Will the UK’s withdrawal from the European Union affect London’s position as a pre-eminent seat of international arbitration? And which European city could be vying to take its place?
In part two of our video series, Breaking Brexit Down, Corrs Partner Bronwyn Lincoln takes a closer look at the implications of the UK’s momentous decision and considers how it will impact on international arbitration.
Click here to watch video.
- What are the immediate challenges for the UK, EU and the wider world?
- Will restrictions on freedom of movement affect international arbitration?
- What should businesses keep in mind, as the terms of the withdrawal are negotiated?
Over the coming weeks we’ll bring you insight from Corrs Partners who’ll examine areas ranging from competition law to privacy, trademarks, regulation and more.
Look out for more episodes in this series, as Corrs Partners consider the key issues which will affect the ways in which Australian firms and their networks do business.
We’ll examine the challenges that will come with the changes, while also exploring the potential opportunities that might arise.
International arbitration is a little bit of an unknown, as are so many elements of the economy and politics and business as a result of Brexit. What we do know is, it’s creating uncertainty and wherever there is uncertainty in an economy you tend to get more disputes and you get parties who are bringing matters to disputes quicker. They take the view that, ‘well, we better try to recover our damages now, we better enforce our rights now, we won’t wait, we won’t negotiate, we’ll go straight into it.’ So, it’s quite possible that there will be an increase in international arbitration.
London is one of the most popular seats for international arbitration – international commercial arbitration – in the world and it has been for a long time. Partly historical, partly because of where it’s located geographically, it has such a well-regarded judiciary, legal fraternity and the infrastructure that you need for a solid and certain arbitral centre.
What we might see changing is the perception of the business community when they are looking for a centre and at a more practical level, things like visa’s might be more difficult for business people to obtain to go into London. So that might change how often it is selected as a centre. But the way that the arbitral institutions – for example the London Court of International Arbitration, administer arbitration – that is not going to change. They will continue with the high standard that they are known for.
There are a number of cities around the world that would love to have the place that London has had in the international arbitration community for a long time. Frankfurt is one of those if you are looking specifically in the northern hemisphere and in Europe. It is very well placed. I have spoken to colleagues in the US and who have done work with US clients who suggest that that is where they would look to. The planes from the US apparently fly largely to Heathrow and Frankfurt, so it’s perfectly placed. People speak English and, of course, it’s in the centre of Europe.
But there is another side to it to. It’s not all down side for London and in thinking about where London is at the moment in the arbitration world and comparing it to, for example, Singapore. Singapore is not part of an economic community such as the EU but it has been highly successful in establishing itself as a centre for international commercial arbitration. There may be lessons that London could learn from Singapore after Brexit is implemented.
Businesses who have traditionally looked to London as their place for arbitration now need to reconsider whether that is the right place for them in the context of what is happening. The relationship of the UK to the EU in the next two to five years is uncertain. No one quite knows where it will land but what it means is if you have a contract which at the moment has an arbitration clause in it which identifies London as the seat then when a dispute arises you need to look at that clause. You need to ask yourself whether, given what is happening at the time the dispute arises, it’s still the right place. Can you get there easily? Does London still have the infrastructure that you need to run your arbitration? All those questions need to be foremost in your mind.