Will London Remain the World Leader in International Arbitration?

By Serena Camici
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Serena Camici is a sophomore studying International Relations in the College of Arts and Sciences.

For decades, commercial and legal professionals have regarded London, England as the top destination for international dispute resolution, in which enterprises headquartered around the world seek quick and easy arbitration from English courts. As opposed to trial, legal arbitration offers a more flexible option to dispute settlement, known for its relative privacy, convenience, and affordability. The Law Quarterly Review has praised the London Court of International Arbitration (LCIA), a private company offering dispute resolution, as “expeditious where the law is slow, cheap where the law is costly, simple where the law is technical, a peacemaker instead of a stirrer-up of strife” [1]. London is home to nearly half of the world’s leading law firms, as well as smaller specialist firms. 80% of the 17,000 cases handled by the International Chamber of Commerce Court of Arbitration in 2014 involved international actors [2], representing 180 countries in total. 

London-based arbitration attracts overseas firms for its judicial, legislative, cultural, and historical roots. London’s courts have been commonly regarded as impartial, expedient, committed to arbitration, and having extensive international judicial expertise. For example, London participates in the New York Convention 1958, which recognizes the enforcement of international foreign arbitral awards [3] and gives confidence to businesses that resolutions will remain binding. A significant portion of London’s legal prestige can be attributed to the English legislative system, specifically in its conception of common law. Businesses view the freedom to contract principle and confidentiality clauses as particularly appealing if they wish to avoid a public trial in their home territory [2]. London courts also pull on a wealth of knowledge about international affairs as a result of its tradition as a hub for global trade and finance and boast a variety of industry specialists. 

However, London’s top seat in the field of international arbitration is vulnerable to both external competition and internal challenges. In 2021, Singapore ranked alongside London as the “most preferred places for arbitration in the world,” with Hong Kong coming in second place, by Queen Mary University of London and White & Case International Arbitration Survey [4]. While Singapore has not yet officially overtaken London’s seat as top arbiter, this ranking should be taken as a sign that the globe has begun to explore other options for alternative dispute resolution. Singapore’s geographic, political, and economic ties with Asia put it at the forefront of consideration for enterprises within that region seeking expedient arbitration awards in a neutral ground. It also has access to a skilled and sophisticated legal and political infrastructure commended for its high integrity [5]. As the world increasingly looks to Asia as a center for commercial and technological growth, London may struggle to compete as it becomes entrenched in EU struggles, such as rising inflation, war, and political controversy.
 
Concerns have arisen about Brexit’s impact on the efficiency of London’s courts. In a post-Brexit world, the UK no longer benefits from the EU regime, such as the Brussels Regulation which codifies the jurisdiction of judgements obtained in England within other EU states [6]. If this results in a new character of arbitration defined by lengthy court proceedings and “cumbersome enforcement procedure” [6], London will lose its primary selling point as a place for legal expedience. 

At the same time, President of the LCIA Paula Hodges KC opposes the stance that Brexit will have a lasting effect on London’s position as a world leader in arbitration. She states that little overlap exists between English contract law and European law, meaning that the practice of arbitration itself will not become overly entrenched in post-Brexit restructuring. Therefore, it can be concluded that forecasts for the impact of Brexit on international arbitration rely on “how the UK portrays itself and seeks to welcome and encourage international investment and participation” [7]. It will be especially interesting to watch how incumbent Prime Minister Rishi Sunak’s foreign diplomacy affects attitudes towards arbitration in light of his moderate pro-Brexit stance.
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Many currently view London as accomplished and equitable in its dispute resolution, but it is not the only territory with these defining attributes. With this in mind, it is worth keeping a close eye on how the global stage shifts within the next decade in response to unprecedented political and economic developments. London may very well be displaced by other cities in the preferred ranking for international arbitration, including but not limited to Singapore, Hong Kong, and New York. 

The opinions and views expressed in this publication are the opinions of the designated authors and do not reflect the opinions or views of the Penn Undergraduate Law Journal, our staff, or our clients.

References

[1] “History.” London Court of International Arbitration. https://www.lcia.org/LCIA/history.aspx [2] Niece, Rory Mac. “Why Is London A Global Capital for International Arbitration?” Ashfords. March 20, 2015. https://www.ashfords.co.uk/news-and-media/general/why-is-london-a-global-capital-for-internati onal-arbitration 
[3] “The New York Convention.” New York Arbitration Convention. https://www.newyorkconvention.org/ 
[4] “Singapore Tops Ranking for Seat of Arbitration.” Asia Business Law Journal. July 6, 2021. https://law.asia/singapore-tops-ranking-seat-arbitration/ 
[5] Ling, Margaret Joan and Vivekananda. “The International Arbitration Review: Singapore.” The Law Reviews. July 14, 2022. https://thelawreviews.co.uk/title/the-international-arbitration-review/singapore#:~:text=In%20sh ort%2C%20Singapore%20is%20seen,skilled%20and%20of%20high%20integrity.
 [6] Lightfoot, Charlie. “Global Disputes: Can the UK Maintain its Elite Status?” ALM. June 20, 2022. https://www.law.com/international-edition/2022/06/20/global-disputes-can-the-uk-maintain-its-elite-status/ 
[7] “Paula Hodges QC: ‘Reasons Why Parties Choose London as Arbitral Seat Remain Unaffected by Brexit.’” Ciar Global. October 20, 2020. https://ciarglobal.com/paula-hodges-qc-reasons-why-parties-choose-london-as-arbitral-seat-remain-unaffected-by-brexit/#:~:text=London%20has%20an%20excellent%20reputation,of%20arbitr ation%20in%20the%20world.