Record dispute numbers, but can London hold onto its litigation crown?

Record dispute numbers, but can London hold onto its litigation crown?

Notwithstanding the huge devastation caused by the Covid-19 pandemic, there can be little doubt that most commercial law firms have been able to flourish online. Thanks to the ubiquitous use of technology, lawyers have been able to work from home continuing to advise their clients in much the same way as they always have done.

Indeed, the data supporting this generalisation is quite remarkable: recent figures published by the American Lawyer show that the top 100 US law firms by size (the Am Law 100) boosted their aggregate revenues by 13.4% last year – an astonishing feat in a very mature and highly competitive market. Although comparable figures for the UK’s elite law firms have yet to be published, they are also expected to reveal a robust performance.

Inevitably, much of this growth has been fuelled by pandemic-related advisory work for companies seeking to mitigate the impact of the pandemic resulting from a series of lockdowns and numerous restrictions affecting businesses of every size. Perhaps counterintuitively, disputes work has also featured prominently in the list of busy practice areas – as indicated by the latest annual report from Portland Communications on the UK’s Commercial Courts.   

‘Vital importance of justice’

From the outset of the pandemic, the continued smooth operation of civil justice (particularly at the premium end) was seen to be of paramount importance. Last March, the Lord Chief Justice, Lord Burnett of Maldon, stated that it was ‘of vital importance that the administration of justice does not grind to a halt’ adding that there was ‘an urgent need to increase the use of telephone and video technology immediately to hold remote hearings where possible.’

Lord Burnett’s sharp words were followed by swift deeds. The widespread proliferation of video conferencing in the Commercial Courts enabled fully remote hearings to be up and running within a fortnight. When Sir Geoffrey Vos, Chancellor of the High Court, later reviewed the progress of online courts and remote hearings, he noted that the Business and Property Courts (B&PCs) had managed ‘in the 12 weeks since lockdown to undertake nearly 85% of usual business. That is quite an achievement.’

According to Portland’s analysis, this achievement is further underpinned by the results of their survey which show that the London courts ‘had a record year, quickly recovering from last year’s dip in activity, and re-establishing a six-year-long trend of growth.’ Portland’s data indicates that the courts have been remarkably resilient, both to the potential effects of the COVID-19 lockdowns and the continuing fallout from Brexit.

Despite international court competition and the proportion of EU27 litigants continuing to decline following Brexit, this has been more than offset by other foreign litigants, most notably those from the US and Russia. In exclusive polling, Portland also reveals that the UK public favour the continued use of remote hearings, as the courts adjust to the increased use of technology in dispute resolution.

A record year

So what exactly constitutes a record year? Answer – the number of judgments handed down by the London Commercial Courts: 292 over the past twelve months, which represents a 47 per cent increase compared to the previous year. The spread of nationalities (75) and the number of litigants (1336) using the courts were also both at record highs. For the third year in a row, more than 70 different nationalities used the courts, underscoring London’s unparalleled reputation as an international hub for dispute resolution. Meanwhile the number of litigants was up by 65 per cent compared to last year.

One notable development is a continued increase in the number of UK litigants. Although it might seem self-evident that London’s Commercial Courts should primarily serve British litigants, this has not been the case for all of the past decade. Go back five years and around 70 per cent of cases involved one or more foreign parties while 60 per cent of all litigants were non-UK based.

But last year, the UK/non-UK figures were evenly split at 50-50. As part of a developing trend, the UK component increased from 45 per cent last year, and 41 per cent the year before, offset a further reduction among EU27 litigants. In the past year, only 11.5 per cent of total litigants were from the EU27 – a notable decrease from the high of 16.5 per cent recorded three years ago.

Excluding those from the UK, US and EU, the geographic spread of litigants appears to be quite eclectic. Prominent among those in the top ten are Russia (3rd), Ukraine (4th) and Kazakhstan (9th). Although Russia and other former Soviet Republics have been the most common jurisdictions of origin for active litigants in London, Kazakhstan has seen a fall from 2nd place last year to 9th place this year.      

Kazak court – British judges

One cause of this decline is that some Kazaks have been choosing to litigate in Nur-Sultan rather than London. Kazakhstan’s judiciary is known to be weak and is trusted by few Kazaks, least of all wealthy litigants. But things have changed in the court of the Astana International Financial Centre – an investment zone opened in 2019, which is led by a British chief executive, and served by nine British judges. Notably, their chief justice is Lord Mance, who was formerly the deputy president of the UK Supreme Court.

Applying laws that are closely modelled on those of England and Wales, these nine Judges use a streamlined version of London’s procedural rules. Their independence is guaranteed by the Kazak constitution, while the court’s electronic system for filing bundles is super hi tech: a bit like the Rolls Building, but with a Rolls-Royce finish. 

It exemplifies how English commercial law has arguably become a victim of its own success: having been exported around the world, different countries now compete for business using it as the model to copy and sometimes adapt with local characteristics.

Take Singapore, for example, where first rate local judges enjoy world class facilities to dispense largely English-based justice with maximum efficiency. In regional arbitration, meanwhile, Singapore leads a crowded and competitive field in Asia, leaving Hong Kong in its wake.     

More competition

Unlike nearly every other European jurisdiction, London’s commercial courts successfully overcame the challenges of the pandemic: the technology worked, cases progressed without delay and no additional backlog occurred. London’s longstanding pre-eminence as a forum for commercial disputes rests on the exceptional judges who make it all possible and the bench strength that London enjoys.

But despite the recent growth in London-based disputes, there is no room for complacency.   As globalisation continues to bring more business and more litigation to London, it is also creating new courts in places like Nur-Sultan. That means more work for British lawyers overseas, and yet more competition for London.

Although the two things are not mutually exclusive, London may face an increasingly uphill battle over the rest of this decade to maintain its claim to wear the undisputed crown as the world’s favourite disputes forum.

Dominic Carman

Written by:

Dominic Carman, journalist, writer and legal commentator.

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Author: Dominic Carman