Foreword
Summary
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A1
Acknowledgements
Figures and tables
Economic value of English law | Oxera

4.3: Risks and opportunities

Published: October 5th 2021
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2.1: Introduction 2.2: Economic value is created by ‘gains from trade’—realised through transactions 2.3: The law underpins growth in the volume of transactions (and therefore the generation of economic value) 2.4: Considering the law as infrastructure on which transactions take place
3.1: Introduction 3.2: The economic value created through the UK legal services ecosystem 3.3: The economic value created for the UK as a whole -3.3.1: English law as a global market standard -3.3.2: Agglomeration effects -3.3.3: Reduced transaction costs for UK businesses trading internationally 3.4: The choice of law and legal services for internationally mobile transactions
5.1: Introduction 5.2: English law suffers from a type of ‘market failure’ 5.3: Solutions to the free-rider problem: coordination across private and public parties 5.4: How to manage the ‘provision’ of English law
A1.1: Maritime sector -A1.1.1: Size of the market -A1.1.2: Overview of governing laws -A1.1.3: Risks and opportunities A1.2: Commodity trading -A1.2.1: Size of the market -A1.2.2: Overview of governing laws -A1.2.3: Risks and opportunities A1.3: ISDA swaps and derivatives -A1.3.1: Size of the market -A1.3.2: Overview of governing laws -A1.3.3: Risks and opportunities A1.4: International insurance contracts -A1.4.1: Size of the market -A1.4.2: Overview of governing laws -A1.4.3: Risks and opportunities
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Chapter 4

4.3: Risks and opportunities

While English law provides significant value to the UK economy through its use in internationally mobile transactions, global trends could pose a risk to English law’s status as a global standard for these transactions. For example, while the London Commercial Courts handled a record number of cases in 2020/21 compared to the previous six years, the proportion of litigants from the EU has been steadily decreasing since 2016/17.[1]Portland Litigation and Disputes (2021), ‘Commercial Courts Report 2021’. Only 11.5% of litigants at the London Commercial Courts were from the EU in 2020/21—a notable decrease from 16.5% in 2016/17.[2]Ibid. Questions around enforcement coupled with the recent establishment of international commercial courts across the EU, including in France, Germany and the Netherlands, may drive some EU litigants to locate disputes in the EU rather than the UK.[3]See Standing International Forum of Commercial Courts (2021), ‘Multilateral Memorandum on Enforcement of Commercial Judgments for Money’, Second Edition, April, for the enforcement procedures of … Continue reading

In addition, New York law—being one of the common laws used globally—may represent a significant alternative in some markets for many of the contracts that underpin internationally mobile transactions—particularly if these transactions involve parties located in New York and which may accordingly benefit from being governed by New York law.

There are further examples of potential competition from other jurisdictions around the provision of certain legal services. The recent growth in the number of international arbitrations in the Asia-Pacific region, with international arbitration centres in the region seeing large increases in the number of case filings in recent years, shows the credibility of these risks. The Singapore International Arbitration Centre (SIAC), for instance, saw 1,080 new case filings in 2020, a 125% increase from 479 new case filings in 2019, with a total sum in dispute of over US$8bn.[4]Singapore International Arbitration Centre (2021), ‘SIAC Annual Report 2020’. This is coupled with a decline in the proportion of SIAC cases governed by English law in recent years—9% of all … Continue reading

Indeed, several jurisdictions have been active in promoting their own legal systems and legal services sector as part of a strategy to attract more international business.[5]We note that in some cases these legal systems may be based, at least in part, on English law (for example, the DIFC in Dubai). In such ‘hybrid’ models English judges and English lawyers may be … Continue reading

For example, Singapore acknowledges that its legal system provides a vital infrastructure for its economy and a major attraction for international transactions in many sectors such as financial services, technology and shipping.[6]See, for example, Committee on the Future Economy (2017), ‘Report of the Committee on the future economy’, February, Appendix SC2.1. This has resulted in various activities being undertaken, such as actively promoting Singaporean law, raising the profile of its legal sector, opening up to foreign lawyers and establishing itself as a major arbitration centre.[7]For example, see Singapore Academy of Law (2021), ‘About Us: Introduction’ (last accessed 10 May 2021); SAL (2020), ‘Report on the right of appeal against international arbitration awards on … Continue reading These are important parts of a broader strategy to increase its attraction as an international business hub.[8]See, Committee to review the regulatory framework of the Singapore legal services sector (2014), ‘Final report’, p. 6.

Therefore, while English law is currently of great value to the UK economy, its use globally in internationally mobile transactions in some areas may be at risk to some degree. However, with the appropriate level of coordinated investment and support, which we discuss in more detail in section 5, English law is well placed to remain a pre-eminent choice globally.

There are also many opportunities for the use of English law to grow. This includes in existing markets (of which examples were provided in section 4.2) as these industries/sectors grow and if the use of English law for these internationally mobile transactions continues to expand. In addition, further opportunities may also exist in new markets and areas. These future opportunities, to which we turn in section 4.4 below, represent significant value that the use of English law can generate for the UK economy.

References

References
↑1Portland Litigation and Disputes (2021), ‘Commercial Courts Report 2021’.
↑2Ibid.
↑3See Standing International Forum of Commercial Courts (2021), ‘Multilateral Memorandum on Enforcement of Commercial Judgments for Money’, Second Edition, April, for the enforcement procedures of 33 countries including France, Germany and the Netherlands.
↑4Singapore International Arbitration Centre (2021), ‘SIAC Annual Report 2020’. This is coupled with a decline in the proportion of SIAC cases governed by English law in recent years—9% of all SIAC cases were governed by English law in 2020, down from 21% in 2017. Singapore International Arbitration Centre (2018), ‘SIAC Annual Report 2017’. Regardless of the precise governing laws used in these cases, such growth in other jurisdictions may represent a potential loss of value to the UK as new legal hubs emerge and provide competition to the UK.
↑5We note that in some cases these legal systems may be based, at least in part, on English law (for example, the DIFC in Dubai). In such ‘hybrid’ models English judges and English lawyers may be used to work on some cases, demonstrating the mobility of English law and legal services.
↑6See, for example, Committee on the Future Economy (2017), ‘Report of the Committee on the future economy’, February, Appendix SC2.1.
↑7For example, see Singapore Academy of Law (2021), ‘About Us: Introduction’ (last accessed 10 May 2021); SAL (2020), ‘Report on the right of appeal against international arbitration awards on question of law’, pp. 15–9. Ministry of Law (2017), ‘15 recommendations to strengthen Singapore as a global leader for legal and accounting services’, April.
↑8See, Committee to review the regulatory framework of the Singapore legal services sector (2014), ‘Final report’, p. 6.