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

Chapter 3: The importance of internationally mobile transactions: English law and the UK

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
4.1: Introduction 4.2: English law provides significant value to the UK economy -4.2.1: Maritime sector -4.2.2: Commodity trading -4.2.3: ISDA swaps and derivatives -4.2.4: International insurance contracts -4.2.5: The value of English law to the UK economy is significant 4.3: Risks and opportunities 4.4: Future opportunities for the use of English law represent significant potential value to the UK
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 3

Chapter 3: The importance of internationally mobile transactions: English law and the UK

  • English law generates significant economic value domestically. Beyond that, a large portion of the economic value of English law for the UK is generated through its application in internationally mobile transactions— and this is where a number of risks and opportunities lie.
  • This application of English law facilitates the international use of UK legal services and stimulates activity in the UK legal services ecosystem— directly generating value for the UK.
    • Decisions of the English courts on complex market issues, relevant to internationally mobile transactions, contribute to English law being a global market standard in many industries and sectors. This benefits users of English law as there is predictability in the law and the law continuously evolves to reflect the issues that businesses face. This is an example of a network effect of English law—the benefit gained by all English law users grows with the total number of users.
    • The use of English law and UK legal services by the international economy create agglomeration benefits within the UK, as UK businesses benefit from having easy access to the concentration of expertise in the law underpinning the economy and from increasing productivity of legal services. International transactions, therefore, help grow expertise in the UK that permeates through the rest of the economy, increasing knowledge sharing, productivity and innovation of all UK businesses.
    • The transaction costs of trading internationally are reduced for UK businesses due to the widespread global use of English law, increasing the competitiveness of UK businesses.
  • The overall value generated for the UK is maximised when internationally mobile transactions are governed by English law, and when UK legal services are used (whether the contract specifies the jurisdiction of the courts of England and Wales, or a UK-seated arbitration). However, there is still benefit to the UK economy when only one of these two things occurs.
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