LOFTILY as they may disdain the profit motive, Britain’s judges are, on a national level, money-spinners. English law is often specified as the one under which commercial contracts are to be interpreted and enforced. And disputes often end up being heard in British courts. But, like any business, the law is competitive, and other jurisdictions want to snatch a share of this market. London is mounting its defences.

It has several hard-to-beat advantages: the use of English; a reputation for fairness; the centuries of precedent that lend predictability. Richard Caird, a partner at Dentons, a global law firm, notes that a foreign company can expect an impartial decision in an English court, even if it is pitted against a British firm. Over 70% of cases in the English commercial courts involve a foreign party. In 2015, Britain had a £3.4bn ($5.2bn) positive balance of payments on legal services.

One way for other financial centres, such as Dubai and Singapore, to compete is by becoming hubs for arbitration—by agreeing to abide by the decision of a tribunal, disputants can bypass courts entirely. But as Philip Rubens of Teacher Stern, a law firm in London, points out, such tribunals create no binding precedent. Financial firms often want their day in court.

So Singapore and Dubai, in the UAE, have also set up special commercial courts. The Netherlands, France and Kazakhstan have similar plans. Mostly, these courts will conduct cases in English and apply internationally accepted laws. Singapore and Dubai have even hired judges retired from London and other jurisdictions.

So far, however, they have attracted little international business. Since its establishment in 2015, no case has been heard in the Singapore International Commercial Court based on a contractual agreement between the parties to hear a case there, though proceedings have been transferred from other Singapore courts. Most cases heard in the Dubai International Financial Centre Courts after they opened to foreign litigants in 2011 have had UAE links.

Nor is London complacent. Judges conducted a survey of big users of the commercial courts, such as lawyers and bosses at financial institutions. One consequence was the creation in 2015 of the “Financial List”. Litigants in financial disputes, generally with over £50m ($65m) at issue, can apply to have their cases heard on the list, by judges with expertise in financial law.

Some new procedures have been introduced for Financial List cases. In ordinary commercial courts, for example, different parts of a trial are heard by different judges. On the Financial List, one judge hears the entire case. The jury is out on whether the new system improves justice. Litigants had hoped Financial List cases would be faster. But Vaninna Ettori, an adviser to the Chancellor of the High Court, notes that the sort of cases that appear on the Financial List would typically be expedited anyway. Ultimately, as Mr Rubens points out, its success will depend on how many Financial List cases are overturned on appeal.

Dubai and Singapore are unlikely to make much of a dent in London’s dominance. Its courts’ reputation has been built over many years, and the forces of inertia stop people from changing contract terms. Mr Caird notes that the true threat to Britain’s courts will be its departure from the EU. He questions whether financial institutions that move operations to the continent as a result of Brexit will still use British courts. Brexiteers worry about the influence of European judges on British affairs after Brexit. Maybe they should worry about continental European judges snapping up the valuable cases.

Source: economist
Foreign jurisdictions try to lure legal business from London