8 March 2019 by Matthew Miller

Something that has nothing to do with Brexit

Ok, that’s not quite true. But bear with me. With some sort of Brexit (we are told) on the horizon, there have been questions raised – in some quarters – over the suitability of English law as the ‘default’ choice of law for commercial contracts in many different markets and business sectors.

But whether you are a ‘leaver’ or a ‘remainer’ (or perhaps even, dare we say it, beyond caring any more), it is nevertheless worth remembering the following:

  • The principles of English law that govern commercial contracts are independent from EU law
  • As such, any sort of Brexit will not affect those English laws which govern commercial contracts (nor will it affect arbitrations about what those commercial contracts mean)
  • In other words, if Brexit does happen, a commercial contract governed by English law will be interpreted in exactly the same way afterwards as it would have been beforehand.

It is also worthwhile briefly revisiting some of the reasons why parties often choose English law for many commercial contracts (particularly those that are high-value and/or complex in nature):

  1. Certainty and predictability: English law usually takes a simple, objective approach to interpreting commercial contracts. Words are given their ordinary meaning. The objective basis of a commercial ‘deal’ struck between two freely-contracting parties is typically upheld.
  2. No implied good faith: English law does not generally imply any duty of good faith on the parties to a commercial contract. On the whole, this is regarded as a good thing because it means contractual disputes are just focussed on the interpretation of the relevant language, rather than subjective arguments about whether the ‘deal’ struck was ‘fair’ for both parties.
  3.  Adaptability: much of English contract law is a product of judicial precedent, and so can evolve easily to deal with changes in technology, markets and business practices generally.
  4.  Logical compensation: if there is a breach of contract, English law tries to award damages according to clear rules that commercial parties understand, rather than on a punitive basis.

In the context of contractual arbitrations, after Brexit, English law will offer commercial parties the same advantages as before, which have resulted in English law becoming the preferred choice of law for many international transactions and any resulting contractual arbitrations.

So, whatever your views on Brexit, it transpires that English contract law is really rather good.

To find out more or discuss some of the issues raised please contact  Matthew Miller (Partner) by email at matthewmiller@boltburdon.co.uk or 0207 288 4739

Alternatively, you can also contact one of our other solicitors in the Corporate and Commercial team here.

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