A city of the world: London as an international dispute resolution hub
Published on: 04/03/2021
London's legal future is as a dispute resolution hub for international firms, writes Professor Loukas Mistelis
Historically, London has long been a “city of the world” acting as an international financial centre; a global hub for insurance, shipping, and commodities trade; and as one of the most prominent centres for dispute resolution, whether in court or out-of-court. In the last two decades we have witnessed the emergence of dispute resolution hubs, often with a “common law” flavour and a similar legal regime. To some these may have appeared nothing less than a “cloning” of a successful model – to others this is a likely threat to London’s position. The key question is whether this proliferation of common law inspired dispute resolution hubs – together with the aftermath of Brexit and the peak of the COVID-19 global pandemic – may have threatened London’s unique place. The short answer is that while London’s enviable dispute resolution position may be challenged, it is not in any way threatened.
Why is London an International Dispute Resolution Hub?
London has established its position as a global dispute resolution centre on two main premises: the international significance of English law for international business matters and the user friendliness of English courts.
As far at English law is concerned, several surveys conducted over the last 15 years clearly evidence that English law is the most frequently chosen neutral foreign law (i.e. when neither party can impose its own law to the other party). In several industries – such as banking, finance and shipping – English law is undisputedly the most frequently used, and the international standard-setter. Importantly, English law has also gained traction in respect of technology, media and telecoms disputes and also in respect of fintech contracts. Even in cases where English law is not expressly chosen, and indeed no law is chosen at all, the nomenclature and terminology in contractual documents and standard terms and conditions have strong references to English law. Such references may be conscious or sub-conscious and, in any event, may simply be attributed to the significance of the English language as the language of international business. Irrespective of why English law is so popular, its significance and prominence remain unchallenged. In this realm, most if not all the new common law dispute resolutions hubs work closely with English common law, and English lawyers are very active in those territories.
In respect of English courts and their user-friendliness, one could simply point out that the English judge sees the judiciary as a service provider to the legal and business community, rather than an expression of state power (as is the main perception in civil law systems). While English courts remain an expression of state power the approach to disputes is pragmatic and democratic. It is democratic in the sense that judgments are written in an accessible language and provide full account of facts and legal positions so that every reader can appreciate the arguments presented and the rationale for the decision. It is pragmatic in the sense that the law is applied in line with party autonomy and in concordance with contractual determinations: the law is there to serve the disputing parties and not to be served by the parties. In this way English law also has a high degree of adaptability and dynamism.
There is however, more to London’s status as a hub for global dispute resolution than English law and the English courts. Consistently, over the last 15 years, London ranks the highest for international arbitration; something which applies to both institutional, and ad hoc arbitration. London is also a market leader for mediation of business disputes with an international element and there is a critical mass of ADR institutions and mediators. Last, but not least, there is strong presence and abundance of talent in all ancillary professions: funders; top class financial experts; accountants and construction specialists; translators; and court reporters, to name but a few.
It is also telling that all relevant ‘metrics’ are also good. There are very few challenges of arbitral awards, the vast majority of them are unsuccessful, and there is a consistently excellent record of enforcement of arbitral awards and foreign judgments.
What about challenges and the future?
While the COVID-19 pandemic impacted greatly public health – having caused a very high number of unnecessary deaths, challenged public health infrastructure and affected the mental health of many – it did not impact dispute resolution capabilities to the same extent.
The dispute resolution community had already availed itself of sophisticated and well-tested technology, which were immediately deployed for online hearings and quickly became the new norm over the last twelve months. Advocates adapted reasonably quickly to online hearings, which in turn meant that the judiciary, arbitrators, and mediators also adapted to new normal. Traditionalist sceptics – who represented the view that online dispute resolution is a rather compromised version of justice, and that there is no substitute for physical human interaction – came to accept the facts that online dispute both focuses the participants’ attention and their eye, and (despite the strenuous nature of online hearings) allows participants to join hearing from the comfort of their own homes, mitigating the issues with travelling to a dispute hearing.
The legal community is now more at ease with these advancements, which will have a positive impact on further use of technology; not only to facilitate hearing, but also in relation to evidence gathering and assessment, and even the limited use of artificial intelligence solutions. More and more resources are being dedicated towards AI and technology solutions in London, which has in turn become a major hub for technology start-ups, many of which are aiming at supporting dispute resolution.
The larger issue, however, is whether Brexit would have a negative impact on London. While most of the strengths of London outlined above do not as such relate to the UK being part of the EU, it is important that London remains attractive, and remains open to both young and senior talent in dispute resolution.
It is simply too soon to assess whether it has become more difficult for such talent to move to London. However, some of the early evidence is rather positive: several US law firms are strengthening their presence in London, with other large firms consider creating a London office; the British government has stated that it is keen to continue to attract exceptional talent from all over the world; and there is also early evidence that the number of cases heard in English courts or in arbitration or mediation in London remains steady.
Dispute resolution has become a competitive market as it has the capacity to contribute greatly to a national GDP, and all early evidence suggests that London will retain its strong position. I would suggest that one of the main reasons for this is the collaborative ethos that exists in the Dispute Resolution community of London, an ethos distinctly and undisputedly manifested through the forthcoming London International Disputes Week with some 100 sessions offered.
Prof Loukas Mistelis
Queen Mary University of London