London’s lead in litigation ‘still under threat’

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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.

BREXIT

Brexit and Roma: What does the future hold?

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Travelling communities – including Roma and Gypsies – are some of the most discriminated against minority groups in Europe. They have long been the targets of prejudice and hate and have experienced widespread inequalities across almost area of society since they have existed. In the UK alone, both Roma and Irish-Gypsies are disadvantaged in the education, health, and business sectors (to name a few). They are regularly discriminated against – by individuals, groups and authorities – and they are often cut off from vital services.

Despite these inequalities, the UK remains a relatively safe place for Travellers when compared to its neighbouring countries, and as such has become a long-standing refuge from states which are less tolerant. In the run up to and during the Second World War, for instance, Romani Gypsies fled Germany and other Nazi-occupied countries for the UK when they were persecuted by the Nazi regime. Equally, over the last century, Roma have fled places like Hungary, Romania, and the Czech Republic where they are commonly the targets of persistent persecution and racism. As such, the UK has historically acted as a refuge of sorts for Travelling communities, with Roma either officially claiming asylum or utilising free movement laws to move here. The latter has long been a core facet to Roma culture, which centres around nomadic principles; the ability to move easily across borders and maintain mobility in this respect is therefore a vital part of their lifestyle.

Brexit, and the end of free movement it promises, greatly threatens the future mobility of Roma and Gypsy communities, both in and outside of the UK. And it does this in multiple ways. Firstly, it threatens it on a fundamental level; the end of free movement will mean that moving from or into the UK from any European country will be more complex at the border. More documentation will be required at customs, and visa restrictions will apply for anyone looking to visit, work in, or study in Britain. This threatens Romani and Gypsy lifestyle principles, as such restrictions would effectively end their ability to be ‘rootless’, as is central to nomadic practices. What’s more, this loss of mobility also presents extra hurdles for those looking to flee persecution and discrimination in other EU countries. Needing to secure a visa, or claim political asylum makes the process that much harder – particularly for groups like Roma who are often cut off from legal services

Equally, Brexit also poses a threat for European Roma populations already living in the UK. Although Johnson and his cabinet may have promised to ensure that the rights of European nationals living in the UK remain the same after Brexit, there are uncertainties about what will happen to those who do not register to keep them in time for the deadline. As it stands, any EU national who arrived in the UK before or during the implementation period (which ends on 31st January 2020), can register for settled status in the UK which secures their right of abode. Currently, there is less than a year to register, and still an estimated 500,000 people yet to do so.

According to Mihai Bica, a representative from the Roma Support Group, a huge portion of this total is made up by members of Roma, Gypsy and Traveller communities. This disparity, she suggests, is down to a combination of three factors: a lack of resources and services to inform Roma of their rights; an inability to access or use the online tools required to register; and a lack of supporting documentation.

In the wake of the Windrush scandal, the idea that Travelling communities could be left to fall through the cracks of the system is extremely worrying, particularly since they are already ostracised from society. Roma and Gypsies have long been the bearers of racism and xenophobia, at both a public and political level. Communities face a string of inequalities across the education, social, health, and business sectors, to name a few. At the other end of the spectrum, they are subject to serious and life-threatening hate crime.

And Brexit has a part to play in this too. Since the referendum result in 2016, hate crime has spiked, rising by almost double in four years; social landscapes have changed drastically and anti-migrant and anti-other attitudes have been normalised in many sections of British society, and even harnessed by pro-Leave groups and organisations.

Unfortunately, though, it is not only in its impact on mobility, status, and attitudes that Brexit is set to hurt Travelling communities. As it stands, the EU currently holds a budget of €11.6 billion for social research and strategy – about 20% of this is dedicated to social inclusion. This is used within minority communities, including Roma, for integration schemes which aim to open up dialogues with and promote the inclusion of Travelling communities. Once the UK entirely leaves the EU at the end of the year, this budget will be lost, and it is unclear what it will be replaced with (if it is replaced with anything at all).

