Report by Oxera for LegalUK for the first time identifies scale of value of English law as a platform that benefits UK plc and international business.
Howard Kennedy is pleased to have supported the funding of this research report that for the first time identifies the value of English law as a platform that benefits UK plc and international business.
The research establishes for the first time how the value of English law goes far beyond benefits to the legal sector and underpins hundreds of trillions of dollars of annual business activity domestically and internationally. English law underpins most contracts and transactions made within the UK, and many outside the UK. However, the value of English law (as it applies to business transactions) to society as a whole, as opposed to the legal services sector, has not been examined before.
The report reveals that that English law governed at least EUR 661.5 trillion of OTC derivatives trading in 2018, $11.6 trillion of global metals trading in 2020, and £250 billion of global M&A in 2019. English law also governs insurance contracts worth £80 billion annually and is the law of choice for maritime contracts, a sector that contributes over £15 billion annually to the UK economy.
Due to the globalisation and digitisation of business models, an increasing proportion of transactions and contracts are now internationally mobile, where the their governing law and the jurisdiction to which they are subject are chosen by those transacting based on their attractiveness to those parties.
Historically, English law has been a popular choice of governing law for many types of internationally mobile transactions. In 2019, it governed around £250bn of global mergers and acquisitions, and 40% of global corporate arbitrations.
The development of new areas of the global economy (such as fintech and green bonds), and, for example, the recent establishment of international commercial courts across the EU, for example, provide opportunities and risks for English law’s status as a global standard for internationally mobile transactions.
Success in these markets is particularly important because many markets have a tendency to ‘tip’ to one governing law, due to the benefits of using standardised contracts: for example, the International Swaps and Derivatives Association’s (ISDA) Master Agreements went from having a range of English, New York and Japanese law prior to 2018 to primarily being governed by English law for EU/EEA counterparties since then. A failure to invest in English law therefore gives rise to major risks for the UK economy.
Oxera’s research leads to several challenging questions for the legal industry and UK government.
- Which organisations either in the private or public sector should coordinate efforts in nurturing and strengthening this asset for the benefit of the UK as a whole?
Who should take responsibility for ensuring that English law be promoted as an international business platform and that the UK is well placed to take advantage of new opportunities?
- What would be the best form of investment in English law that can appropriately reflect the significant value that English law brings to the UK?
The report marks the formal launch of LegalUK, a body including representatives from across the legal industry including solicitors, barristers, arbitrators, industry bodies and other key stakeholders within the legal community. LegalUK was established in 2017 by the Lord Chief Justice, and is chaired by Dame Elizabeth Gloster a former judge of the Court of Appeal of England and Wales and Vice-President of the Civil Division. Its purpose is to promote English law nationally and internationally, to increase the use of English law internationally, and to enhance the UK’s position as a leading global centre for dispute resolution.
The funders of the Oxera report are Allen & Overy, Atkin Chambers, Baker McKenzie, Bar Council, Blackstone Chambers, City of London Corporation, Clifford Chance, CMS, DLA Piper, HFW, Herbert Smith Freehills, Howard Kennedy, Kennedys Law, Linklaters, Macfarlanes, Mishcon de Reya, One Essex Court, Osborne Clarke, RPC, Simmons & Simmons, South Square, Stewarts Law, The Law Society, Travers Smith, Twenty Essex Street and Wilberforce.