Jonathan Goldsmith

Jonathan Goldsmith

Among the main aims of the current ‘Legal Services Are GREAT’ campaign is that the UK remains the number one place globally to resolve disputes. In our Brexit negotiations, and in our post-Brexit vision, we are united in believing this should continue. But what are the consequences? In particular, who suffers if we lead?

We may not care about competition with other European countries post-Brexit, because they are strong enough to look after themselves. The ‘GREAT’ campaign is popular among those of our members who face, say, German or French lawyers trying to take advantage of Brexit by reducing English law’s dominance.

But outside the developed countries in Europe, and the USA, many people say that the export of services, including dispute resolution, is a new form of colonialism. Our leadership may be good for us, but it is bad for those countries which import such services. For instance, the law has to travel vast distances to be resolved, and is no longer conducted locally by local people. Expertise and funds are lost domestically to rich overseas jurisdictions (not only to the UK).

Take Africa as an example. It is estimated that 82% of all legal fees in Africa go to offshore firms. The parties in 99% of all African disputes abroad are represented by lawyers and law firms based in the UK, USA and Europe. 95% of arbitrations involving an African party take place out of the continent.

The 2016 International Chamber of Commerce (ICC) Dispute Resolution Statistics – ICC being one of the international arbitration bodies - show that 53% of their appointed arbitrators for African cases hold European nationality. By contrast, only 10% of such arbitrators are African. Of the 400 arbitrators in African ICSID cases, the top 3 appointed nationalities are French, Swiss and US, making up 43% of appointments – interestingly, the UK is not among the top three. The total number of African-seated cases is strikingly low (less than 0.01% of the overall new cases filed).

A past president of the International Council for Commercial Arbitration (ICCA, which is an NGO that promotes arbitration) said even as far back as 1987: ‘When the entire centre of gravity of an investment contract from its negotiation to its performance is in an African country and has resulted in the creation of an enterprise whose physical plant, corporate records and personnel are located in that country, the concept of arbitration in Europe or North America may be not only artificial but truly burdensome’.

African lawyers are unsurprisingly resentful about this. They want a share of the action. There are arbitration centres now in many African countries, for instance Kigali (Rwanda), Nairobi (Kenya), and Lagos (Nigeria). But in order to influence the seat of arbitration, these lawyers need to be involved in the case at an early stage, which is not so easy. They need to partner with international firms in the first place to build expertise and market share.

And this is where it becomes apparent that not all the blame lies on one side. African jurisdictions themselves have barriers to the international trade in legal services. Before even arriving at those barriers involving the specific practice of law, there are other barriers. Much of international trade will be with neighbours and within a region, but travel between African countries is not always easy. African lawyers complain that they sometimes have to leave the continent altogether – to Paris or London, say – to take a flight back into another African country.

Regarding immigration requirements, most African countries still have stringent entry requirements for other African countries, making travel within the continent doubly difficult. According to the Africa Visa Openness Index, published by the African Development Bank, Africans require visas to travel to 55% of other African countries, compared to North Americans who require visas to travel to 45% of such countries. Africans can get visas on arrival in 25% of African Countries, compared to 35% for North Americans.

On top of that, many individual jurisdictions have strict rules for the practice of law, which mostly disallow the kind of structures which would easily permit joint practice between a local and a foreign law firm. The lawyers and their regulators are afraid that the consequences of opening up will make the import balance worse.

In other words, the disparity in dispute resolution statistics, and the consequent financial and cultural damage, does not arise solely because of invading foreign firms. There are existing barriers which are a contributory factor.

My point is not to hold back UK firms, or undermine the ‘Legal Services Are GREAT’ campaign, which I support and have worked for, but rather to show that, like eating fruit out of season or drinking coffee at a cheap price, there is damage elsewhere from our actions.