Parties to
international contracts and cross-border transactions often choose the law of
England and Wales (which we’ll call “English law” for short) as the governing
law of the agreement.
In fact, English law is
the preferred governing law for business transactions worldwide, even those
that don’t have any geographic connection with the UK.
There are a number of
reasons for this, one of the main ones being that English law has a well-known, well-developed and reputable
jurisprudence.
Historical Importance and Influence
English law is important
historically as a result of the British Empire, one
of the two largest empires in recent history, alongside the French Empire. Part
of the legacy is that its former colonies have modeled their legal systems
closely on English law.
Many countries which
were formerly British colonies retain a system of common law (in which the
development of and guidance and rules as to interpretation for the law are
influenced by the input of the courts through precedent) and can look to the
judgments of higher courts of England and Wales, particularly the Privy
Council, for guidance on new or unusual issues. Similarly, the judgments of
courts of other common law jurisdictions may also assist English courts in
considering issues as they arise elsewhere.
The law of the United
States is largely derived from the English common law system, at both the
federal and state levels, although it has diverged greatly from its English
ancestor both in terms of substance and procedure.
East India Company
The East India Company left a lasting legacy on international law. An English
joint-stock company formed for trading with the East Indies and later with Qing
China and the Indian subcontinent, it was founded by Royal Charter in 1600.
Queen Elizabeth I used
royal decree and treasury funds to establish trade on behalf of English merchants,
creating the first joint-stock corporation, composed of investors with shares
in the company. The shareholders are given percentages of the company’s
profits, or dividends, based on the number of shares they hold.
Queen Elizabeth also
limited the liability of the East India Company’s investors, making it the
world’s first limited liability corporation. This means the investors are
granted protection against losing any more money than their initial investment.
If the company fails, its outstanding debts aren’t divided up among its
investors.
The establishment of the
East India Company set a precedent and its French, Dutch and other competitors
followed suit. For better or worse, without the East India Company, England may
not have developed into the nation it is now. When Queen Elizabeth granted
charter to the company, it set the prototype for modern corporations as we know
them today.
HM Courts and Tribunals Service
English law is further
bolstered by its independence of the judiciary, the experience and reputation
of judges and the high quality of UK law firms and barristers. The HM Courts and Tribunals Service, through courts and tribunals, administers the work
of the courts to give individuals and businesses access to justice.
The courts deal with
matters ranging from commercial disputes and people asserting their employment
rights to family law and matters of administrative law, across the remits of
the magistrates’ courts, the County Court, Crown Court, Family Court and Royal
Courts of Justice.
The Mercantile Court
deals with commercial, professional and business and disputes, including
contracts and business documents; buying, selling and transporting goods;
insurance matters; banking and financial services; commercial agencies and
arbitration claims.
The relative speed and
efficiency with which commercial disputes can be resolved through the English
courts or alternative dispute resolution mechanisms also contribute to the
popularity of English law and London’s reputation as an international dispute
resolution centre.
Statistics published by HM Courts and the London Court of International
Arbitration revealed that between 31st March 2012 and 1st April 2013, almost
81% of its cases involved a foreign party, while 49% of cases were entirely
between foreign parties, being companies incorporated outside of England. London
is one of the most popular arbitration venues in the world for such foreign
parties.
Judicial Independence
The careful selection,
impartiality and experience of English law judges, coupled with their skill in
dealing with complex cases, are founded in judicial independence, a key
principle of the UK constitution. Judges are empowered to decide cases
according to their own judgment of the issues, without outside influence and
government control.
Judicial appointments in
England are made by the Judicial
Appointments Commission,
an independent non-departmental public body that was launched in 2006. It
ensures that the candidates for judicial office are free from any political
involvement.
This process minimises
the risk that judges are unduly influenced by external forces when deciding
cases, helping to maintain the integrity and independence of the English
courts.
