The English legal system enables, but the EU’s system restricts.

The law matters and has always been appreciated by the British people. For centuries it has been developed and nurtured and the British legal system has been adopted by countless countries around the world. It enables rather than restricts and people know where they stand.

In contrast, the EU27 countries operate on “the Napoleonic code”. The principle in the EU is that you can only do something safely if the law says you can. If there’s no law then you have no legal cover.

In effect, the EU legal system means you could be committing an offence even if there is no law prohibiting it.

In this excellent summary written by Barney Reynolds, Partner at Shearman and Sterling, he explains to readers why businesses would far rather do business in the UK than in the EU.

Why businesses should choose English law

By Barnabas Reynolds, Partner, Shearman and Sterling

https://www.shearman.com/

Law, its extent and method are critical to doing business; and English law provides a highly desirable system. It is predictable yet innovative, and also apolitical.

Key benefits of English law

1. The law supports business ambitions, powering global business rather than slowing it down. It brings:

• Contractual certainty and predictability
• Commercial freedom
• Recognition of the trust and equitable ownership
• Confidence in the system through the doctrine of precedent
• A sophisticated body of common law
• Robust commercial law which is suited to international trade
• Damages for contractual and tortious breaches are awarded to compensate not punish
• No juries in commercial cases
• Robust conflicts of law rules

2. The English law system is visionary and progressive, constantly evolving and looking to the future.

It has proved flexible for adapting to societal changes and events over the centuries. There is a large body of practitioners with a great depth of international experience and specialist industry knowledge.

3. The system has the support of a robust court, arbitration and dispute infrastructure.

• The U.K. is a leading place for the resolution of disputes involving international contracts. There is a deep bench of legal and commercial experts.
• The U.K. has strong, relatively fast and efficient judicial and arbitration systems, with high-quality judges and arbitrators.
• State-of-the-art technology is available for dispute resolution. There is a wide, progressive, dispute resolution sector, constantly innovating.

How to choose English law

• In contract, it is possible expressly to choose English law; a further step is to submit to the jurisdiction of the U.K. courts.
• Taking advantage of U.K. regulations, and U.K. corporate and insolvency laws, generally requires a business to be located here.
• Property rights are usually governed by the place in which the property is located. For financial and certain other assets, English law can be chosen by locating the relevant holder of the asset in the U.K.
• The advantages of English property law have resulted in the U.K. being a key global jurisdiction for the custody and holding of financial assets.

Why establish business vehicles in the U.K.?

• U.K. corporate law is flexible and the UK’s restructuring and insolvency laws are seen as efficient and fair.
• The U.K. is often seen as a hub for international restructuring and insolvency matters.
• English law encompasses the highly developed recognition of trusts, security interests, netting, set-off and other means of reducing exposures, with no surprises.

U.K. regulation

The U.K.’s regulatory system is flexible, well-managed, and can be changed quickly, by professional regulators.

The regulators:

• are respectful of the free market;
• seek to focus on matters of untoward risk to customers, market integrity and systemic risk;
• do not impose penal fines, nor fines levied to fund their own activities

Note: Nothing in the above should be construed as legal advice. Please refer to Shearman and Sterling should this be required.

About the author: Barnabas (Barney) Reynolds is one of the world’s leading financial institution practitioners. He specializes in banking and financial markets law and regulation, clearing, settlement, derivatives, asset management and insurance regulation. He advises banks and investment banks, fund managers, financial infrastructure providers (exchanges, clearing houses, settlement systems), payment agencies, FinTechs, crypto companies, insurers and reinsurers on their proprietary business in the U.K., EU and U.K.-style systems elsewhere, including Abu Dhabi Global Market (ADGM, which he set up) and Dubai International Financial Centre (DIFC).

Barney specializes in U.K. regulation and advises on and coordinates rest-of-world advice for institutions. He provides strategic advice on the implications of legal and regulatory change and opportunities for their businesses. He also advises Boards on strategic issues.

Barney is a leading thinker on legal and regulatory matters, engaging in individual and roundtable discussions with C-suites and boards of financial firms. He has played a central role in evaluating the legal and regulatory implications and opportunities arising from Brexit. He plays a key role in European structuring for numerous financial services firms.

He is the Global Head of the Financial Services Industry Group at international law firm Shearman & Sterling LLP and leads the global Financial Regulatory practice.

Sources: Barney Reynolds, Shearman and Sterling