How will Brexit affect arbitration?

Paris and the Netherlands are already vying for the attention of international litigants, with both countries due to open international commercial courts later this year. It seems the cogs of Brexit and its consequences for the legal world and our courts are already starting to turn.

The government is keen to quash any uncertainty around how Brexit will impact our legal processes and it was announced last year that Singapore will be targeted by the UK with the ‘Legal Services are GREAT’ advertising campaign, to raise London’s profile as the go-to legal centre.

At this turbulent time, other jurisdictions are stepping up their efforts to capture some of the UK’s litigation work and the focus should be on promoting Britain’s reputable legal system that is well regulated and effectual, with a judiciary that has renowned expertise in complex international disputes, as well as being just, impartial and free of corruption. However the question is raised as to how Brexit will affect our pre-eminence in the arbitration sphere.

There are a number of reasons why arbitration in England and Wales is so desired by businesses. Our courts are viewed to be different to other countries’ national courts; they do not intervene unnecessarily and they uphold the independence of the arbitral process.

The courts have powers, under the Arbitration Act 1996, such as:

  • Facilitating the appointment of an arbitral tribunal (parties can choose their tribunal, but in court one cannot choose the judge)
  • Order interim measures such as injunctive relief
  • Hearing challenges to the validity of an award
  • Upholding finality of an award

Post-Brexit, could the English Courts once again issue anti-suit injunctions?

Depending on the post-Brexit deal, London’s position as an arbitration centre could actually strengthen, and be given a unique, competitive advantage. It would further be strengthened if the UK courts may once again be able to support arbitrations by issuing anti-suit injunctions which restrain proceedings started in EU member state courts, in breach of an arbitration agreement.

Before the Court of Justice of the European Union (CJEU) curtailed the ability of the English Courts in the 2009 case of Allianz SpA and Others v West Tankers Inc (Case C-185/07), the English courts were able to, and did not shy away from, injunctive proceedings brought in breach of an agreement to arbitrate.

The decision made in West Tankers was also continued with the subsequent Recast Brussels Regulation (Regulation (EU) No. 1215/2012). In the case, an EU member state court was prohibited by the CJEU (despite proceedings brought in breach of an arbitration agreement) from issuing an anti-suit injunction restraining court proceedings in another member state.

Could Brexit be a positive force?

Brexit could potentially strengthen London’s reputation as the world-class centre of dealing with commercial disputes. Brexit may also bring some other positive advantages and with an arbitration system which supports settlement and mediation, third-party funding available for arbitration and a weaker pound creating a less expensive process for international parties to arbitrate, there are many opportunities for growth in this part of our legal sector.

Charlotte Hill is a committee member of the JLSLA and an associate at Penningtons Manches