Content of English law
English law is
transparent and predictable, providing freedom of contract, a pro-business
approach. Under English law, in commercial contracts, there’s no implied
overarching duty of good faith, unlike in other jurisdictions. A duty of good
faith requires neither party to take advantage of the other.
Good faith, in reference
to other countries, creates obligations for parties to inform each other, when
reasonable, of the important points that the other party couldn’t discover on
its own. It also creates obligations to apply reasonable diligence in the
performance of contractual obligations, while observing moral and ethical
behaviour standards.
While good faith may
have its own advantages, it creates uncertainty as to the standard of behaviour
expected from the parties to the agreement, especially in cross border
transactions, where cultural difference often exist. On the contrary, with the
absence of any general duty of good faith, English commercial law is built on
well-founded principles and provides predictability of outcome, legal certainty
and fairness.
Sector Dominance
There are many sectors
dominated by English law. These include international commercial contracts,
banking and financing, maritime and shipping, mergers and acquisitions, dispute
resolution and international arbitration.
With the increasing
globalisation of business, companies are tasked with choosing governing law for
cross-border construction contracts. English law is frequently chosen because
the English courts are amenable to permitting and enforcing limitation of
liability causes, waivers of consequential loss, liquidation of anticipated
damages, time and procedural bars on claims, “knock for knock” indemnities and
“pay when paid” clauses.
English law dictates
that discussions with your lawyer are confidential and covered by legal privilege.
English lawyers are bound by professional rules to keep the affairs of their
clients, and former clients, confidential. Legal professional privilege is
established in English law as a basic human right and provides comfort to
parties that they can freely and frankly discuss issues and strategies with
their legal counsel without this prejudicing the case or leaking into the
public domain.
London: a World Leader
London has firmly
established its position as a world-leading financial centre. Research has revealed that it has overtaken New York as the world’s best
financial centre. Many finance professionals rank London very highly, indicating that it’s a stable place to
work.
According to
international rankings, compiled by analysts at the Z/Yen Group in 2015, London
topped every single category in their index, including best business
environment, the most impressive infrastructure, the most developed financial
centre, the top overall reputation and the best human capital.
Foreigners believe the
stability of London makes it a safe place to conduct business, with the depth
and breadth of business activity in the capital, the strength of its
professional services and its world-class insurance and banking industries
giving it a further boost.
London is also renowned
as a world centre for international arbitration. The London Court of International Arbitration
(LCIA) is a leading international institution for the
resolution of commercial disputes. It offers flexible, efficient and impartial
administration of arbitration, regardless of the location and under any law
system.
Its international nature
is reflected by the fact that around 80% of parties in current LCIA cases are
not of English nationality. It offers the most experienced, eminent
arbitrators, experts and mediators from many jurisdictions, who have the widest
range of expertise. Its services are available to all contracting parties and
there aren’t any membership requirements.
Further, the service
sector in the UK is now so important to the economy that it constitutes nearly 80% of GDP, with a large proportion of the service sector being
based in London. Whatever the basis of operation in the UK, these service
sectors often prefer to use English law as the basis for their commercial
transactions.
By extension, English
law is the natural governing law for business based in or operating in London
and its markets.
Deep Legal Expertise
The English legal sector
is estimated to be worth £25 billion,
meaning that parties can draw on the depth and breadth of legal expertise and
experience offered by law firms practising in English law. These firms
understand global business needs and speak the language of their clients to
deliver commercial and pragmatic solutions. Good advisers are the key to
commercial success, and English law boasts some of the best in the world.
English solicitors are often perceived to be of a high pedigree in the legal
world.
Whether its complex
multi-jurisdictional corporate deals, extensive commercial frameworks and
tax-efficient structures, multi-party high-value dispute resolution,
immigration and employment issues or worldwide infrastructure projects which
shape nations, English law firms and legal experts lead the global field in
knowledge, technical expertise, commercial acumen and transactional agility and
work on many of the headline-grabbing, world-changing deals, business and
affairs happening today.
