Due to the globalisation and digitisation of business models, an increasing proportion of transactions and contracts are internationally mobile, where parties are free to choose a particular governing law and legal services that best suit their requirements.
Interviews we have conducted with stakeholders have highlighted several aspects of English law in relation to business—for example, increased predictability, certainty, and flexibility, which make it a popular choice of governing law for many types of internationally mobile transactions.
For example, a 2019 survey of over 600 legal practitioners and in-house counsel involved in cross-border transactions in Asia found that English law was selected as the most frequently used governing law by 43% of respondents, and was often used in transactions with little or no other link to the UKSingapore Academy of Law (2019), ‘Study on governing law & jurisdictional choices in cross-border transactions’, April.. Similarly, it is estimated that English law comprises 40% of all governing law in corporate arbitrations globallyTheCityUK (2020), ‘Legal excellence, Internationally renowned UK legal services 2020’, November..
The choice of English law has become a standard—either officially or unofficially—for contracting in a number of areas since it provides compatibility across transactions and ensures ease in further transactions.
In section 3 above, we discuss the mechanisms through which the use of English law to govern internationally mobile transactions generates economic value for the UK. In section 4.2, we study four examples that display the value of internationally mobile transactions that are governed by English law. This illustrates the value of international activity that is underpinned by English law.
However, competition from other jurisdictions promoting their own legal systems, and increasing global trade tensions, such as those associated with Brexit, could pose a risk to English law’s status as a global standard for internationally mobile transactions.
Despite this, there is also significant future value available from the use of English law across various new markets. Thus opportunities to promote the use of English law internationally should be seized: this is discussed in section 4.4.
This section is structured as follows.
- Section 4.2 highlights some of the value of internationally mobile transactions governed by English law through four examples:
- the maritime sector (section 4.2.1);
- commodity trading (section 4.2.2);
- ISDA swaps and derivatives (section 4.2.3);
- insurance contracts (section 4.2.4).
- Section 4.2.5 then summarises the potential significance of the value of English law to the UK economy and some emerging competitive risks.
- There are potential risks to the widespread use of English law and to the associated benefit to the UK economy, discussed in section 4.3. However, further growth of existing markets where English law is widely used and the prevalence of the use of English law in those markets also presents an opportunity to increase the value for the UK.
- Section 4.4 sets out the further opportunities for English law to bring additional value to the UK economy in emerging sectors, markets and products.