London's renown as an arbitral seat arises from dependable and modern arbitration legislation, a judiciary respectful of arbitration and the UK's membership of the New York Convention.
These factors do not depend on the UK's membership of the European Union (the "EU"). Nevertheless, even arbitration is subject to the wider socio-economic context, particularly when concerned with jurisdiction shopping. As such, the uncertainty surrounding Brexit and perceptions of the UK as anti-business may be enough to damage London's hard earned standing as an arbitration centre.
Will London's popularity wane?
There are no obvious legal reasons why London's popularity as an arbitration destination should wane. Following Brexit, English courts will continue to apply the Arbitration Act 1996. This is seen as an arbitration friendly piece of contemporary legislation; parties and counsel have 20 years of experience navigating and learning its quirks. The English judiciary will continue to apply the Arbitration Act with the same tact and pragmatism as before, while respecting arbitral processes and enforcing awards rendered overseas. A dedicated, skilful and competitive legal industry will remain at the service of London's arbitration users.
Importantly, the New York Convention will continue to govern the enforceability of awards rendered in London. This includes awards made in London to be enforced in an EU Member State.
Some commentators have mooted perceived benefits for London arbitration of Brexit, most prominently the possibility of anti-suit injunctions in respect of proceedings in EU Member States. Currently, such injunctions are deemed incompatible with the Brussels I Regulation governing the jurisdiction of EU Member State courts (Allianz SpA and Generali Assicurazioni Generali SpA v West Tankers Inc. (C-185/07)). A Brexit opens the door to English courts once again granting these much valued injunctions.
And yet, it would be naïve to think that a decision as monumental as Brexit would not impact arbitration in London.
Much of the rhetoric around Brexit concerned whether the United Kingdom, and specifically London, would remain "good for business". Many perceive the Brexit vote as raising questions about "Little Englandism" and the United Kingdom's commitment to remaining "open for business". It is possible that such perceptions could extend to arbitration in London.
Moreover, if business in the UK and London does suffer post Brexit, it is possible businesses will relocate and take their disputes with them. For example, with large banks already threatening to relocate to an EU Member State, arbitrations concerning financial disputes may follow the banks to their new jurisdiction. These alternative jurisdictions will be keen to establish themselves as the go-to for dispute resolution.
Finally, some commentators fear the impact of the end of free movement of people within the EU on London arbitration. They submit that European parties and counsel may avoid London if visa requirements increase the time and cost of business travel. However, whether this is enough to dissuade parties and counsel from arbitrating in London seems unlikely. After all, London is already a popular arbitration destination for Asian parties never afforded free and unrestricted movement.
Overall, London's offering as an arbitration hub remains strong. The London arbitration community must affirm its worth to businesses resolving disputes, even if those same businesses find London a less welcoming place to do business following Brexit.
Written by Robert Meakin, Partner & Russell Banfi, Associate