Bylined article from London Litigation & Dispute Resolution partner Stuart Pickford on the implications of the opening of the Shanghai Financial Court for London retaining its litigation crown.
The opening of the Shanghai Financial Court last month has brought into focus once again whether London will keep its strong position as one of the world's leading litigation centres.
International commercial disputes
Although the immediate priority of the new court is likely to be the growing workload of Shanghai's existing special financial tribunals, it may well follow the path of other new courts which already actively target international commercial disputes.
To take just one example, the Singapore International Commercial Court was launched in 2015, building upon Singapore's existing reputation as a centre for international arbitration. With the international commercial dispute market firmly in mind, its procedural rules have many features that will be familiar to litigants in the English courts, plus several of the features that have made arbitration an increasingly attractive option.
Similarly, the Dubai International Financial Centre has taken advantage of Dubai's position as a regional trade hub to develop as a venue for international commercial disputes, sharing the Singapore approach of using a panel of judges which brings in experience from established common law jurisdictions, including retired members of the English judiciary.
Closer to home, specialist international commercial courts have recently been launched in Frankfurt and Paris, with a new court in Amsterdam due to open shortly and plans underway for a Brussels International Business Court. These new courts each have their own procedural models for attracting international business, with some planning to go as far as issuing English language judgments. The unifying thread is that they are being promoted as giving commercial litigants the opportunity to have disputes heard in English, potentially at lower cost than in London.
Faced with an increasingly competitive environment for international disputes, London offers court users a number of positive features – and will continue to do so post-Brexit.
First of all, London is a long-established litigation centre. The Commercial Court has a well-deserved reputation as a leading centre for international dispute resolution, with the majority of its litigants coming from outside the UK, and for providing a supportive environment for international arbitration. London benefits from a substantial legal services sector and a unique depth of specialist advocacy talent, which brings all the practical advantages of having in-depth expertise immediately at hand.
Secondly, English contract law is well-regarded for its predictability and stability, and for its ability to evolve incrementally to remain fit for purpose in the commercial environment in which it is applied. It is founded on longstanding principles which will not be impacted by Brexit, and it will remain a popular choice of law for international contracts. There is an obvious logic to having disputes under English law contracts heard by English judges.
The reputation and experience of the English judiciary is second to none. In addition to their undoubted expertise, it is all too easy to take for granted that English judges are rightly praised for their independence and integrity – factors that are highly valued by international commercial parties.
Speculation that Brexit will bring an end to London's position as a leading dispute centre is likely to prove wide of the mark. Although future arrangements between the UK and EU on cross-border jurisdiction and enforcement are not settled, exclusive jurisdiction clauses in favour of the English courts will generally continue to be respected by EU member states both during and after any transition period, with judgments enforced accordingly.
Perhaps more importantly for London's status as a truly international litigation centre, English judgments will continue to be widely enforceable beyond the EU post-Brexit, including through an established network of reciprocal enforcement arrangements and, as an increasing number of countries ratify it, under the Hague Convention on Choice of Court Agreements. London should also maintain its status as a leading arbitration centre, with an award made in an English arbitration enforceable under the New York Convention in more than 150 other jurisdictions.
But the English judiciary is far from complacent. The increasing competition from other dispute centres has no doubt played an important part in recent procedural reforms to enhance London's offering to court users. These have included the creation of the Business and Property Courts last year, with the objective of providing court users with a more intelligible court structure, and the creation of the Financial List, which provides judges with specialist expertise for claims which require knowledge of financial markets or which raise issues of general market importance.
The senior judiciary remain acutely aware that it is vital that litigants can have their disputes resolved in a timely manner and at proportionate cost. The Shorter Trials Scheme and the Flexible Trials Scheme have both been designed to achieve quicker trials for business disputes, with tailored procedures to keep costs in check. A pilot scheme is due to start next year in the Business and Property Courts to reform how litigants go about disclosing documents. Assessing what level of disclosure is right for each case will help to cut this expensive process down to size, which should make litigating in London more attractive to those court users whose heads might otherwise have been turned by jurisdictions with rather more limited disclosure procedures.
In the words of the Chancellor of the High Court: "We need to be proactive and we need to be prepared to take active steps to improve our offering if the clarion call that Britain is open for business post-Brexit is going to be taken seriously". Rather than resting on the longstanding advantages that London has to offer, the UK judiciary is actively meeting the challenge to maintain, and indeed enhance, London's offering as a global dispute centre. There is nothing like competition to keep a business on its toes – the same is true of justice systems.
First published on Thomson Reuters Regulatory Intelligence on 14 September 2018.