As such, it would seem that Brexit’s threat to the Roma and Travelling communities is three-fold; individuals are set to lose their movement rights, lose access to funding, and be put at a further risk of discrimination and hate crime. Urgent and vast work must be conducted to prevent and address these issues. Support must be given to inform and assist unregistered European Roma living in and entering the UK during the next year, and schemes must be put into place to continue with and improve on EU Roma integration and inclusion efforts. Equally, dialogues must be started in every sector, particularly education which forms the attitudes of children of young people, to promote understanding and representation of Gypsy culture – it is only through this that racist, xenophobic and discriminative attitudes can be challenged.

Luna Williams is the political correspondent at the Immigration Advice Service, an organisation that assists migrants emigrating to the UK and Ireland.    

 

Brexit Hits UK Law Firms in South Korea

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The five U.K. firms present in Seoul—Clifford Chance, Herbert Smith Freehills, Linklaters, Stephenson Harwood and Allen & Overy—will have to either re-register their office licenses or close their offices, at least temporarily.

A group of U.K.-based law firms in South Korea are anxious about the future of their offices in Seoul, as a no-deal Brexit could force them to close their offices temporarily.

Brexit-shattered-glass

UK trying to convince EU Irish backstop is illegal under its own treaties

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British Brexit negotiators are trying to convince the EU that the controversial Irish “backstop” the two sides agreed to, is actually unlawful under the bloc’s own treaties.

Speaking after a tour of EU chiefs in Brussels and Strasbourg on Tuesday, Brexit secretary Stephen Barclay said he believed the indefinite backstop was in fact not legal because “Article 50 under the European treaty says that it must be temporary”.

He said this argument was “very much the message that we’ve taken to European leaders” – the latest glimpse inside the UK’s frantic efforts to try and extract a change in policy.

“The key issue is that we need to deliver an outcome that is legally binding on the backstop,” Mr Barclay told reporters after his meetings.

“That’s the key issue because Article 50 under the European treaty says that it must be temporary and yet the advice from the UK attorney general sets out a concern that it could be indefinite.

“So this link between what is legally temporary under the Article 50 but what the UK attorney general has said could be indefinite is the key issue and that’s very much the message that we’ve taken to European leaders.”

The EU has previously expressed legal doubts about whether the withdrawal agreement can be used to set the future relationship with the UK – thought here is no section of Article 50 that expressly says any of its provisions must be temporary.

Mr Barclay is among ministers and officials to have gone back to the continent to try and extract changes to the withdrawal agreement – after Brexiteer MPs instructed the government to ditch the backstop.

The EU says it will not reopen the withdrawal agreement, and that the UK should shift its red lines if it wants a more ambitious future relationship. Both sides say they are preparing for no deal.

The Brexit secretary would not answer whether he thought the changes he sought could be made without reopening the withdrawal agreement, saying only that “we’ve started a process”.

Asked whether he thought a deal could be sorted out before the March summit of the European Council he was also unclear, stating that “we’ve been very clear that time is of the essence”.

Speaking after his meeting with Mr Barclay, Guy Verhofstadt, the European parliament’s Brexit chief cast doubt on the value of talks.

Brexit legal challenge: UK government appeals

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The UK Supreme Court is considering whether to hear an appeal filed by the government over a Brexit legal challenge to be heard in Europe.

On November 27 an emergency hearing of the European Court of Justice (ECJ) in Luxembourg will examine whether a majority vote against Brexit in the House of Commons will be able to arrest the UK’s minimal progress out of the EU. The Brexit legal challenge, submitted by a group of pro-Remain MPs and campaigners, was referred to the ECJ by the Edinburgh Court of Session, Scotland’s supreme civil court.

A cross-party group of Scottish MPs, MSPs and MEPs teamed with Good Law Project director Jolyon Maugham QC to bring the Brexit legal challenge, arguing that MPs should be able to vote to revoke Article 50 without the permission of the government or other Member States. They said Brexit was “not inevitable” and that allowing parliament to vote to stay in the EU could be essential to avoid a “no deal disaster”.

The Court of Session initially turned down the group’s bid to refer their Brexit legal challenge to the ECJ, but after the group successfully appealed the court’s decision the case was passed to the ECJ with a request for an expedited procedure due to the time sensitivity of the issue.

