Brexit uncertainty is showing no sign of abating and a potential no-deal exit from the EU is still on the horizon. Questions are of course being raised as to the impact this could have on London’s role as the world’s leading centre for international arbitration.
Indeed, the gradual shift of financial and other businesses to the EU, if replicated, may cause cases heard in London to be heard elsewhere in the medium to long term. Whilst some of these concerns may be legitimate, London remains in a position to maintain its leading position in both the short and long-term.
Even a no-deal Brexit should not negatively affect London’s international arbitration market, which is thriving. In many ways, the framework that the New York Convention applies, which predates our joining the EU, ensures that the arrangements for mutual recognition of awards are well-established.
There will be, naturally, more competition, from other EU jurisdictions such as Paris. Public perception of a disorderly Brexit may encourage others to look at established rivals outside the EU for competition, such as Singapore and Hong Kong, or Dubai, in markets which have already shown a range of institutions able to compete, say, with the LCIA. It is to London’s credit, however, that thanks to London International Disputes Week, London is already on the front foot – notably because lawyers have taken the initiative.
Brexit will not change the key factors that make London attractive. The quality of the judiciary and the eloquence of its judgments is something that is appreciated globally. It provides a supportive and pro-arbitration framework for arbitrations seated here. English law continues to be the first choice in international contracts. Then there is the high concentration of arbitration experts based in London, which arguably is unparalleled anywhere else in the world.
London is also ahead of other markets in terms of the sophistication of its third- party financing offering. A significant number of professional funders are based here and subscribe to the strict ethical code of the Association of Litigation Funders. The market is well developed, well ahead of other legal markets in Europe and elsewhere. Lawyers and in-house counsel are familiar with the benefits of using third party financing to remove the burden and risk of arbitration or litigation costs and the impact that such legal spend has on businesses that could be using the money instead to continue and grow operations.
It is also very possible that as a result of the uncertainty created by the recent Achmea decision and the latest Declarations by EU States to terminate intra-EU Bilateral Investment Treaties, with respect to intra-EU investment treaty disputes, London may be seen as more attractive to investors wanting to ensure treaty protections for their investments, and as a seat for investment treaty disputes. The EU’s policy drift is against investor-state arbitration, and without the UK, this is likely to increase. That is a dimension that needs to be considered.
Brexit and in particular a no-deal Brexit would be an unfortunate development. We do not, however, see Brexit as a threat to the popularity of London as a seat for arbitration. London is and will continue to be a pioneering legal market, leading the way in offering parties effective and efficient means for resolving disputes.