London’s lead in litigation ‘still under threat’

London’s lead position in cross-border dispute resolution is being undermined by Brexit, judicial competition, and the ‘extravagant’ cost of civil litigation in the UK, the former president of the Paris Commercial Court has said.

Jean Messinesi told the Gazette that ‘uncertainties still prevail’ around the enforcement of UK judgments in EU countries after the end of the Brexit transition period. ‘Even if the UK were to accede to the Lugano Convention, the four-step accession process means that it would not come into force before a year and a half, at best,’ he said.

The Law Society has urged the EU to allow the UK to sign up to Lugano, which would allow civil and commercial judgments to be recognised across borders.

Messinesi, now a senior adviser at consultancy Zalis SAS, added that the ‘extravagant cost’ of civil litigation in the UK and the emergence of international competition in judicial services are also eroding London’s position. ‘Access to justice in France is significantly more affordable and it is increasingly clear that legal departments in international firms are under pressure to contain legal costs and to choose alternative, yet respectable and reliable, jurisdictions for the solution of possible disputes,’ he said.

France, Germany, the Netherlands and Belgium have all created English-language business courts to compete with London as a commercial dispute resolution centre.

The Netherlands Commercial Court (NCC) has reported getting off to a ‘great start’ since opening in January 2019. The court dealt with seven cases in 2019 and 2020 – most of which related to international contract disputes – and two cases are still pending.

The organization for the Dutch courts, De Raad voor de Rechtspraak, said prospects are ‘good’ for the NCC, as more contracts are including clauses designating NCC as the court to resolve any disputes. ‘Such contracts are likely to generate work in the months and years to come,’ it said.

However, London has continued to perform strongly in spite of European pressure. According to a February 2020 report, international disputes dominate the work of the Commercial Court, accounting for 75% of business.

Meanwhile, a report last June found there had been no fall-off in court business between January and March 2020, and virtually no backlog of cases as a result of the pandemic.

Mickaël Laurans, head of international at the Law Society, said the ‘very attractive’ nature of English law is unchanged by Brexit. He added that while Brexit has made it ‘more complex’ to enforce English judgments in the EU, large companies will still be able to get judgments recognised and enforced.

‘Lugano is very much about access to justice for people who might not have the means to go through all the procedures,’ Laurans said.