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Brexit uncertainties starting to impact on UK contract dispute litigation

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Amongst the current turmoil surrounding the UK’s exit from the European Union, a recent survey on commercial legal services behaviour by Thomson Reuters adds to the litany of negative news emanating from all parts of UK society.

Due to ongoing concerns and uncertainty over the UK’s role in the regime for mutual recognition of court judgments with the EU, a “substantial minority of businesses” changing from having their contractual disputes heard in the UK to being heard in EU courts. The survey respondents indicated that their business includes contracts with an international component, with 40% stating that over half of their business was international in nature.

Around 35% of businesses surveyed said they have already changed jurisdiction and choice of law clauses so that any disputes are heard in non-UK courts. 51% of those surveyed have opted for disputes to be dealt with in EU courts, in particular in Germany or France. Of the businesses that have not yet made changes to their contracts, 39% said they will review the situation if there was no significant and meaningful progress on mutual recognition of court decisions before the currently schedules ‘Brexit month’ of March 2019.

In addition, 20% of businesses said that they would consider at arbitration in more detail instead of a different jurisdiction for litigation. The survey said:

The number of businesses conducting a contract review may increase even further in the lead up to March 2019 if no progress is made in negotiations…many businesses may be adopting a ‘wait and see’ approach for now before deciding on whether to review contracts nearer the time”

It continued:

On 3 July 2018, ISDA (International Securities and Derivatives Association) announced that it had introduced Irish and French law versions of the ISDA Master Agreement to offer its EU/EEA members both common law and civil law solutions to address this risk associated with its English law version.”

Jim Leason, VP of Market Development and Strategy at Thomson Reuters Legal, said:

The fact that a third of businesses are revising dispute resolution clauses away from the English courts should be a concern for the UK’s legal profession…it is this initial selection in a contract that drives an entire industry of legal advice that supports transactional work, ongoing contract management and dispute resolution. If nothing concrete comes from Brexit negotiations soon or if there is a no-deal Brexit scenario, then more and more businesses will consider taking legal disputes elsewhere.”

If you are thinking about taking legal action against another individual or company but are worried about the costs involved, Advantage Litigation Services have the skills and expertise to help you find a way of funding commercial litigation without risking your personal finances or those of your business. Click here to contact us today or call 0800 160 1298 to see how we can help.

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