Feature

English law and the English courts – resilient or diminished?

English law and the English courts will remain attractive choices for commercial parties post-Brexit in all but a few cases.

 

SOME HAVE USED THE BREXIT DECISION AS AN OPPORTUNITY to argue that English law is now a broken system and that the English courts are courts that investors and commercial parties will want to steer clear of.

There is in fact no evidence to suggest that this is the case. Nor is there any reason to suggest that New York or Delaware law or courts, or continental European laws or courts, have a significant advantage over the English system that did not previously exist, particularly in the context of international transactions and in the financial markets.

Such statements are much more a reflection of the high levels of competition between different governing legal systems (and the law firms that service the work) – a competitive landscape that is delivering, and that will continue to deliver, real benefits to commercial parties.

English law – like New York law – is popular in jurisdictions around the world, including across Europe, Africa and Asia, for very practical reasons.

Parties choose English law because it is a well known system that delivers predictable results, based on a huge body of precedent. It is also valued because contracts tend to be interpreted literally – something business people really appreciate. It is also widely used because it is highly flexible, allowing parties to use innovative structures in deals and contracts.

These reasons for choosing English law are unaffected by Brexit, at least where contracts between commercial parties are concerned.

We believe English law will therefore remain a popular choice for commercial parties in all but a very few cases (for instance, in the narrow category of cases where certain European regulations stipulate the use of a member state law).

There is also little chance, we believe, that a choice of English law will be any less respected by courts in the EU once the UK leaves.

As for the English courts, they have always proved popular among commercial parties as the chosen jurisdiction for settling disputes for very straightforward reasons.

They are seen as independent, to have vast experience in adjudicating complex cases and to have a strong system of precedent. They are also widely recognised as effective by the financial markets. In particular, a ‘foreign’ litigant can have comfort that English judges will not favour a ‘home state’ litigant, if there is one, and the English courts are seen as creditor-friendly, something which financial institutions value highly. None of these reasons for choosing to resolve disputes in the English courts will be affected by Brexit.

The enforcement of English court judgments in EU states is going to be less straightforward after Brexit, as English judgments are currently enforced under simplified EU mutual recognition rules.

It is likely that the UK would fall out of this regime on Brexit and it remains unclear what regime will be put in its place.

But that does not mean that English judgments will be unenforceable in the EU after Brexit. In fact it is likely that in most cases it will still be possible to enforce English judgments, although it will probably be more time-consuming and costly to do so.

Consequently, we do not expect Brexit to make a significant overall difference to the popularity of the English courts.

Of course the most important point for commercial parties – both in choosing a governing law and specifying which courts will have jurisdiction – is one that has always applied. Parties should choose the option that best suits the deal being done.

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