As Brexit negotiations resume, there is a lot of talk about what the final trade deal will mean for the UK.  There are a number of considerations to make and a lot of attention has been placed on areas such as freedom of movement, the status of EU citizens in the UK and what role the European Court of Justice will play in UK law going forward.  What is getting clearer as negotiations progress is that whatever deal is put in place will have far reaching consequences for all sectors and markets, including litigation funding.

While nothing is certain, upon the UK’s departure from the EU the number of funded disputes in the UK is likely to rise.  The consensus among experts is that Brexit will cause disruptions in the financial market and fluctuations in asset values. This uncertainty could lead parties to look for ways to avoid and exit their contractual obligations, which would probably lead to litigation or arbitration. As the number of companies entering into legal action increases, the benefits of litigation funding means we can expect to see an uptick in those turning to this option.  

The number of funded disputes could also be greatly affected by the UK’s intention to resume issuing anti-suit injunctions to protect arbitration proceedings. An anti-suit injunction is an order issued by a court which prevents an opposing party from initiating or continuing legal action in another forum, allowing the English courts to protect their own jurisdiction. Anti-suit injunctions were deemed incompatible with EU law by the CJEU (Court of Justice of the European Union) in 2009. This created a precedent on ‘mutual trust’ between member states and heavy reliance of the EU regime on court jurisdiction.

After Brexit, it looks as though English courts will once again be permitted to grant anti-suit injunctions, which can be a powerful weapon in international disputes. If anti-suit injunctions are granted in English courts post-Brexit, the UK’s arbitration position will be attractive to possible litigants, many of whom will seek funding for their disputes. 

It is also becoming increasingly evident that funded disputes are unlikely to be negatively affected by the UK’s withdrawal from the EU. One of the main reasons for this is that English arbitration law and practice has thrived independently of the UK’s EU membership and has a reputation as a first-rate jurisdiction for resolving complex multi-jurisdictional commercial disputes.

Much of this can be traced to the English Arbitration Act 1996, which provides a modern framework for resolving disputes by arbitration. The Act embodies principles which state arbitration should be resolved by an impartial fair arbitral trial without unnecessary delay or expense; parties should be free to agree how their disputes are resolved, subject only to minimum safeguards necessary for public interest. The Act also gives arbitral tribunals a wide preference to decide on procedural matters and also embodies the courts with limited powers to intervene with the process. Because it was not triggered by EU law, it will therefore continue in force following Brexit.

The UK judicial system is internationally recognised for its impartiality, experience and skill and this is unlikely to change after Brexit. Accordingly, the funded disputes market looks poised for growth in the UK after our withdrawal from the EU. Though, only time will tell if this turns out to be the case.

If you want more information about Funded Disputes, you can visit our webpage

Back to Search