Demand for commercial courts hits new peak as competition circles

China: Two international courts set up

The number of commercial cases heard in London grew significantly last year, according to new research which highlights the difficulties for new international courts to challenge the UK’s position post-Brexit.

The annual commercial courts survey from Portland recorded that the number of different nationalities and litigants using the London courts, and the number of judgments the courts produced, were all at record highs in 2018/19 when compared to the previous five years.

The total number of litigants who used the courts surpassed 1,000. “These figures demonstrate that the London commercial courts have upheld their strong reputation among foreign and domestic litigants alike,” Portland said.

Over the past year, the courts heard 258 cases, a 63% increase from 2017/18. Of these, 24% concerned business contracts, 19% arbitration challenges, and 16% civil fraud and investigations.

These involved litigants from 78 countries, up from 69 previously. In total, non-UK litigants accounted for 60% of users, with a surge in litigants from Europe driving the growth.

The list of countries from which non-UK litigants came was headed by the USA, Kazakhstan, India, Russia, Cyprus, Ukraine, Switzerland, Germany, the UAE and the Netherlands.

The report said Ukraine was in the top 10 for the first time since 2014. “This year saw 25 Ukrainian litigants in the London commercial courts, with 20 of those relating to civil fraud and investigations.

“In a majority of these, Ukrainian individuals were the defendants in high-profile cases. These include politically connected persons such as Igor Kolomoisky, who was the defendant in three separate cases.”

Despite the UK government increased scrutiny of high-profile Russian, Kazakh and Ukrainian nationals. “London clearly remains the forum of choice for litigants from these jurisdictions”, it continued.

“Cases continue to involve oligarchs and billionaires often residing in London. Unlike cases involving other nationalities, the majority of such litigants are individuals rather than companies or governments.”

Portland said there were now four internationally recognised commercial courts aside from London, as well as many other national commercial courts.

“Despite this, the London courts continue to dominate English language dispute resolution. This is, perhaps, unsurprising considering it has been operating since 1895.”

But while “establishing a world-class court system takes time”, the amount of time needed is getting shorter, it said.

“The London court system has provided other courts with an opportunity. Knowledge sharing, transplanting legal systems and employing experienced judges have allowed and will potentially allow new courts to leapfrog ahead and become recognised courts more quickly.

“This, as well as significant investments made in recognition of the difficulty in becoming established, allows countries to position themselves as financial and business hubs where disputes are resolved quickly and consistently.”

The report highlighted how Qatar was pushing to attract more international litigants, while China has established two new international commercial courts to ease the resolution of disputes related to its ‘Belt and Road’ initiative.

Further, five European countries have announced the launch of an English-speaking commercial court since 2017, although only two of these have opened and heard their first case.

“This highlights the complexity of opening English-speaking courts in non-English speaking countries with different legal systems,” the report said.

“A spokesperson for the High Court of the Canton of Zurich noted in an interview with Portland that the ‘implementation of procedures in international commercial disputes only in English requires not only the adaptation of cantonal and federal laws but would also entail considerable… expenses’.”

But while “some have speculated that the opening of international commercial courts should serve as a warning sign of the potential decline of the London courts, especially with the uncertainty of Brexit”, Portland said this has yet to be seen.

“It will be important to follow the development and growth of these international courts in comparison to foreign litigant use of the London courts over time. It seems likely that, while more countries try to take a slice of the pie, the pie will continue to grow.”

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