The UK government has asked the Supreme Court for permission to appeal against the Court of Session’s decision to refer the Brexit legal challenge to the ECJ, citing the terms of Article 50 of the Treaty on European Union. Lawyers for the Department for Exiting the European Union (Dexeu) say the issue of reversing Article 50, thereby stopping Brexit, is hypothetical as the government has declared it has no intention of doing so; and that remaining in the EU would undermine the sovereignty of parliament.

The Supreme Court has not set a date to hear the appeal. A statement from the court said: “The court is aware of the urgency of this matter.”

75% of City partners back second Brexit referendum

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Three out of four City partners are in favour of a second Brexit referendum, according to a new a survey which has also found strong concerns among lawyers over the impact of a ‘no deal’ scenario on the legal sector.

Three-quarters (75%) of all respondents to the latest Big Question survey said there should be a second referendum, with a similar proportion saying that Brexit will negatively affect the ability of UK law firms to attract the best talent and compete with increasingly aggressive US rivals.

Brexit-shattered-glass

‘There is a pre-Brexit window to aim for’

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London capital markets partners are anticipating a flurry of initial public offerings (IPOs) this year, ahead of the UK’s exit from the European Union in 2019.

Partners says there is an impetus to start IPO processes early in order to avoid any uncertainty in the run-up to Brexit, scheduled for 29 March next year.

Clifford Chance (CC) global capital markets head Adrian Cartwright (pictured above) comments: “Most companies are looking to get IPOs away in 2018, as the first half of 2019 will be overshadowed by Brexit. You really need to be getting a process underway in the next two to three months to hit an execution window in the second half of 2018.”

White & Case partner Jonathan Parry (pictured right) adds: “There is definitely a pre-Brexit window to aim for. A number of IPOs are expected to hit the early summer window.”

With Brexit looming, partners say the volume of deals will at least match 2017. Last year, there were 106 IPOs raising a total of £15bn in London, a three-year high – a strong increase on 2016, which saw 65 IPOs raise £5.7bn.

 

If you haven’t got a deal done by the end of the third quarter, you will be getting into a nervous period

Key IPOs in 2017 include the Irish Government’s May flotation of a 25% stake in Allied Irish Bank, which valued the group at €12bn (£10.5bn). The dual-listing in London and Dublin threw up roles for Linklaters, Allen & Overy and Herbert Smith Freehills.

Meanwhile, in November, Russian aluminium company EN+ floated in London and Moscow, giving the overall business a value of $8bn (£5.6bn). It was the first major primary listing by a Russian company in London since sanctions were imposed on Moscow. White & Case acted for EN+ and Linklaters advised the banks.

In April, logistics company Eddie Stobart raised £393m on AIM, the largest AIM IPO since 2005. King & Spalding acted for Eddie Stobart while Hogan Lovells advised the banks.

Ashurst partner Nicholas Holmes comments: “I think 2018 could be broadly comparable to 2017, but my suspicion is that activity in 2018 will be compressed into three rather than four quarters. If you haven’t got a deal done by the end of the third quarter, you will be getting into a nervous period as Brexit becomes more imminent.”

Parry adds: “Overall volumes could be higher this year. Last year, volumes in the first half were pretty low in terms of premium listing IPOs and it was a very sluggish market. There was a change post-summer – the IPO pipeline picked up considerably in Q3, and as a result overall volumes for the 2017 were fairly high.”

At the same time, some companies may opt to take their chances in a less crowded market in early 2019, comments Allen & Overy partner James Roe (pictured right). “There’s an impetus to get transactions done before October 2018, but equally if the market is crowded as a consequence there may be opportunities towards the end of this year or the first quarter of 2019 for a prepared company to IPO.”

By region, partners say the London listings are expected to come from a range of locations including Turkey – spurred on by general elections in the country scheduled for November 2019 – Greece and the Middle East.

Cartwright comments: “There is activity across a whole mix of jurisdictions, including the UK, continental Europe, Turkey, and Russia is also back, despite the threat of further sanctions. The Middle East is also busy.”

