Brexit threatens London’s status as global centre for dispute resolution
While London has enjoyed a reputation of being a global centre of dispute resolution, Brexit could weaken its position, a new study suggests.
Thomson Reuters Legal found in a recent survey that 35% of businesses confirm that they have already revised contracts to move their preferred dispute-resolution venues to courts outside of the UK.
Of those businesses who said they have made the particular change to contracts, 51% said that they have chosen disputes to be heard in European Union courts, like those in France or Germany.
The impasse in Brexit negotiations may also push more businesses to make the change. The study found that among organisations that have not yet revised contracts, 39% said they expect to review contracts if there is no significant clarity, by March 2019, on the regime that will apply after Brexit.
Among those that expect to review contracts, more than a third are considering choosing venues other than the UK or choosing different law clauses in contracts. A fifth of this group said they are interested in arbitration.
“Brexit uncertainty is causing concern as businesses want clarity over their trading arrangements for the future. The English legal system and professions that support it are major contributors to the UK economy. Selecting English law and the English courts has long been the preference for international commercial arrangements,” said Jim Leason, a VP at Thomson Reuters Legal.
“The fact that a third of businesses are revising dispute resolution clauses away from the English courts should be a concern for the UK’s legal profession. It is this initial selection in a contract that drives an entire industry of legal advice that supports transactional work, ongoing contract management and dispute resolution. If nothing concrete comes from Brexit negotiations soon or if there is a no-deal Brexit scenario, then more and more businesses will consider taking legal disputes elsewhere,” he said.
A poor outcome from Brexit could result in work and talent moving away from the UK legal services sector, he said.
