In his speech at the recent P.R.I.M.E. Finance conference in The Hague on 22 January 2018, Lord Briggs ended with a word of warning. He said if the present uncertainties over Brexit were to lead to a large shift in the balance between courts and arbitration, for the resolution of international commercial and financial disputes, then 'transparency and open justice will be the inevitable victim.'  He said the development of the common law through independent judges in public court rooms, and publication of the reasons for their judgments, is a 'corner stone' of the rule of law, and has enabled the common law to remain relatively predictable, and capable of responding flexibly to changes in the business and financial world. If there was a large shift towards arbitration, which thrives on privacy and restricting avenues of appeal, he argued this could seriously impact on the transparent development of the common law.

Arbitration concerns 

This is not the first time judges have voiced their concerns about arbitration’s effect on transparency and open justice. In a lecture in Singapore in 2015 Sir Bernard Rix described how the increasing popularity of arbitration meant that commercial law was 'going underground' and argued that as more international commercial cases go to arbitration we were losing the basic 'feedstock' of our commercial law. In 2016 Lord Thomas caused controversy in arbitration circles when he suggested in his Bailii lecture that appeals from arbitration should be more readily available to maintain a good diet of cases for the Commercial Court to ensure, in the public interest, that the commercial law continues to be irrigated and keeps pace with change.

Major player

The UK is currently a major player in the international market for the resolution of international commercial and financial disputes, in both court and arbitration. This is down to the perceived quality and integrity of our Commercial Court judges and arbitrators, the predictability of English law, as well as the relative ease with which judgments or arbitration awards can be enforced internationally. There is no obvious reason why Brexit should affect these perceived advantages of the UK, or mean we are now in danger of retreating into some parochial back-alley. 

Dynamic 

For example, it is not clear that Brexit will adversely affect the choice of English law, or jurisdiction. Some feel that in many respects once the UK is left to its own devices English law may be able to react more quickly and freely to changes and advances in the fast-moving business world. Blockchain contracts and commercial exploitation of bulk digital data are just some examples of where the law needs to remain dynamic. If one reason for choosing English law is its relative predictability and certainty compared with civil law, then detachment from EU law should reinforce that perceived advantage. 

Shifting balance

Up to now however the balance between courts and arbitration in the UK has in some measure been preserved by the virtually automatic regime of mutual recognition and enforcement of judgments throughout the EU under the (now Re-Cast) Brussels Convention. But that balance may be shifting. The Brussels Convention has been founded on the notion that the EU is a single jurisdiction ruled over by the CJEU.  Both of these ideas are anathema to the Brexit process. It is not easy to see how a suitable compromise could be reached given the UK Government’s professed red line over any continuing jurisdiction of the CJEU. It would be unacceptable politically and seen as a cheat on the British electorate. If Brexit means an exit from the Brussels Convention, it could lead to a significant shift in favour of arbitration as international commercial parties look to avoid uncertainties over their ability to enforce court decisions.

Why England?

So how can we heed Lord Briggs’s warning and ensure that that shift does not impact on the development of English commercial law, but at the same time ensure that international parties who wish to arbitrate continue to come to England? There have been a number of suggestions, from relaxing the current restrictions in section 69 of the Arbitration Act which limit appeals from arbitration to the court on a point of law, to compulsory publication of arbitration awards. But the ability to appeal under section 69 is routinely excluded by parties who choose arbitration, and confidentiality is one of the main reasons parties choose to arbitrate. 

Finding the right balance

Therefore it is a question as ever of finding the right balance. It could be that appeals to the court on points of law could be made more attractive to parties by for example improving and speeding up the process and, as some have suggested, permitting leap-frog appeals from arbitration direct to the Court of Appeal. And it would be possible to enable arbitration awards to be published, suitably anonymised and redacted to preserve confidentiality. Neither however are ideal. Of course if the Government chose to relax its red line on the CJEU and ensured the current advantages of the Brussels Convention were preserved after Brexit, Lord Briggs would have no reason for concern, and the current happy balance between court and arbitration would continue. That however might be wishful thinking.

Mathew Rea is co-head of the global international arbitration team and a partner in the commercial litigation client service group at Bryan Cave.