Brexit: Europe sees emergence of specialist commercial courts to compete with the UK
After the Brexit referendum in 2016, European jurisdictions began to create their own specialist commercial courts, given the potential impact of leaving the EU on the UK’s own courts. Commentators have asked whether the creation of such courts will change the landscape of commercial disputes and arbitration, for example by attracting the litigation cases that traditionally go to the English courts and, in particular, the London Commercial Court.
Such courts have been established in France and the Netherlands, while Belgium, Germany and Switzerland are also looking into their creation. Both the French and Dutch tribunals are specialised sections within national courts. Compared to ‘regular’ chambers, they cater in particular to international disputes. For instance, their judges have specific experience in private international law and English legislation.
Between its opening in 2019 and 2022, the Netherlands Commercial Court (NCC) saw only 16 cases, according to a publication by the Court. The tribunal’s performance is, however, generally well-regarded, says Martin Poelman, a partner at the Amsterdam firm Poelman. ‘They have very good judges and broadly speaking their judgments are perceived as good and solid’, he says. Poelman suggests that some Dutch lawyers are, however, hesitant about going to and promoting the NCC.
Dries Beljon, co-founder at Lean Lawyers in Utrecht, says that the vast majority of cases before the NCC have involved foreign parties, and that ‘all steps have been completed within a year, with most of them completed within approximately eight weeks’. He adds that the NCC makes ‘litigation significantly cheaper and quicker than most – internationally orientated – arbitrations, as well as […] many commercial courts outside the Netherlands. The NCC proceedings are also quite flexible and can be adapted to complex international commercial disputes. We see this as a great advantage’.
The French commercial court’s decisions, unlike the UK’s, benefit from the extremely quick and efficient recognition and enforcement mechanism of the Brussels Regulation
Partner, Herbert Smith Freehills
The NCC uses the latest communication technology – for court reports, for example – while proceedings and judgments are issued in English, avoiding the possibility of the process being perceived as non-transparent and unpredictable by those who don’t speak Dutch.
In France, the International Chamber of the Paris Commercial Court (CCIP-TC) was set up in 2018 at the same time as the International Chamber of the Paris Court of Appeal (CCIP-CA). This ‘guarantees the parties an homogenous set of rules for the resolution of their disputes throughout the two levels of jurisdiction’, says Clement Dupoirier, a commercial litigation partner at Herbert Smith Freehills in Paris. ‘Four years later, the ambition to provide litigants with a procedural environment aligned with international standards has been met.’
According to Dupoirier, the CCIP-TC is the entry point for attracting international disputes to France. ‘The main challenge it faces is that of any new institution: it needs to spread the word of its existence around the world and build a track record. The CCIP-TC and the French legal community generally are very active [in trying to] reach these goals’, he says.
Despite these new arrivals, the impact on the English courts that some feared would result from Brexit doesn’t seem to have materialised so far. ‘The English Commercial Court in fact appears to be holding up very well in the face of Brexit and UK sanctions regimes against various states’, says Lucinda Orr, Scholarship Officer of the IBA Litigation Committee and a partner at Enyo Law in London.
Nick Vineall KC, Chair of the Bar of England and Wales and a barrister at London’s 4 Pump Court, says there hasn’t been a reduction in commercial work since the UK left the EU. He explains that the Commercial Court and the London arbitration sector are as busy, perhaps even busier, than before. ‘The reasons are firstly that the Commercial Court and London arbitration sees a wide cross section of the world’s disputes, and parties domiciled in the EU/EEA [European Economic Area] only account for a modest part of litigation in the Commercial Court’, Vineall KC says. ‘And secondly, the complexity of the problems thrown up in particular following the Russian invasion of Ukraine and the imposition of sanctions have themselves created a great deal of work.’
Beljon says it’s hard to predict whether the new EU commercial courts will represent a threat to the UK’s. ‘In general, lawyers see and feel the desire among their clients for legal certainty, [or] as much as possible. Brexit has [created] much uncertainty on this level – we don’t know how the case law will evolve within the UK and whether it will develop in line with the case law of the European Court of Justice’, he says. Poelman meanwhile believes that, currently, there isn’t a challenge to the UK courts but this may change once the NCC begins to attract more cases.
Dupoirier doesn’t doubt that both the French and UK courts will be kept busy. The one competitive advantage he sees as distinguishing the French court, however, is that ‘its decisions, unlike the UK’s, benefit from the extremely quick and efficient recognition and enforcement mechanism of the EU Brussels I bis Regulation’, which EU courts use for the purpose of determining where jurisdiction lies in cases involving multiple Member States.
For the UK, the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (‘the Convention’) would represent a similar framework as the Brussels Regulation since it ensures the contractual choice of the parties regarding jurisdiction is enforced and that judgments from tribunals in member states are enforceable in the EU.
The UK was, pre-Brexit, among the member states of the Convention by virtue of being part of the EU. Before Brexit, if a defendant wanted to defend a case in the UK but was sued in the EU or in a member state of the Convention, it was reasonable to predict that the foreign court could be persuaded to decline jurisdiction in favour of the UK. Post-Brexit, without international obligations in place for foreign courts to decline jurisdiction in favour of the UK, British parties litigating in EU countries become subject to the foreign court’s domestic rules of private international law, in common with any other third country.
In 2021, the UK’s application to accede to the Convention was blocked by the European Commission by means of an official communication to the Swiss Federal Council, the Convention’s depositary. Vineall KC says that the Bar Council is continuing to press for the UK to re-join the Convention, ‘which will be to the mutual benefit of the EU and the UK’.
Image credit: Feydzhet Shabanov/AdobeStock.com