How courts compete with each other

Netherlands Commercial Court -

By Professor John Flood
Professor of Law and Society
Griffith Law School

It can be a harsh world in the world of courts today. Competition is intensifying. Courts not only have to pay their way, they now have to face challenge from equivalent courts in foreign jurisdictions. What might have been a cosy sinecure in the past is now cold and clinical.

International arbitration is the prototypical competitive scene as Stockholm, Paris, New York, and London slug it out for disputes. Countries pass legislation according arbitral communities all kinds of rights in order to help them succeed. Creating competitive courts is a much harder process.

Courts are creatures of government who must use tax monies to fund them when there are many other claims on those pounds, dollars and euros. But to consider them mere cost centres would fail on several levels. If the rule of law is central to society and the economy, no country should skimp on its courts and judges.

England and Wales have long been in the vanguard of promoting British courts and lawyers around the world, actively seeking cases from Russia, the Middle East and China. Indeed the Commercial Court in London built a new court house, the Rolls Building, just for this purpose. While the court fees of thousands of pounds might appear high, they don’t deter clients from these areas. They prefer to use the British courts rather than their own, often to the dismay of their countries’ justice ministers.

In part countries have attempted to fight back by creating flexible and accommodating arbitral centres, but there are always questions around sustainability and longevity of such institutions among the arbitration community. The only truly new arbitration centre to emerge is CIETAC in China, which speaks to China’s international commercial heft. One country that has not sought overseas litigants is the US, although it has a thriving arbitration community.

Now a challenge has come from an unexpected quarter, namely, Paris. The French minister of justice has opened a new commercial court within the Paris Court of Appeal. The court fees are set at Euros 100, much less than the British Commercial Court. The court aims “to offer speedy resolution, transparent decision making and guaranteed enforceability of judgments throughout the EU.”

This can be seen as part of the modernisation drive under Macron. His predecessor, Sarkozy, attempted to do something similar making Paris the litigation centre of Europe, but the proposal went nowhere. This is part of a portfolio of changes:

“Nicole Belloubet, minister of justice, said the international chamber is one of a series of innovations aimed at creating ‘clearer rules of play in tune with today’s global and digital economy’. These include the 2016 reform of contract law – the first substantial change for two centuries – and a measure allowing lawyers from non-EU states to practise as ‘foreign legal consultants’.”

While applications have to be made in French, testimony and decisions will be in both French and English, and the judges will be bilingual. One hope is to attract US companies to use Paris as their European litigation centre (post-Brexit perhaps).

How flexible and user-friendly such a court will be is open. The Commercial Court has always been attuned to its users, especially with its Users Group. The Paris fees are cheap but they aren’t the key issue. Paris has a thriving arbitration culture with the ICC in residence and its attraction for north-south disputes, but it is multi-cultural. Can the Paris court become the new ‘court of pie powder’?

Much depends on how the big international law firms situate themselves if Brexit is successful–I hope not–as well as the financial institutions. Big commercial law is part of a matrix of institutions that includes consultants, accounting firms, law firms, banks and the like. Law firms and barristers’ chambers that practise in these fields tend to have offices overseas and see themselves as cosmopolitan and international. I wonder if French avocats feel the same way. However they react it will be good to see some competition in the global legal order. As the English know the returns can be substantial.