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A third of companies have shifted contracts out of English courts' jurisdiction since Brexit vote

Four in 10 of those who have not made a move say they will do unless significant progress is made in negotiations by March 2019

Ben Chapman@b_c_chapman
Monday 23 July 2018 09:05

Brexit threatens the UK’s position as a world leading centre for companies to resolve legal disputes, with 35 per cent of businesses saying they have changed their contracts so that issues are heard in courts elsewhere, according to new research.

Of those, 51 per cent have chosen for disputes to be heard in EU jurisdictions, with the remainder deciding on locations elsewhere, a survey by Thomson Reuters found. All of the companies polled conducted business internationally.

English courts have historically been the first choice for many companies to govern their contracts, with London being a top destination for companies to bring litigation.

The popularity of the English courts helped legal services generate £31.5bn for the UK economy in 2016, along with a trade surplus of £4bn.

But companies are uncertain as to whether the UK will continue to benefit from a regime that will mean judgments made here are recognised in other EU member states, leading some firms to already look elsewhere. Others are taking a “wait and see” approach, according to the report.

Although close to two-thirds of businesses surveyed have not yet made changes to contracts, 39 per cent of those say they intend to review contracts unless Theresa May’s Brexit negotiating team makes significant progress by March 2019 on the question of what legal regime will apply in future.

Of this group, over a third are considering selecting different jurisdictions for their contracts. A move away from the English courts should be a concern for the legal profession in this country, said Jim Leason, a vice-president at Thomson Reuters.

He added: “It is this initial selection in a contract that drives an entire industry of legal advice that supports transactional work, ongoing contract management and dispute resolution.

“If nothing concrete comes from Brexit negotiations soon or if there is a no-deal Brexit scenario, then more and more businesses will consider taking legal disputes elsewhere.

“London has a long-standing reputation as a global legal centre. However, a poor outcome from Brexit could result in work and talent pivoting away from the UK legal services sector.”

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