Regulation & Government

Crumbling legal system will cost Britain money and influence, report finds

The research found that English law is ‘struggling to remain relevant’ to disputes and contracts involving technological innovations such as blockchain, AI and biotechnology

The Social Market Foundation’s (SMF) new research reveals Britain risks losing out on economic growth and international influence due to its “crumbling” legal system.

The research draws on insights from senior lawyers, academics and officials, as well as Opinium polling of UK’s businesses. It revealed the UK is “not prepared” for innovations such as crypto-currencies, artificial intelligence and green investing.

The SMF said that delays in settling cases in “overburdened courts” and a lack of laws governing new markets and technologies could “dissuade” companies and investors from doing business in Britain or using English law in their commercial activities.

The think-tank said that politicians, officials and business have been “complacent” about the international standing of Britain’s legal system, and the SMF said that Britain risks losing its place as a “world-leading economy” based on the rule of law.

According to the research, civil court cases in England and Wales  “take too long and cost too much”. The World Bank rankings revealed England and Wales “languishes” 33 places behind Singapore when it comes to enforcing a contract. 

SMF said that delays and costs push some big businesses to use private arbitration processes instead of the courts, “reducing the relevance of the legal system”.

The report also noted a  “persistent  problem” with the recruitment and retention of judges, which contributes to the slowness and cost of litigation. 

Additionally, SMF said there are “growing concerns” about English law’s ability to deal with the growing interest in Environmental, Social and Governance (ESG) investing.

Richard Hyde, SMF senior researcher, said: “Our laws and legal institutions have been respected around the world, generating wealth and influence for the UK. But as a country we have become complacent about it and failed to support the law and its institutions properly. 

“If companies can’t settle their cases quickly in our crumbling courts, they will go elsewhere. If business can’t use English law to draw up contracts for cryptocurrencies, AI or green investment, they’ll use another system.” 

He added: “We can no longer take the rule of law and its economic benefits for granted. To maintain and improve our place in the global economy of the 21st Century, we must continue to invest in and update our legal code and legal institutions.”

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