Two-thirds of all cases before the Commercial Court involve foreign litigants, but the proportion of Europeans continues to fall, new research has shown.
The findings could provide some reassurance to those worried about the impact of Brexit on the international appeal of the jurisdiction.
The annual report from Portland Communications – which has reviewed 1,158 Commercial Court judgments since 2008 – said that while Europe has historically been home to the largest share of Commercial Court users, occasionally even surpassing the number of UK litigants, the figure has fallen from a peak of 35% in 2012-2013 to 20% in 2015-2016.
Overall, foreign litigants continue to see London as a key international disputes resolution centre, making up 66% of all cases. Over the last eight years Kazakhstan, Russia, Switzerland and the US have consistently ranked in the top eight countries of origin for litigants. Kazakhstan is now number two, after UK litigants.
However, the number of UK litigants was much lower (at 144) during the last year than the spike seen in the previous 12 months.
The survey also found that litigants were coming from an increasingly narrow pool of countries; 2015-16 saw the lowest recorded variety of different nationalities, with only 57 countries represented (compared to 70 in the previous year);
Litigants most often face their own countrymen in the Commercial Court. Litigants from countries such as Kazakhstan, Nigeria and Russia frequently choose the London court to have their domestic disputes heard.
Philip Hall, head of Portland’s disputes practice, said: “Our eight years of research is further proof of the attraction of London to litigants around the world. The decline from Europe is however notable – it will be interesting to see if it continues in the coming year.”
Meanwhile, at the recent annual dinner of the London Solicitors Litigation Association, president Ed Crosse described the possible disruption to jurisdiction and enforcement arrangements under the Brussels regime, triggered by Brexit, as the single biggest challenge and greatest threat to litigators in England and Wales.
Mr Crosse – a partner at Simmons & Simmons – said there was genuine concern among lawyers of the potential loss of regulations, such as the Recast Brussels Regulation, which contained a uniform set of rules to govern issues such as jurisdiction and enforcement across the EU, unless they were safeguarded in the EU exit negotiations.
“I readily accept that, although the legal steps required to replicate EU regulations on jurisdiction and enforcement, are clear, the political landscape may be challenging and uncertain, particularly if the UK government is minded to pursue the UK’s exit from the Single Market.
“But if our government fails to take some basic steps to maintain the status quo, which it can readily do, such as ensuring that the UK re-signs up to the Hague Convention on Choice of Court Agreements, we can reasonably expect that to impact on the volume of international disputes that are referred to the courts of England and Wales for resolution in the future.”
Along similar lines, a survey commissioned by MLex, which analyses regulatory risk around the world, has highlighted the concerns that both in-house lawyers and partners in law firms share over relocating their operations, being able to trade with other EU countries, and London losing its title as a leading legal centre post-Brexit.
Over half (58%) of firms said that they already have plans to move elements of their operations to a jurisdiction within the EU after Britain formally leaves the EU, while 42% of businesses said they would definitely relocate in-house legal staff after formal departure.
As a result, the findings revealed that the majority of in-house lawyers and partners at UK law firms (61%) felt that another city could rival London as Europe’s leading legal centre.
Despite these growing concerns, less than half (46%) of the partners at law firms said that they have set up a dedicated steering group to examine how Brexit would impact the business and to make key decisions for its future stability and growth.
In a separate international move, the British Virgin Islands (BVI) has launched an international arbitration centre (IAC) to administer arbitrations under its own rules and also ‘ad hoc’ or other institutional arbitration.
The aim is for the IAC to become the regional centre of choice for arbitration arising from business activity worldwide.
In a statement, it said: “BVI is well known for the quality of its commercial and appellate courts and for its political stability. BVI is the home to the Eastern Caribbean Commercial Court and its legal system has full recourse into the Privy Council in London.”
The centre’s board of directors is chaired by John Beechey, former president of the Court of Arbitration of the International Chamber of Commerce.
Litigants from the BVI were sixth largest group using the Commercial Court, according to Portland’s list.