The English courts are a key asset of UK plc. Are they losing their international appeal?

Last year^[1], according to the Portland Commercial Courts Report 2021, 50% of judgments in the English Commercial Courts involved foreign litigants. The Portland Report for 2022^[2] suggests that, for the 12 months ended 31 March 2022, there may have been a noticeable reduction in those figures. That is something which requires appropriate consideration by those concerned with the promotion of English law as a platform for the resolution of international business disputes. That is not least because English law and the Commercial Courts (as well as the other Business and Property Courts) make a huge contribution to the UK economy – and not just to the legal services sector^[3]. But we must not be complacent of our position.

To understand the apparent numeric reduction revealed by the Portland Report, we need to analyse whether international parties are indeed choosing other legal “products” over the English offering or if other factors are at play.

My experience – albeit supported by somewhat anecdotal evidence from solicitors’ firms and members of commercial barristers’ chambers – does not for a moment suggest that foreign litigants are losing their enthusiasm to litigate in the English courts. Non-EU, and particularly US, litigants remain very active within the English courts. However, the behaviour of European parties is obviously more uncertain.

The predictable decrease in European litigants since the 2016 referendum may be due to the EU’s general desire to reduce dependence on English systems and institutions. This attitude has been seen in financial markets^[4]: the EU is reluctant to allow decisions to be made outside its sphere of influence. The EU’s rejection of our accession to the Lugano Convention suggests that this attitude may affect the English legal landscape.

However, there are alternative explanations for the decrease in the numbers of foreign litigants. From an economic point of view, it is realistic to expect that the legal market would reflect the general contraction in the UK economy; GDP was 7.8% lower in February 2021 compared to 2020^[5]. It is likely that the impact of COVID-19 has only just started to affect the figures. Delays and backlogs have meant fewer cases have come to judgment in 2022.

Despite the EU’s attitude and the creation of would-be competing commercial courts in Europe, many EU litigants are still choosing London. The take up of those foreign courts purporting to offer parallel pop-ups of the Commercial Court is reassuringly small. In addition, we have seen more jurisdiction challenges in certain areas of the English courts;^[6] this shows that, even though there are now enforceability difficulties presented by non-accession to Lugano – actually more perceived than real – claimants are still keen to establish a connection to England and Wales. This suggests they are still eager to benefit from the strengths of the English legal system.

This decade continues to be one of unprecedented world change, which inevitably leads to disputes.

But, going forward, the English Business and Property Courts are well positioned to attract many more foreign litigants in all areas for several reasons:

1. The English court is not just a function of the State: it is an independent and trusted service provider. Common law jurisdictions are adaptable because law is made through judicial decisions. The English legal system, in particular, is one of the most trusted institutions, not only because of the fierce independence of its judges and their specialist expertise drawn from their previous careers, but also because of the system’s ability to deliver certainty of outcome.
2. Under English law, a contracting party can be sure that the court will honour the written words of its contract and not try and rewrite the provisions in accordance with fuzzy notions of what an opposing party may assert are “good faith” terms.
3. The English court provides powerful remedies for litigants and judges are not afraid of adapting them to fit the changing modern world. We can see this happening in relation to the issues surrounding crypto assets: one of England and Wales’ most coveted legal products, the worldwide freezing order, was granted to a claimant who had been victim to cryptocurrency fraud, recognising that the landscape had changed: assets could now be dissipated “at the click of a mouse”.^[7]
4. The English court system is particularly good at adapting, introducing regular procedural updates and innovations from county to Supreme Court level to ensure it promotes good practice.^[8] The technological evolution of the English courts during the pandemic allowed them to perform exceptionally well under pressure: the Business and property courts carried out almost 80% of ordinary business using remote hearings.^[9]

Our unique combination of strengths, combining history, reliability and innovation, still make us the legal system of choice around the world.

This contribution is taken from Commercial Courts Report 2022, produced by Portland’s specialist Litigation and Disputes practice. Sign up to download the report here.

Damages Claims Pilot PD51ZB (May 2021)

Remote hand-down of judgments (Dec 2021)

Disclosure Pilot PD51U – extended for another 12m to Dec 2022 (July 2022)

Online Civil Money Claims Pilot commenced 20 July 2021

Digital Notice of Change (Feb 2022, in force April 2022)

Electronic Working Pilot PD51O – extended for another 12m (Feb 2022)