lack of clarity over issues such as the enforcement of judgments, there is still confidence that the attractions of English law and the English court system will persist post-Brexit.
Europe, Middle East and Asia chair at law firm Norton Rose Fulbright, Farmida Bi, said last week she was “optimistic that London and English law remain an important part of how the global financial system works going forward”.
Molyneux argues that factors such as the English system’s approach to witnesses will remain an attraction to overseas litigants whatever happens with Brexit.
“People take the view that our approach to witnesses, which is foreign territory for European lawyers, is attractive. They like putting their opponent in the box and getting them cross-examined by these big, tough QCs.”
Vos says that while the UK “may go through some rocky times” it is a “no-brainer that mutual enforcement of judgments is a benefit to everyone in the EU and Britain”.
In September, Swiss law firm Lalive announced a new London office, in the expectation that post-Brexit Britain could see a boom in arbitration work. Marc Veit, a partner who is moving from the firm’s Zurich office to its new London base, said: “London’s attractiveness may even increase after the UK has left the EU as it may be perceived as a more neutral venue as is the case with Switzerland outside the EU.”
Despite this positivity, there are still serious concerns about the lack of clarity around civil judicial cooperation and the enforcement of judgments post-Brexit.