How London Could Become Europe’s Arbitration Hub
29 April 2021 – During the transition period when a no-deal Brexit seemed possible, optimists looked to Singapore, suggesting that the City of London might become a midshore European financial services hub.
The exclusion of financial services from the Trade and Cooperation Agreement has provoked renewed interest in the idea. But the Singapore model is more immediately relevant for arbitration across Europe.
While criminal matters are subject to reciprocal law enforcement and judicial cooperation, no similar cooperation is anticipated for civil and commercial matters.
On Dec. 31, 2020, the Brussels Regulation Recast  and the body of rules regarding service, jurisdiction and reciprocal enforcement and regulation of court judgements, ceased to apply between the UK and EU member states.
Thanks to sovereignty politics, retaining the Brussels system without acknowledging some role for the European Court of Justice was simply unworkable.
For commercial dispute resolution, the outcome has the same practical effect as a no-deal.
Although international conventions replicate features of the previous Brussels regulation system they are characterized by cumbersome procedures: an imperfect substitute, with corresponding increases in delay, costs and risk. A helpful summary is provided by the Law Society of England and Wales.
Because of omissions in the UK-EU agreement, parties in dispute face considerable uncertainty.
This highlights the importance of commercial arbitration: offering advantages of the previous Brussels regulation system, but without reliance on national courts, except for those matters outside the scope of the previous system — arbitration being generally excluded in the Brussels Regulation Recast — such as curial supervision in support of arbitration or enforcement under the New York Convention.
In examining Singapore’s growth as an Asian regional disputes hub, London has a similar opportunity to strengthen its position as Europe’s equivalent.
Several factors may contribute.
First, the end of the Brussels Regulation system in the UK creates uncertainties in resolving disputes with a cross-border European dimension. The corollary may be a burgeoning market in arbitration, fuelled by UK parties and multinational companies that use London as a European gateway.
Commercial parties, which have previously relied on English forum selection agreements, may explore arbitration as an alternative. Accordingly, demand will probably increase.
Another driver is trade. As the EU continues to strike new trade deals – most recently, with Canada and Singapore – the number of disputes involving non-European parties will inevitably increase.
Because of history, several of the EU’s most significant trading partners (e.g., the US) have strong affinities with the UK – hence, the continuing preference for commercial contracts to be subject to English law.
London’s legal ecosystem is sophisticated and mature. At the epicentre of the Industrial Revolution, and more recently, financial services deregulation, English lawyers have always been at the forefront.
Notwithstanding Brexit, London has a deep pool of experienced practitioners across diverse practice areas. Moreover, the UK’s legal system, underpinned by high quality judges, enjoys a universal reputation for integrity, honesty and neutrality.
Post-Brexit, commercial arbitration offers a practical means of navigating the uncertainties and risks of complex disputes. In a future of greater global trade, London has an unparalleled opportunity to become the natural hub for arbitrating European commercial disputes.