Herbert Smith Freehills equity capital markets head Charles Howarth adds: “There are some UK IPOs of non-UK companies, but much of the IPOs are from the far end of the Mediterranean, Turkish and Greek. There is a burgeoning pipeline of Turkish IPOs, both domestic and London, driven in part by uncertainty over the elections due late next year.”

Much talk in the market is dominated by the potentially record-breaking Saudi Aramco IPO, which could value the company at as much as $2.5trn (£1.7trn). It is understood the company has shortlisted London, New York and Hong Kong for the international portion of the listing. White & Case is acting for Saudi Aramco, but further legal advisers have yet to be appointed.

Other IPOs that could launch this year include UK cinema chain Vue Cinema International, which would reportedly value the group at at least £1.6bn, while its rival Odeon is also looking at a listing of a similar value.

Overall, companies and investors seem more likely to take their chances sooner rather than later.

Parry concludes: “There is still very little clarity as to what is going to happen in March 2019. At the moment, with investor sentiment and stock market valuations where they are, there does seem to be an open window that issuers and investment banks are looking to take advantage of.”

Simmons third INTL Firm to open in Dublin since Brexit vote

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Simmons & Simmons has hired a partner from Mason Hayes & Curran to spearhead a launch in Dublin.

Simmons has hired the Irish firm’s head of investment funds and financial regulation, Fionan Breathnach, ahead of the planned opening.

Breathnach has been at Mason Hayes since 2003. He was previously an associate at PwC legacy law firm Landwell and also spent time in-house at banking giant HSBC.

The Dublin base will represent the first new office for Simmons since 2015, when it opened in Luxembourg. Before that, it launched bases in Munich and Singapore in 2013. However, it has also shut its doors in locations such as Rome in 2015 and Abu Dhabi in 2016.

Simmons managing partner Jeremy Hoyland told Legal Week: “We are going to be opening an office in Dublin. It will focus initially on our asset management clients. We already service those clients in Singapore and Luxembourg but Ireland is a key jurisdiction for fund formation and it is a gap in our offering that we are keen to close. It is currently an important location and it will become more important going forward due to the referendum result.

“Brexit is obviously a fluid situation and we are trying to stay at the forefront of changes. There is a lot of uncertainty.”

The timing and further details of the launch are yet to be confirmed, however, Hoyland said that the office could become full service over time.

Mason Hayes managing partner Declan Black said: “Fionan has made a great contribution to MHC over the years and he will retain many friends here when he leaves. We wish him the very best of fortune.”

The Irish legal market has become increasingly attractive for UK and international firms since the Brexit vote last year.

Like their major clients in the banking sector, many law firms have been examining their post-Brexit footprints to ensure they continue to have access to the European Union (EU) single market and the EU’s courts and decision-making bodies when the UK leaves the EU.

Last month, Legal Week revealed that US firm Covington & Burling is currently waiting for regulatory clearance from the Irish Law Society to launch a life sciences and technology focused office in Dublin.

Earlier this year, Pinsent Masons opened in Dublin with the hire of three partners from local firms, making it the first international firm to open in Ireland following last year’s Brexit vote.

Other UK and international firms with bases in the Irish capital include Eversheds Sutherland, DWF, which hired William Fry corporate partner Ross Little last year to launch a full-service practice, insurance players DAC Beachcroft, Kennedys and BLM,  US firm Dechert, and offshore firms Maples & Calder and Walkers.

Local partners also expect global giant DLA Piper to enter the market. Earlier this year the firm’s senior partner  Juan Picon told Legal Week: “Post-Brexit, there will be more institutions looking to have a presence in Ireland, so opening there would be consistent with our strategy.”

 

BREXIT

‘Brexit should be seen as an opportunity’ – Shearman’s Reynolds

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Shearman partner Barnabas Reynolds, a partner from Shearman’s believes Brexit provides opportunities for English lawyers and the UK’s courts.

With Brexit now taking place, the question is no longer whether we remain or leave. The debate has moved on and it is the duty of common law practitioners in England and Wales, and their colleagues in Scotland and Northern Ireland, to be at the vanguard of shaping what comes next, minimising the risks and maximising the opportunities.

Two key opportunities that arise are for English law lawyers and the UK’s courts.

