International Arbitration Centre, Intercontinental Seoul Hotel, 15 November 2012
Lucy Scott-Moncrieff, president, The Law Society of England and Wales
It is a great honour to have been invited to speak to such a distinguished audience today about London's experience with international arbitration - and I look forward to hearing more about the upcoming arbitral developments in Korea.
London is a legal hub
Last year, our former Lord Chancellor and Secretary of State for Justice said: 'The City of London is a legal centre - not just a financial one', which was a welcome acknowledgment to my chosen profession that London is not just a global financial centre - it is a global legal centre too (even if our success is often overshadowed by our headline grabbing financial services neighbour).
Among the gleaming offices serving the financial and associated services industry, more than half the world's leading law firms have chosen the capital as their headquarters, which means that London has the largest concentration of judicial expertise anywhere in the world.
Few - if any - other cities offer this combination of experienced lawyers, specialists business and financial professionals and experts, within a short walk of one another.
The coexistence of the legal and financial centres in the City is no coincidence.
Financial service centres can thrive if they have the right legal framework to support commercial transactions and resolve commercial disputes. At a time when there is a global understanding that worldwide competition for legal (and financial) services is set to intensify, we are fortunate that in England and Wales, particularly in London we have both of these.
Of course we cannot be complacent: New York, Dubai, Singapore and Hong Kong are already snapping at our heels, competing with London as hubs of legal expertise.
But English law firms are still highly valued across the world for their skill and expertise they offer in advising their international clients at pre-contract stage, in the negotiation and preparation of contractual document and in resolving disputes.
Our legal services are an integral part of our international offering to colleagues and clients across the world and I am delighted that London is first and foremost their destination of choice for dispute resolution.
English law and the common law system
There are three key reasons why London is a destination of choice for dispute resolution which stand out to me:
- first and foremost our legal system - built with the rule of law at its foundation
- second, the volume, variety, and quality of specialist expertise available in London, and
- lastly, but not least, our longstanding experience in dealing with complex and multi-jurisdictional disputes and international parties.
First and foremost our common law system - built with the rule of law at its foundation.
English law attracts many parties to contracts because it is based on the principle of freedom of contract - it is there to give effect to their intentions.
There is nothing hidden in English law that will defeat their intentions - a principle that has always been attractive to commercial parties.
So I am proud to promote English law to our partners abroad as the law for business because of the clarity it provides and because it is used right across the world. It is a tried and trusted friend in so many countries.
Parties to contracts, or those seeking litigation, mediation or arbitration know that they can place their trust in a legal system which is clear, and built upon well founded principles such as the ability to require exact performance and the absence of any general duty of good faith.
International corporations, commercial parties or states that regularly look for a neutral third-party legal system turn towards one of the oldest legal systems in the world.
In fact, more international and commercial disputes take place in London under English law than in any other city in the world, and 90 per cent of commercial disputes handled by London law firms now involve an international party1.
A similar choice may be made by contractual parties from a single country if they regard their own courts as lacking independence or relevant experience.
Parties welcome the fact my colleagues and I are bound by our professional rules to keep the affairs of their clients, and former clients confidential, bar a few tightly controlled and understood exceptions.
Confidential communications between a lawyer and his or her client coming into existence for the purpose of giving or getting legal advice are privileged.
Attempts to settle disputes are also protected from disclosure by rules on without prejudice communications.
This key principle, where parties are bound by the terms of their agreement, is attractive to commercial parties.
English law allows the parties to agree the proportion of benefits which may accrue to either party, allowing the parties much greater flexibility of arrangements than under many civil codes.
The lack of a codified structure under which a contract might be declared void on technical terms means that parties that litigate over a contract know that English law will construe an agreement according to its own terms - if both parties have made a valid deal then English law will enforce it.
Second - the volume, variety and quality of specialist expertise available in London.
Waiting for them are first class highly specialised lawyers, arbitrators and mediators and courts whose judgement carries a guarantee of judicial excellence and integrity, conducting their business in one of the most widely spoken languages in the world.
As in finance, London is a global hub which attracts legal experts and expertise from all over the world. In addition to our internationally renowned law firms, over 200 foreign law firms have chosen to open their doors in London.
I believe that international experience and presence is a key part of our success in an increasingly globalised world and I believe too that welcoming international expansion, expertise and clientele is key to London's success as an international legal centre.
