Adopting English Law for International Trade
If you trade internationally, there are many factors to consider, alongside the usual issues when you are trading with other businesses in the UK. One of the main areas that Lovetts advise their clients to consider is whether English law should govern the contract and should you give the English courts jurisdiction?
English law is often the law of choice in commercial contracts.
Why is this?
- Firstly, English law gives the parties greater freedom than civil law systems to enter into contracts on terms of their choosing.
- Secondly, it is probably easier to predict the likely outcome of a case under English law than under civil law systems. English commercial law covers most issues having been built up from both statute and case law.
- Thirdly, where a point is not covered, a court will make a decision. That decision and particularly any decision by an appellate court will form a precedent. English law can therefore evolve more quickly and flexibly to the needs of the commercial community.
The English courts are also the courts of choice for many international disputes. London hosts the largest commercial court in the world and over 80% of the cases involve a foreign party. The English Commercial court and the Mercantile courts are specialist courts for business disputes with expert judges and procedures designed to deal efficiently with commercial disputes.
Can You And Should You Choose English Law And The English Courts?
The Commercial and Mercantile courts are part of the High Court. Currently the amount owed must be more than £25,000. However, this will probably rise in 2013 to the more realistic level of £100,000. Even now, cases for less than £100,000 should probably not be brought in the Commercial and Mercantile Courts.However, there is nothing to stop the parties agreeing that English law will be the law of the contract and that the English courts will have jurisdiction whatever the size of the contract. London is also often chosen as the seat of international arbitrations.
What Are The Advantages And Disadvantages?
On the one hand, if proceedings area brought here, the debtor will need to come to this jurisdiction to defend the proceedings. English proceedings (the needs for translation and service apart) are often more efficient that those abroad. On the other hand, proceedings will have to be translated into the debtor’s language if they are not English speaking and may well have to be served in the debtor’s country. All this adds delay and expense. Finally, before taking proceedings here, you need to know that an English judgment will be enforced in the debtor’s country.
The best course may be to provide that English law is the law of the contract and to give the English courts non-exclusive jurisdiction. You would then have a choice as to where to start proceedings. In larger cases you would be free to start proceedings here but you would also be free in smaller cases to take proceedings locally to the debtor, if that would be more cost effective.