Impact of Brexit
The attractiveness of
England and Wales as a jurisdiction for international commercial contracts
hasn’t changed because of Brexit, according to the Law Society of England and Wales.
The fact that England
has the best law firms in the world, with renowned experience and expertise
built up over many years, means they will continue to set the global standard.
English courts’ reputation for expertise and independence and the fact that
judges are held in high esteem for their commercial knowledge will be
unaffected by the UK’s vote to leave the European Union.
English contract law is
not affected by EU law on the whole, because it derives from Common Law.
English contract law is flexible enough to adapt, should there be any specific
terms in contracts that relate to EU law.
Some even
argue that Brexit could lead to English law being more attractive as the
law of choice, as the UK would no longer be required to incorporate those
aspects of EU law.
The Law Society believes
that solicitors, judges and law firms can be relied upon, not least because
English law offers stability and certainty and this won’t change because of
Brexit.
The reality is that the
future direction of the UK and its legal sector in respect of Brexit remains
unclear, but there is nothing at this stage to indicate that the sector as a
whole will suffer significantly.
How Dual-Qualified Lawyers Contribute to Overseas
Practice
Foreign
lawyers who achieve dual-qualification as English solicitors often do so in order to offer an extra dimension to
their domestic practice in their home jurisdiction. The significance of UK
trade with foreign countries is one reason many lawyers decide to dual qualify.
UK businesses trading
internationally need, in many cases, to establish a local presence and dual-qualified
lawyers can help them to achieve commercial goals. They can further
help their clients to understand cultural differences between the UK and
overseas markets. The number of UK businesses operating abroad is increasing,
hence there’s a greater demand for English law expertise outside of the UK.
Dual-qualified lawyers can
play an important role in managing complex, cross-border transactions in an era
where retaining high-value work and top clients is a commercial priority.
Having a dual-qualification enables lawyers to analyse a problem from a wider
perspective, helping the client achieve a practical solution.
Finally, the results of
an IRN survey reveal a consistent and increasing demand for dual-qualified
lawyers in the UK and overseas law firms. Some firms now place
dual-qualification and expertise in the English law as a minimum requirement.
Dual-Qualify as an English solicitor – the Qualified
Lawyers Transfer Scheme (QLTS)
The QLTS launched in England and Wales in September 2010,
offering lawyers with the chance to become an English solicitor in a few
months, thanks to a fast-track qualification route, without participating in a
traditional training contract or internship.
Becoming a
dual-qualified English solicitor via the QLTS provides participants with more
legal knowledge of English law, an outstanding professional profile and unique
practising skills.
The focus has shifted
from a highly-localised legal profession and now, lawyers require an increasing
amount of cross-jurisdictional knowledge and expertise. National borders aren’t
a barrier to doing business and increased profits are possible with worldwide
operations and a global focus.
The QLTS is the key to becoming a dual-qualified English
solicitor, unlocking international career and professional benefits. It
comprises assessments to test candidates’ knowledge of English law and the
skills required to practise as a solicitor.
Types of Assessment
There are two sets of QLTS
assessments.
First, a multiple choice test (MCT) comprises 180 questions, divided into a
morning and an afternoon session, each of two hours and 45 minutes’ duration.
Secondly, the Objective Structured Clinical Examinations (OSCE) test
candidates’ interviewing, online legal research, advocacy, legal writing and
legal drafting skills.
The multiple choice test
must be passed before attempting the OSCE. The assessments are offered in the
UK twice annually by an assessment provider appointed by the SRA. The MCT
assessment is also offered in several international locations in Europe, Asia
and North America.
The premier provider of
training and consulting services for the QLTS assessments, QLTS
School, has a proven
track record of thousands of candidates who passed the QLTS assessments on
their first attempt. They are now eligible to become dual-qualified lawyers.
Training is available to
candidates around the world, allowing maximum flexibility, enabling even
lawyers who are working full-time to participate. Request a
free consultation with a QLTS advisor to learn more how you enhance your knowledge in
English law and become an English solicitor.
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