Thirdly our long standing experience in dealing with complex and multi jurisdictional disputes and international parties.
England's long legal history and position as an international trade centre means we have built up extensive practical experience and infrastructure for resolving disputes and the expertise of our legal profession is sought after around the world.
Arbitration
In terms of long standing experience and expertise, arbitration has long history in London and has developed alongside London's central role in trade, financial and legal services.
Indeed, one of the many London arbitral institutions, the London Court of International Arbitration (LCIA), dates its establishment back to 1891.
The facts speak for themselves.
London remains the more preferred seat of arbitration, favoured by nearly a third of respondents in the most recent International Arbitration Survey in which 710 responses were received and 104 individuals interviewed.2
The numbers of arbitration and mediation bodies alone, along with the legal framework supporting arbitration in the UK have created a high calibre stage within England and Wales for international parties to resolve their legal disputes amicably without the need to litigate.
Last year, over 80 per cent of parties to arbitration at the London Court of International Arbitration, were of non-UK origin.
What leads people to London?
London is home to a large range of arbitral bodies, governed by the one act, but each with its own set of rules.
We have the London Court of International Arbitration (who were sadly unable to be with us today).
The International Chamber of Commerce, London Maritime Arbitrators Institution - which unlike many other trade based organisation does not place restrictions on lawyers or third party representation - deals with around 2,000 cases annually each year.
Some are industry based, some are institutional: together they offer a large range of choice for all commercial parties.
As with most jurisdictions, the Arbitration Act 1996 is based on the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules, but is not a wholesale adoption meaning that it provides for a greater number of benefits.
Of course, the UK is party to a number of international reciprocal arrangements, including the New York Convention, allowing for mutual recognition and enforceability of arbitral awards.
The English courts are supportive of arbitration and respect parties' autonomy and desire for finality.
If necessary, courts will enforce awards under the Arbitration Act 1996 in the same way as court orders.
But judges will not interfere with parties or arbitration awards unless the arbitrators have clearly misunderstood the law or have misconducted themselves.
In fact, and compared with many other developed countries whose courts are much quicker to impose their own view on the facts our judiciary is much slower to re-open cases where arbitral awards have been made.
English courts are enabled to support arbitration by ordering the preservation of documents and compelling witnesses to give evidence, as well as by granting injunctions to assist in the enforcement of future or existing awards.
An important advantage of arbitrating in London is the availability of experienced specialist arbitrators from a variety of different disciplines, including finance, engineering and shipping. Parties are likely to find experts in the subject matter of the dispute, however complex or technical it may be.
Along with excellent facilities that London offers, all of these advantages have been recognised by the fact there has been a rapid growth in arbitration since the late 2000s and the market is expected to grow along with the increasing use of arbitration clauses among contracting parties.
Conclusion
Ladies and gentleman, it is inevitable that dispute resolution and arbitration are services that ebb and flow themselves to meet the demands of a rapidly changing, growing and competitive environment, and that means that new centres will be established.
I have no issue with that.
Businesses can and will legitimately 'shop' for the seat of arbitration that best meets their needs, and I have no doubt that London can continue to meet many of their needs.
When international corporations, commercial parties or states chose English case law, or to resolve a dispute, they know the process will be fair and independent; that it will be supported by expert legal professionals and judicial officers and that it will be based on hundreds of years of experience, respected and enforceable across the world.
- in fact having competition snapping at our heels will help to keep London on its toes!
Developing additional seats of international arbitration, wherever they may be, will require that all the players work together to ensure that they are offering the right 'product' with commercially sensible laws and regulations in place to match market expectations.
Finally, our experience taught us that there is a direct link between an open legal services market and our success as an international legal and dispute resolution hub. The fact that so many firms both large and small with a broad range of expertise chose to make London their home has been a key contributor to the attractiveness of the City as an international centre for dispute resolution.
I hope that the number of UK firms opening in Seoul will help contribution towards the aspirations of the Korean legal sector - even if we are still waiting for the first Korean law firm to open in London.
I wish Korea the best of luck with their development of the Seoul International Dispute Resolution Centre and looking forward to hearing more about your plans.
Thank you.
1'The Rolls Building, London's Trump Card', The Gazette, Neil Hodge 9 February 2012
22012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process Queen Mary University of London