English contract law under threat

Suggested changes to European contract law could signal the demise of English law as the preferred jurisdiction for contract matters.


A response to the Communication on European Contract Law by the General Bar Council of England and Wales stated that it would be strongly opposed to one of the four options presented in the communication.

A Bar Council spokesperson said: “The feeling is one of real concern. It could have far-reaching effects for lawyers and the City of London.” Invisible earnings from professional services, including law firms, contribute to the UK economy. The Bar Council fears that this income could be lost to the US.

The four options can be summarised as: leaving the market to solve any problems; promoting greater convergence of national laws through developing common contract law principles; improving existing European Commission (EC) legislation; and adopting new EC legislation.

The communication sought to discover whether cross-border deals suffer from differences in member states’ contract laws.

Information was also gathered on attitudes to harmonising contract laws.

Presently, English and US law rate jointly as the framework chosen by businesses for contract matters, irrespective of their country of origin.

The Bar Council spokesperson added that “harmonisation would inevitably lead to a dilution of the points of English law that are so appealing to business”. & Austin and Cleary Gottlieb Steen & Hamilton.