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Brexit, English law and enforcement of judgments

by David Anderson 

English law has become the preeminent commercial law in Europe because it is flexible and is trusted to provide a fair outcome in the event of a dispute. In a competitive legal market place it is the box business people tick when entering into a contract, even though the substance of the deal has little or nothing to do with England.

That market place is about to change following Brexit, with enforcement of orders from an English court likely to become very problematic within the EU. Business needs certainty and this is a classic case in which business cannot wait to see whether this Brexit issue gets resolved. You cannot sign a 5 year contract now subject to English law and the jurisdiction of the English courts and not know whether a judgment you obtain in 4 years’ time from an English court will be easily enforceable in the EU.

One solution is to keep on using English law but have the cases heard before a jurisdiction within the EU. This way you get continuity of law and do not have to worry about English court orders being unenforceable. The French government has recently announced it will establish a commercial court which will operate entirely in English and apply English law. The French court is to be set up before the end of 2018 as part of the Paris Court of Appeal. Preparatory work with the Commercial Court in Paris is due to start in autumn 2017. At the moment there are no published documents on how the French court will operate and how judges will be recruited. Recruitment of high calibre judges will be important in ensuring the success of the new court.

Many lawyers in England will dismiss this on the basis that non-English courts will not have the experience or quality of judges and lawyers to provide the same service as in England. However this was what was said in the manufacturing context in the 1960s when the first Japanese cars arrived in the UK and tellingly what the Swiss watch industry said at the beginning of the 1970s when it still completely dominated world watch sales, before the quartz watch took over the market. There must be a good risk that what happened in manufacturing 40 years ago could happen in the service sector at an even faster rate. 

None of the proposed English law foreign courts has yet been set up by any EU countries but there is no doubt this is coming and soon. A hard Brexit will make it inevitable with several countries trying to get the business. It also creates a financial interest for a hard Brexit. It is likely that the procedural law will differ from England and that this will be driven by the market. Procedural innovations will be easier to introduce with the aim of gaining more litigation work. This will involve the use of new technology. The costs rules are likely to be different to lower the barriers to litigate with for instance the indemnity principle unlikely to apply. Court fees will be a fraction of the costs claimants have to find in England, which represents a significant barrier.

Another factor which has not been discussed in this context is new technology. The ease with which witnesses can give evidence and be cross examined by Skype, and the advent of virtual reality makes it easier for courts to deal with cases remotely and will help competitors to English courts.

At the moment with no progress on substantive Brexit issues, including cross border enforcement of judgments, and the Brexit date less than 18 months away no wonder business people will be considering which court they put down in their contracts to hear any dispute. It is surprising that other EU countries have not moved faster to establish local English law courts given that the barrier of upfront costs is very low compared to the high fees which could be generated locally.

October 2017

David Anderson  Solicitor

Sykes Anderson Perry Limited

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