November 02, 2016

U.K. to Remain Top in Arbitration Despite Brexit

Despite the uncertainty following the British referendum on 23 June 2016, when the United Kingdom voted to leave the European Union, one area is not expected to change and in all likelihood will flourish. London has long been revered as the centre of international arbitration for a variety of reasons, and the majority of these benefits will endure no matter what type of agreement is decided upon between the U.K. and EU as a result of Brexit. 

A Rise in Commercial Disputes 

In general terms, the overall number of commercial disputes is expected to rise as a result of Brexit, as companies attempt to navigate these uncharted waters. This will benefit the U.K. arbitration market, perhaps bolstered by the weakness of the pound making London, albeit possibly temporarily, a cheaper place to operate.

The New York Arbitration Convention

In practical terms, the enforcement of arbitration awards will continue to be governed by the New York Arbitration Convention of 1958 — a key aspect of international arbitration — which creates a uniform framework across its international signatories for the recognition and enforcement of arbitral awards in many parts of the world (157 states currently being signatories), including the U.K. The U.K.’s position will not change on leaving the EU; it is a party to the Convention in its own right. 

Additionally, the main piece of U.K. legislation which currently governs London’s arbitration scene — the Arbitration Act 1996 — will be unaffected by Brexit as it incorporates no EU law. 

Choice of English Law 

English law is still frequently chosen as the governing law in international commercial contracts and this choice is often coupled with the selection of London as the seat of arbitration. 

The advantages of the choice of English law are manifold: the system has long benefitted from a globally held trust in its reliability and efficacy; the quality of the system is for the most part unquestioned and benefits from its unrivalled reputation for judicial excellence and independence. As a result, the developing and developed world will continue to look to the U.K.’s unparalleled legal system. Additionally, the way in which the common law is based on precedent and evolves contemporaneously has long been an attractive aspect of the system. This flexibility combined with the reputation of English law as both certain and commercially minded has resulted in English law being the most popular choice of governing law in cross-border commercial contracts. As commercial contract law in the U.K. has been largely unaffected by membership of the EU, this is not expected to change following Brexit. 


Although there are potential challengers to London’s position — jurisdictions such as Singapore, Hong Kong and Dubai — at present, they cannot rival London’s depth of expertise and tradition. The reputation of the U.K. as a reliable and fair place in which to settle complex multijurisdictional commercial disputes has developed quite apart from its relationship with the EU and, although other markets are strong even within the EU itself, London’s many benefits — as a financial and legal hub and with all the advantages of an English speaking city — should help keep its head well above the parapet. 

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