A Moment In The Drizzle: Could Brexit Represent An Opportunity For Arbitration?

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A trigger that came with more warnings than the Daily Mail in a post- colonial gender studies course, the formal notification of Article 50 has brought into relief the fact that the EU-UK legal framework is moving swiftly towards the Rumsfeld paradigm: “There are things we know that we know. There are known unknowns. That is to say there are things that we now know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know”.

But from the Prime Minister’s statements, a few legal threads can be drawn out. The main point of concern is the determination to leave the jurisdiction of the Court of Justice of the European Union (CJEU). The salient interest here is that the CJEUs positon as ultimate arbiter of EU law gives it a two-fold function; by giving binding opinions on the interpretation of EU law it ensures uniformity of the single market, but equally it provides a foundation of certainty to intra-EU regulations. A convincing case can be made that this existence of binding authority over member states is what characterises EU law as being more ‘domestic’ than ‘international’ law.

More concretely, the Rome and Brussels conventions, respectively covering choice of law agreements, and jurisdiction and enforcement, allow the choice of English law to be a secure one; enforceable across the EU and EFTA states, based in principles of mutual recognition. If the UK should insist on no oversight from the CJEU in its post-Brexit EU framework – a virtual impossibility, if access to the single market is sought – then the mutual recognition of UK and EU/EFTA judgements cannot be guaranteed in their current form. Instead a new agreement – for example, by ratifyiung the Hague Convention on Choice of Court Agreements – must be found, albeit providing a less straightforward framework than exists today.

And here is where arbitration has a chance to shine; remarkably for an international agreement, mutual recognition and enforcement of arbitral awards has been in place since the entering into force of the New York Convention in 1959. By requiring “Each Contracting State [to] recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon”, Article III gives teeth to arbitral awards, and means that the chosen seat of arbitration need not be unduly concerned with

For a post-Brexit UK, this means that the legal profession can attract participants on other factors – such as quality of law, ease of proceedings and the existence of an adversarial system. To be sure, there are areas in which arbitration remains inappropriate or impossible –such as tax, family law and criminal proceedings – but for businesses who carry out all or part of their services and manufacturing in the UK, adding arbitration clauses could provide a very useful insurance against future uncertainties regarding the pan-EU enforceability of their judgements. And for UK Plc, where legal services were estimated to represent a GBP 25 billion industry in 2015, maintaining the attractions of the UK as a seat of disputes ought surely to be a top priority.

Written by Peter Boyle.

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Peter Boyle is currently pursuing an LLM in Public International Law at the University of Kent in Brussels. A UK native, he has been resident in Belgium since 2013.

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Categories: ADR, arbitration, New Analysis, Opinion

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