A forum of choice for arbitration

The spectre of Brexit has sparked debate about the prospects for London’s continued pre-eminence in the legal world. But while we undoubtedly face uncertainties in the litigation sphere, what is the outlook for arbitration?

Unlike some other countries’ national courts, the English courts are well known for upholding the independence of the arbitral process and will not intervene unnecessarily. The Arbitration Act 1996 also provides the courts with ‘teeth’ in the form of powers to assist and support arbitration when needed, such as facilitating the appointment of an arbitral tribunal, ordering interim measures such as injunctive relief, hearing challenges to the validity of an award, and upholding the finality of an award.

Further underpinning this popularity is the established and well-deserved reputation of the English judiciary for having vast expertise in complex international disputes, and for being fair, free of corruption, and impartial. Equally, our common law is regarded as robust, settled, and stable, and our legal system as effective and efficient.

Although traditionally the English courts had proved willing to injunct proceedings brought in breach of an agreement to arbitrate, their ability to do so was curtailed by the Court of Justice of the European Union in the 2009 case of Allianz SpA and others v West Tankers Inc (Case C-185/07).

In West Tankers, the CJEU prohibited a court of a member state from issuing an anti-suit injunction restraining court proceedings in another member state, even if those proceedings were brought in breach of an arbitration agreement. This position was continued under the subsequent Recast Brussels Regulation (Regulation (EU) No. 1215/2012). Since 2009, the English courts have therefore been unable to issue anti-suit injunctions to restrain offending proceedings brought in another member state.

Post-Brexit, depending on the shape of the divorce deal, it is possible that the UK courts may again be able to support arbitrations by issuing anti-suit injunctions to restrain proceedings commenced in EU member state courts in breach of an arbitration agreement. Should this prove to be the case, London will gain a distinctly competitive edge as a seat for arbitration in comparison to other European cities.

Despite the ongoing uncertainty regarding the terms (or likelihood) of Brexit, arbitration in England ought to suffer few ill effects, and it even has the potential to positively benefit. As well as the factors discussed here, there are other possible issues at play: for example, our courts’ enthusiasm for and encouragement of settlement and mediation, which is said by some to have a positive impact on our reputation as an arbitration centre; the presence of a highly active third-party funding market (now also open for arbitration); and the weakness of the pound, which makes it less expensive for foreign parties to arbitrate in England.

We therefore cautiously anticipate that England will maintain, or perhaps even strengthen, its position post-Brexit as a welcoming and supportive environment in which to arbitrate as the forum of choice.

Charlotte Hill is a committee member of the Junior London Solicitors Litigation Association and an associate at Penningtons Manches