London’s Commercial Courts and post-Brexit Europe
The international commercial courts marketplace is increasingly crowded and competitive. It has become clear that London cannot afford to take its preeminent status for granted.One of the major challengers to London is post-Brexit Europe.
One of the major challengers to London is post-Brexit Europe.
Portland asked Dr Giesela Rühl, Professor at The University of Jena/Humboldt-University of Berlin, to share her thoughts on the rise of European international courts and the potential impact of Brexit on both London and Europe’s commercial courts.
Will more EU27 litigants turn away from the London Commercial Court?
For many years the London Commercial Court has been the dominant player on the market for the settlement of international commercial disputes, attracting an impressive number of litigants from outside the UK each year. As this year’s data indicates, however, litigants from EU27 countries only made up 13.6 per cent of all litigants, compared to 14.9 per cent in 2018/19 and 16.5 per cent in 2017/18.
Of course, it is too early to tell whether the decline in EU27 litigants since 2017 marks the beginning of a trend or whether it is historical coincidence. There are, however, at least two reasons that make it seem plausible that some EU27 litigants may have started to reconsider their decision to litigate in London.
First of all, there is the likely effect of Brexit on judicial cooperation in civil and commercial matters. Unless the UK and the EU manage to agree on a new framework, the UK will lose its access to the European Judicial Area once transition provided for in the Withdrawal Agreement expires (most likely at the end of 2020). English court proceedings will then no longer benefit from the many European Regulations that ease the settlement of international disputes in cross-border civil and commercial matters. In particular, English court judgments will no longer be automatically enforced in EU27 countries in accordance with the Brussels Ia Regulation. Of course, there is a chance that the UK will join the Lugano Convention of 2007 instead. However, the Lugano Convention was never aligned with the recast Brussels Ia Regulation and will, therefore, only be a partial substitute. At least for litigants who seek access to the European Judicial Area, Brexit will, therefore, make it less attractive to settle a dispute in London.
Second, some EU27 countries, notably France, Germany and the Netherlands, have recently created new international commercial courts and court chambers to make their civil justice systems more attractive for international commercial litigants. Of course, it is impossible to say whether these new courts and chambers actually had an impact on EU27 litigants and their decision (not) to litigate in London. But at least the Netherlands Commercial Court inaugurated in January 2019 seems to provide an attractive alternative to the London Commercial Court. This is because it offers full English language proceedings and applies special rules tailored to the settlement of international disputes. It deserves to be kept in mind, however, that the London Commercial Court owes its success also to the reputation and experience of its judges, the perceived quality of English substantive law as well as a pronounced service mentality that goes hand in hand with a pronounced joy in innovation and experimentation.
Against this background, it will be interesting to see how things will develop in the coming years. Will more EU27 litigants turn away from the London Commercial Court? If so, why? And will they return once it has become clear what the relationship between the EU and UK in the field of judicial cooperation in civil and commercial matters will look like post-Brexit? Or will they seek justice in EU27 countries instead? The next Portland Commercial Court Reports will hopefully provide empirical data that will help to answer at least some of these questions.