London lawyers plan for Brexit:

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Following the official triggering of Article 50 this morning, law firms have begun to bulk up their Brexit taskforces and prepare for two years of unprecedented change.

So far, Freshfields Bruckhaus Deringer and DLA Piper have made key hires into their Brexit taskforces. More firms are expected to follow suit.

Freshfields has hired former European Commissioner Jonathan Hill as a senior adviser, while DLA Piper has hired ex-EU legal adviser to the House of Lords Paul Hardy as a lead Brexit specialist and support the firm’s Brexit committee alongside its existing government affairs, trade and regulatory capabilities.

Reactions from UK and US firms have been mixed, with many more concerned about the UK’s chances of bartering a good deal rather than the UK’s status as an attraction for international investment.

London will prevail

The City will lose some financial services jobs to continental Europe, Dentons partner Andrew Cheung said, but some global players have also announced their commitment to London as there is no other equivalent in the continent.

“It is true that, absent certainty about passporting and equivalence, London-based financial institutions (and professional services firms) will need to have a material base in the EU,” explained Cheung. “But where?  No single other City has or could within the foreseeable future replicate London’s vast business infrastructure – everything from the size of its huge professional services infrastructure and pool of labour (London is far bigger than other European cities, so more IT workers, office cleaners, lunch stops etc) to the availability of office space, people to fit out office space with technology etc.

“Take US investors. TTIP seems to be dead in the water, at least for the duration of a Trump administration; so US:EU investment terms will likely remain static for at least four years (plus however long it takes to resuscitate TTIP). The potential for an early trade deal with the US, on the other hand, coupled with a devalued pound, mean a soon-to-be post Brexit Britain presents some real growth opportunities for US businesses and the prospect of political needs on the UK side of the pond delivering investor-friendly terms.

“Two years is not a long time. The EU negotiating team will need to throw out its playbook if it has any hope of agreeing a workable interim arrangement and framework for a free trade agreement within that time. Blink and it will be 2018.  So now is the time to start your Brexit risk planning in earnest if you have not already done so. And for non-EU investors looking for a home for capital, buy now before others get the best deals!”

Data issues await

“The Article 50 notice has fired the starting gun,” Bird & Bird partner Graham Smith said. “Will the finishing line be a cliff edge or a smooth transition? For flows of data from the EU to the UK the answer will depend in part on whether the UK’s controversial bulk surveillance and communications data retention laws are deemed to give adequate protection to EU citizens’ personal data. The closer we move towards Brexit Day the larger this issue is likely to loom.”

London may be overtaken at some point by another European city as a Fintech hub, but not any time soon.

Bird & Bird partner Jonathan Emmanuel said: “For now, what is clear is London won’t give up its crown without a fight: it is already building FinTech “bridges” to other regions such as Singapore and South Korea to maintain its position and the FCA’s regulatory sandbox initiative is lauded worldwide which makes it a natural magnet for many FinTech start-ups.”

Insurance

Last year, the uncertainty surrounding Brexit led to some insurers seriously considering a move from London to Dublin. At the time, The Lawyer reported that insurers including QBE, Admiral and Beazley were all considering Dublin as a potential hub for their European businesses.

Clyde & Co European corporate insurance group head Ivor Edwards said: “Insurers haven’t been sat waiting for Article 50 to be triggered since the referendum. Planning for Britain’s exit from the EU is well underway, as insurance carriers believe they need to take concrete steps for all eventualities by setting up carrier companies in the EU’s 27 countries.

“Carrier companies are by far the most popular and realistic solution to allow insurers to carry on writing business in the EU post Brexit. But they require time, money and commitment to set up.  Fronting arrangements can work but are complicated and not a solution for carriers who want to write significant amounts of business.”

Edwards added that UK companies are not the only ones making plans. “There are over 500 general insurance companies headquartered in continental Europe who passport into the UK that are taking steps too,” he said.

The insurance industry will be hoping that the government achieves the freest possible trade in financial services between the UK and EU Member States, Edwards said.

“However, at this point, no-one knows when an agreement might be reached, if at all, nor what provisions in might contain,” he commented. “The industry is watching on with interest, but it’s not waiting with baited breath. It’s acting already.”