London business courts face increasing competition
IN NUR-SULTAN, as the capital of Kazakhstan is now known, there is a little corner of England. The gleaming courtyard of the Astana International Financial Center, an investment area opened in 2019, is headed by a British managing director and served by nine British judges, who wear gold and black robes adorned with the blue of the republic flag. Their chief justice, Lord Mance, was the vice-president of the Supreme Court. They apply a law closely modeled on that of England and Wales and a simplified version of the London Rules of Procedure. The Kazakh judicial system is weak, but the independence of these judges is guaranteed by the constitution. The court’s electronic system for filing bundles is as fiery as any in the world. “They want this to be seen as anchored in all the qualities of London, effectively transplanted there,” says Andrew Spink QC, one of the judges.
English commercial law, like football, was exported all over the world. The game was perfected and the star players signed on. Globalization both brings more business to London and creates new tribunals like that of Nur-Sultan. This means jobs for British lawyers and new competition for London.
Britain has the second-largest legal market in the world after America, with £ 36.8 billion ($ 51 billion) in fee income, encompassing the city’s top firms to high-profile lawyers. . Commercial litigation, that is, representing companies that have argued in court, is perhaps the most prestigious element, attracting the biggest brains and often the biggest fees. His home, the Rolls Building, a mile west of the Leadenhall Street skyscrapers, is a complex of 31 courtrooms (some very large, others with translation booths) that before covid-19 moving business online had the crowd and the aesthetic of a municipality. airport. It’s booming. The number of business deals in London has more than doubled since 2015, to 292 in the year through April, according to an analysis released on April 22 by Portland Communications, a consultancy firm. The number of lawyers serving foreign clients has also doubled in a decade.
Commercial courts support globalization, ensuring investors that their rights will be protected when they venture abroad. They are also functions, because the parties are free to choose where to go in the event of a problem. For traders in medieval Europe it was Bruges and Antwerp. Today, it is often London. Take a Wednesday last month, when soft-spoken English lawyers represented the Maltese owners of a damaged ship in Bangladesh and those of the Panamanian ship who would be to blame; the Danish tax administration and the Dubai trader whom it accuses of fraud; the Bank of St. Petersburg, in a dispute with a Russian port chief; and a Cypriot property developer accused of defrauding British pensioners.
London is attractive because English judges do not accept bribes, are seen as not favoring home litigants over foreigners, and are generally not supported by politicians. They are often specialists, which means judgments tend to dig deeper than those elsewhere, says Derek Sweeting QC, president of the Bar Council, the Bar Association and the Common Law can “adapt and develop in an embryonic way” to new types of commercial litigation. The formats have been changed to speed up large files.
But this domination is under pressure, from Brexit and tougher competition. London’s clientele is growing, but also increasingly domestic: the British represented more than half of litigants last year, for the first time since the start of the Portland investigation, while those in Europe and of the rest of the world fell by 12% and 35% respectively (see graph). “Business decisions are being made and contracts are being drafted, which does not muscularly include London as the default legal battleground,” says Philip Hall, a partner.
British lawyers have lost the automatic right to practice in Europe and migration will become more difficult. EU the rules that govern where cases are heard and ensure that judgments are recognized and enforced throughout the bloc are gone. Britain hoped to join the Lugano Convention, a treaty that would produce a similar effect. The European Commission opposes it, arguing that it is part of the plumbing of the single market that Britain has left. The British detect an appetite to strip the branches.
This will result in fragmentation, as judgments will become more costly to enforce. Lawyers expect some litigation to move to Europe. (The increase in the number of cases this year may be due to a push to hit the Brexit threshold, some lawyers believe. Cases brought by covid-19 may also be a factor.) Since the Brexit vote, English-speaking commercial courts have opened. in Frankfurt, Hamburg, Paris and Amsterdam, and some academics want a single European court to rival London. It would be “ridiculous” if English judgments were not executed, says Duco Oranje, a judge at the Dutch Commercial Court. “We’re not trying to get things out of the teeth of the London Commercial Court, but weird things are happening,” he says. Mr Sweeting said Britain’s reputation for the rule of law, which it negotiates, risks being tarnished by government fights with lawyers and threatening to break the Brexit treaty.
Competition is growing elsewhere, and new courts have emerged in the United Arab Emirates, China and Singapore since 2004. (Lord Mance also serves in Singapore, while Lord Thomas, the former Lord Chief Justice, is president of the court of Qatar Trade). new litigation, by promoting foreign investment, believes Mr. Spink (who is also the head of Outer Temple Chambers, a London establishment with outposts in Dubai and Abu Dhabi). But they can also tap into their regions for work that would otherwise go to London and nibble its lead.
The response of the judiciary is to prepare for the next wave of globalization. Sir Geoffrey Vos, the master of the roles, holds a post dating back to 1286, but speaks like a Silicon Valley evangelist. Video hearings launched during the pandemic should be continued, he says, as they make London more accessible to more distant claimants. He wrote guidelines on how judges should apply English law to crypto-assets, such as bitcoin, and self-executing “smart” contracts. How judges assess accountability for decisions made by AI systems is another thorny question, and if London answers it clearly, he argues, the litigants will come. Brexit will not dry up London’s legal work any more than the rest of the city, nor the competition. The question is whether London can ride new tides. ■
This article appeared in the Great Britain section of the print edition under the headline “Ruling the world”