The UK’s pending exit from the European Union has led some to question whether its status as a leading global dispute resolution center could be affected, an issue particularly relevant to the international firms that call it home and the international commercial parties looking to enforce judgments or awards rendered in the UK.
The change to the legal dispute resolution landscape is not imminent, and is not going to materialize before the UK officially leaves the EU. It is also expected that the UK will seek to adopt legislation that upholds the Brussels Regulation (the EU’s legislation on jurisdiction and the reciprocal enforcement of judgments). Without the Brussels Regulation, the enforcement of English judgments in the EU, or of EU judgments in the UK, could become more cumbersome, although the UK may seek to reach some other agreement with the EU or to join existing conventions on such matters (such as the Lugano Convention). The default option would be the application of domestic rules in European cases in the English courts, and in other EU countries faced with applications to enforce UK court judgments, although in many cases this may not have significant practical impact.
The enforcement of arbitral awards will not change upon the UK’s departure from the EU. This is because the UK is a party to the New York Convention 1958 independent of its EU membership. Arbitral awards issued by UK-seated tribunals will still be enforceable in the 156 states party to the NY Convention, and awards issued by a tribunal seated in any of these states will still be enforceable in the UK.
Nor should Brexit have any impact upon the advantages of choosing English governing law in international commercial contracts. Almost all core principles of English contract law are born from common law, and are largely unaffected by the UK’s membership in the EU.
Despite Brexit, English law remains an excellent choice to govern contractual relationships. The scrutiny of English courts will continue to be among the most scrupulous in the world and therefore judgments will likely be enforced albeit under a different legal framework. London will retain many of the strengths that make it an attractive seat of arbitration: an arbitration-friendly law, a robust body of case law, even judicial oversight, and widespread enforcement – irrespective of a “hard” or “soft” Brexit.
This article was first published by British American Business and is also avaiable here
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© Herbert Smith Freehills 2020