3.3.1: English law as a global market standard
Decisions of the English courts on complex market issues relevant to internationally mobile transactions contribute to the building of precedent under English law. Network effects also play an important role in this process, as we discussed above.
English law has the flexibility to adapt to and solve complex market problems relatively quickly. By providing solutions early in various markets, English law often enjoys the ‘first-mover advantage’ by becoming a global market standard in these areas. This can occur through the establishment and building of precedent, providing further predictability to users of English law. This benefit leads to a greater volume of transactions being governed under English law, encouraging the widespread use of English law in internationally mobile transactions. Indeed, this is a form of network effect—as English law becomes more widely used, businesses are more likely to choose English law in part as it has become a global standard.
Through the building of precedent and the establishment of these global market standards, all English law users, and especially UK businesses, benefit from certainty and predictability in the law and a law that continuously evolves to reflect the issues that they face. Businesses can more easily assess the nature and scope of their legal obligations, be clear about how risk is allocated when the contract is formed, and predict the likely outcome of disputes and judicial decisions. Businesses are able to plan accordingly in light of relevant precedent, and have increased confidence to transact due to this certainty and predictability in the law.
This generates economic value by promoting growth in transactions and increases the domestic competitiveness of all UK businesses, as discussed in section 2.