Post-Brexit arbitration gains?

26 May 2017

This article was first published on Practical Law's Arbitration Blog.

The calling of a snap general election to take place on 8 June has raised any number of issues, not least of which is Brexit. Will our Brexit be hard or soft? Will our Brexit menu (as recently indicated in one major party’s manifesto) include an option not to Brexit at all?

If we assume that there will be a Brexit of some description, the position with regards to international arbitration becomes interesting. London is, of course, an extremely popular choice for international arbitrations. Practitioners will be keen to know whether the English court’s supervisory jurisdiction will be imperilled by leaving the EU, and they will want to know the terms on which leaving occurs.

Some commentators have (perhaps gleefully) suggested that Brexit will end the dominance of England as the preferred centre for dispute resolution. But it is hard to see why they say so.

Speaking to the National Judges College Beijing recently, the Lord Chief Justice rightly extolled the importance of excellent national courts in support of arbitration. London particularly recommends itself as a centre for arbitration partly on the back of the English courts. England is famously pro-arbitration; embedded in our legal culture is respect for the autonomy of the arbitration process. Unlike most civil legal systems, our judges are appointed from the ranks of legal practitioners, many of whom bring extensive, practical experience of arbitration to judicial decision-making. The English courts have a range of powers it can exercise in support of arbitration under the Arbitration Act 1996 (AA 1996), and the wisdom to know when to deploy them.

All of this is true and Brexit takes none of it away.

The powers of the English court include the power to injunct court proceedings commenced in breach of an arbitration agreement. In both reputation and practice, the English court willingly exercises this power.

However, the ability to grant an injunction is anathema in most civil jurisdictions. My European colleagues have been known to hiss when I have asked why they find injunctions so problematic.

Perhaps it should never have been a surprise that EU law would prohibit anti-suit injunctions as against proceedings in EU member states, even in support of arbitration. Since 2009, we have lived with the Court of Justice of the European Union’s (ECJ’s) ruling in the (in)famous West Tankers case, that a court of a member state may not issue an anti-suit injunction which has the effect of restraining proceedings in another member state, even if commenced in breach of an arbitration agreement. The ECJ so decided under Regulation (EC) 44/2001, and despite some coy recitals, the position has not changed under the revised instrument, the Recast Directive, Regulation (EU) 1215/2012.

But, come Brexit, we are not bound by the Recast Directive. And so an opportunity arises. As the eminent Professor Adrian Briggs puts it:

“… the relationship between judicial jurisdiction and arbitration will be freed from the hamstringing complications of the Regulation and the taint – to put it no higher – that the Regulation is less respectful of the rights and duties of those who promised to arbitrate.”

Undoubtedly, loathers of West Tankers are rubbing their hands. Indeed, Professor Briggs appears to see Brexit as an opportunity to further strengthen the English courts’ ability to support arbitration. He says:

“… there will be pure gain: in wider and better rules of English jurisdiction, to say nothing of anti-suit injunctions in those cases in which it is necessary to put the stick about”.

We might predict that the English courts will go back to its pre-West Tankers position and merrily injunct away (always within the appropriate circumstances and reason, of course).

Will Brexit make England more attractive as a centre for arbitration? Will the London institutional centres gain? Will practitioners see more parties choosing London as their seat?

In truth, England did not appear to lose much ground as a centre for international arbitration following West Tankers. Parties from around the world still consistently chose London as their seat; no doubt due to the reasons given by the Lord Chief Justice.

But now we have an opportunity to distinguish ourselves as against the remaining EU member states. Far from Brexit being detrimental to our international arbitration offering, we are now presented with quite the unique selling point. There is every reason to consider that England should be an even stronger choice for parties with potential actions against European counter-parties.

In short, it won’t hurt, and it looks like it will help.

And the final question: what is the sound of a thousand lawyers dusting off their Dicey…?


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