Article, Courts

Will European initiatives to create international commercial courts be attractive enough for foreign litigants post Brexit?

Sophie Hunter

Guy Canivet, president of the High Legal Committee of the Financial Platform of Paris recently told the press that Brexit is a real eye opener, because it triggered the need to come up with an alternative to London, in order to better respond to a change in relation between the UK and parties from the continent. With the deadline of the Brexit looming ever closer and growing tensions fueled by the uncertainty of its outcome, competition between major European capitals is under way to fulfill the gap that will be left by London on March 29 2019. Paris, Frankfurt, Amsterdam and Brussels have recently announced or created specialised international commercial chambers in their jurisdictions.

The creation of several European commercial courts that deal with international financial and business disputes enables European jurisdictions to kill two birds with one stone. First, to claw back on disputes that previously escaped their jurisdictions. Due to the absence of such courts, parties have to litigate abroad, often in London, or parties have to rely on expensive international private arbitration proceedings. Second, to get a share of the lucrative market London has become. In the UK, the market of commercial litigation legal services represented a total of 16 billion euros in 2016. The Court in London hears approximately 1000 procedures per year, of which almost 200 concern parties from the continent. Post Brexit, UK judgments will not benefit from the mutual recognition of awards between EU Member States, unless an agreement is reached between the UK and EU partners. In practice, because the UK will not be part of the EU legal system from March 29 2019, all decisions handed down in London will have to follow the exequatur procedures of each member state in order to be enforced. Therefore, the preference for London as a place to settle disputes is likely to be challenged by another European forum, which has yet to emerge according to a leading French firm.

Brussels aims to capitalise on its international status as de facto capital of the EU and home to numerous international institutions to set the specialised Business court (BIBC) as the European reference  for international commercial disputes. Paris already constitutes an international center for dispute resolution. The International Commercial Chamber of the Paris Court of Appeal (CICAP) aims to take advantage of the presence of the ICC, its Arbitration Court as well as the only ICSID not located in the USA. As the financial capital of the Eurozone, the home of the European Central Bank and one of the most important financial centers in the world, Frankfurt is strategically located to hear and settle international financial and business disputes. Amsterdam relies on its reputation as a massive hub for the fintech sector as well as the efficiency, low cost and ultra-modern technology of its courts.

European initiatives are trying to defy the hegemony of English courts in international commercial litigation. The Law Society which represents solicitors in England and Wales has warned the British Government of the consequences of a “no deal” on the status of UK Courts. At the same time, Brussels, Amsterdam, Frankfurt and Paris have started a race to offer the most attractive forum within the EU. There is a clear attempt to persuade foreign investors of the quality and efficiency of European courts which argue that they are faster and cheaper than British Courts.

While major European capitals try to woo foreign litigants, concerns have been raised in each jurisdictions over the fact that those national initiatives target high volume disputes and fail to adjust fees for small and medium sized businesses. The BIBC and NCC fees are relatively high (approximately 20 000 euros) in comparison to, for example, high court fees for appeal cases in the Netherlands (5 270 euros), but remain low when compared to arbitration.

However can the withdrawal of London from the European Judicial Area be compensated by national initiatives from the continent? This article argues that the mushrooming of international commercial courts in several European jurisdictions will lead to a fragmentation among European capitals, that is counterproductive to compete globally with other emerging legal hubs that have spurred, like Singapore or Dubai. Therefore, the establishment of a European Commercial Court (ECC) could well be a solution. A study commissioned by the European Parliament Policy Department at the request of the European Parliament Committee on Legal Affairs in September 2018 put forward the idea of establishing an ECC to: improve the settlement of international disputes in the EU in order to remedy the disparity between Member states and complement national initiatives. The ECC could better position itself as a highly experienced and neutral forum in the global competition for international disputes across the world. However some doubts over its legal basis and its relationship with the CJEU overshadow its creation.

Nevertheless, the impetus of European capitals to become part of the global trend of international commercial courts have at least started a procedural revolution, which is much needed to become more attractive. Regarding the French initiative, the CICAP, the two Protocols that outline rules of proceedings before the Chambers have managed to introduce many of the innovations which resemble arbitration practises such as flexibility with regard to the use of English, simultaneous interpretation, determination of a procedural calendar, rules of evidence, witnesses and experts testimony as stated here. Such procedural features will determine the success of European national initiatives to establish a reliable international commercial court that can counter London on an equal footing.

The competition for the settlement of international disputes has gained momentum with the mushrooming of international commercial courts across the globe. In 2018, China has announced the creation of the China international commercial court to support its Belt and Road projects. International litigants are, thus, more likely to forum shop and put London, European initiatives and regional hubs in competition. Apart from European specialised commercial courts that are being created, the choice offered to litigants ranges from so called “neutral countries” such as Zürich, Vienna or Stockholm to emerging regional legal hubs that have reformed their judicial system and created new courts with the ambition to attract international commercial litigation. The Dubai International Financial Center (DIFC) opened in 2004 has decided in 2016 217 disputes alone, the Qatar International Court and Dispute Resolution Center (QICDRC) created in 2009 has handed down 38 decisions between 2009 and 2017 and more recently in 2015, Singapore launched the Singapore International Commercial Court (SICC).

European initiatives are lagging behind the more attractive model of Singapore that seem better aligned with  the realities of international commerce. Since its establishment in 2015 as a division of the High Court, the SICC has heard 17 cases from parties of various jurisdictions. In contrast with European initiatives, the SICC took an innovative approach to anchor itself as a the main Asia hub for international commercial disputes. The SICC is supported by a world-class bench comprised of 11 International Judges from both civil and common law traditions who have extensive expertise in commercial law (USA, HK, Australia, England and Wales, Japan and Austria). To respond to the rise of  global commercial cases, parties who have no connection to Singapore (offshore cases) may be represented by foreign lawyers. This unique international component is crucially lacking in European intiatives which rely on national procedural rules and national judges. Also, parties can apply for the proceedings to be heard confidentially instead of in an open court. Because the SICC is a division of the High Court, decisions can be appealed to the Singapore Court of Appeal. In a nutshell, the SICC offers “adjudication by a court rather than a mediator or tribunal”. With the aim to position the SICC’s reputation as the leading neutral centre for the resolution of international commercial disputes in Asia, new laws were passed in January 2018 to boost the attractiveness of the SICC as the regional seat for international arbitration and commercial dispute resolution. The SICC is part of a larger plan to set Singapore as Asia’s dispute resolution hub, which includes the Singapore International Arbitration Centre, established in 1991, and the Singapore International Mediation Centre, launched in November last year.

While European initiatives seem to be lagging behind the Singaporean model, the NCC/NCA in the Netherlands should be mentioned for its innovative approach. More ambitious than the French CICAP, the NCC/NCA can hear both civil and commercial disputes. English will be the language of proceedings even if, evidence may be handed in the French, German or Dutch language, without a translation being required. The court hearing will be held in English and the judgment will be rendered in English with all legal documents being submitted electronically. This was already the case in two district courts, namely Rotterdam and The Hague, as outlined in this post. The CICAP is far behind the flexibility offered by the Netherlands.

As Guy Canivet concluded,“we are experiencing the globalisation of law by the law itself.” It is up to European capitals to cooperate in order to respond to the gaps left post Brexit, and to shape a coherent framework that is attractive enough to compete globally. The first hearings at the CICAP expected early 2019 will reveal whether the model advanced by Paris can be attractive enough for foreign litigants, or whether it is doomed to fail against more attractive models.

The Author 

Sophie Hunter is a Former Judicial Clerk at the International Commercial Chamber, Paris