This year’s commercial courts report is bad news, but it is too early to say the courts are in decline

This year’s commercial courts report is bad news, but it is too early to say the courts are in decline

Things decline gradually, said one writer, and then suddenly.  On the face of it, the substantial drop in volume in the English commercial courts set out in this report indicates a system that is in a sudden decline. Like the coyote in Roadrunner, the commercial courts in London appear to have been running in mid-air for a few years, and now they are plummeting.

If so, then there is a plausible explanatory narrative. Brexit has meant that judgments obtained in the United Kingdom are not readily enforceable in the European Union. Many financial institutions and businesses are shifting away from London to EU27 centres. 

New commercial courts around the world, including in Singapore and Qatar, now offer well-resourced facilities, international-standard judges and proceedings in English. The use of virtual proceedings during the pandemic made court proceedings far more open to journalists and campaigners, which while good for open justice is bad for reputation management.

The impact of the Russian invasion of Ukraine and the corresponding sanctions, and the withdrawals by London law firms from Russia and other former soviet states is also likely to be profound. Russian and Kazakhstan money has been significant for all City of London services, not only lawyers. There will now be fewer Russian and Kazakh litigants willing to finance big-ticket litigation. This report is based on data to March 2022.  One wonders how much more dismal the picture would be had the data been for up to May 2022.

Every case before the London commercial court is the result of a sequence of decisions. These decisions can include those about the law and forum of a contract, about whether issuing proceedings instead of compromising will benefit the litigant the business, and about how well a party will come out of the dispute being played out in public.  The combination of Brexit, Covid and the Ukraine invasion, as well as the concurrent rise of other world-class commercial courts, will probably mean fewer business decisions will be made that result in cases being heard London commercial courts.

But one should not nod-along too much with such a gloomy narrative.  Commercial litigation is in part a function of ‘choice of law’ and ‘choice of venue’ clauses, and not all disputes occur straight after contracts have been signed.  As long as business agreements continue to be under English law and subject to the jurisdiction of the High Court then there will always be disputes that will be heard here.  

And English contract law is as flexible and robust as it was this time last year.  Most contracts are not intended to be the subject of litigation, but to soundly allocate foreseeable business risks as between the parties. If English commercial law remains practical, and is applied practically by London judges, then disputes will continue to come to London.  Substantive law matters.

Next year’s commercial courts report may perhaps set out a sudden upswing. This year’s negative report may be a blip. It is too early to say international commercial litigation in London is in free-fall, however worrying the statistics in this report. But it is also not safe to say that all is well for the London commercial courts. We just do not know what is going to happen next to the coyote.

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.

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