Out-Law / Your Daily Need-To-Know

Brexit ‘unlikely a key factor’ behind fall in London Commercial Court judgments

Out-Law News | 26 May 2022 | 11:28 am | 3 min. read

Brexit is unlikely to be responsible for a significant fall in the number of cases heard by London commercial courts, according to one expert.

It comes as a new legal study noted a dramatic year-on-year decline in the number of judgments handed down by the courts. Between April 2021 and March 2022, there were 20% fewer decisions handed down, and 34% fewer litigants used the courts. The study, published by Portland Communications, suggested the decrease was caused by a combination of Brexit, Covid-19 and increased competition from other international courts. 

But Emilie Jones, commercial litigation expert at Pinsent Masons, said the “striking” drop was unlikely to be linked closely to Brexit. “Cases proceeding to judgment in the Commercial Courts in 2021 or early 2022 will probably have begun before the Brexit transition period ended in December 2020 - and in many cases the disputes will stem from contracts containing jurisdiction clauses which significantly pre-date Brexit,” Jones said.

She added: “It is true that some businesses may have moved away from including English court jurisdiction clauses in their contracts in anticipation of Brexit - and that last year’s Portland report showed a small decrease in EU litigants using the Commercial Court, likely driven at least in part by Brexit-related concerns about the enforcement of English judgments. However, it would in my view be surprising if such concerns were already being reflected in such a significant decrease in the number of judgments given by the London Commercial Courts.”  

Instead, Jones argued that the decrease is likely to represent a “blip” in the otherwise general upward trend in the number of judgments delivered by these courts. “At first blush, this might seem like a concerning statistic, in terms of the ongoing strength and appeal of the English Commercial Courts. But the change could be explained by reference to factors which do not undermine their continued position as a global venue of choice for the resolution of major commercial disputes,” she added. 

The courts’ own report (75 pages / 0.77MB PDF), published in February this year and covering a period that overlaps with the Portland study, showed an upward trend in the number of claims being settled in both the Commercial Court and London Circuit Commercial Court. Jones said it was likely that financial pressures brought about by the pandemic had focused some parties’ minds on resolving disputes consensually.

“It is also possible that some cases issued in the London Commercial Courts are being transferred to Circuit Commercial Courts in other English regions or to County Courts. There is a focus by the courts on ensuring that the Commercial Court’s resources are dedicated only to those claims whose value or complexity really require its expertise. Smaller, simpler cases can benefit from shorter lead times elsewhere,” said Jones. 

According to its own report, between 2021 and 2022 the Commercial Court began auditing claims issued there and transferred a number of smaller and more straightforward claims to the London Circuit Commercial Court, Circuit Commercial Courts in other locations, or an appropriate County Court. From 2022 onwards, all claims issued in the Commercial Court are audited this way before their first procedural hearing, or ‘case management conference’, in the matter.

The Portland report also noted that the English Commercial Courts face increasing competition from international commercial courts that use English law as their legal basis, such as the Dubai International Financial Centre Courts. Some courts adopt English law wholesale – like the Abu Dhabi Global Markets Court – and others, such as the Singapore International Commercial Court, will hear cases governed by a range of foreign laws. 

One commentator in the Portland report observed that “while the [English] Commercial Courts remain the premier venue for hearing English law claims, it is not the only one. International businesses now have a number of options enabling them to enjoy the significant benefits of English law from the comfort of their own locations.” 

Max Rossiter of Pinsent Masons said: “English courts must not be complacent in the face of the growing number of international commercial courts elsewhere in the world, such as in Singapore and the Netherlands, which offer well-resourced facilities and proceedings in English, among other features. However, the fact that claimants in the London Commercial Courts in the period covered by the Portland report still came from 75 different nationalities shows that the English Commercial Courts remain attractive as a forum for international litigation.” 

“That many claimants remain keen to establish a connection to England and Wales, so as to have disputes heard here, is also supported by the fact that there has been an increase in jurisdiction challenges in certain areas of the English courts. The competition posed by other international courts is actually likely to drive even greater innovation in the English Commercial Courts. We have already seen a great deal of innovation from the Courts, whose swift move to conducting hearings remotely at the outbreak of the Covid-19 pandemic allowed matters in those courts to continue largely on a ‘business as usual’ basis,” Rossiter said.

He added: “Remote hearings and the taking of evidence by video link have been popular with many international parties, and the courts are retaining some of these practices, with the default position in the Commercial Courts now being that hearings of less than half a day will take place remotely, and with encouragement to consider evidence by video link being built into the new Commercial Court and Circuit Commercial Court Guides.”