backEnglish law occupies a unique and influential position in global finance, sharing its status with New York law as one of the two dominant legal systems underpinning the international financial markets.
According to the Law Society of England and Wales, English law now governs around 40% of all international business and financial transactions across a wide range of different industries and markets, including over-the-counter derivatives trades, metals trades, M&A, and insurance contracts.
Within the international debt markets, English law is routinely selected by parties as the governing law for sophisticated commercial finance contracts and is implemented across a wide range of markets and products from syndicated bank loans, international bond issues, derivative contracts, and structured finance transactions. With the ascendancy of private credit as a financing source around the world, international direct lenders and asset managers are also turning to English law to govern their cross-border facilities and loan documentation.
The English connection
The selection of English law to govern finance contracts does not require, and is not conditioned on, there being any link between the transaction and England as a jurisdiction.
Indeed, parties to a transaction with no substantive connection to England or the United Kingdom more broadly are free to select English law to govern their agreements and English courts to adjudicate them. English courts will generally recognise and accept the express selection by the parties of English law as a valid choice of governing law for a finance contract.
The United Kingdom Ministry of Justice has stated that over 70% of the cases registered in the Commercial Court in 2024 had an international element, 49% of which were entirely without any UK element.
This choice is deliberate and rational, reflecting the perception of English law as an international public good - providing a neutral, consistent, and reliable legal framework necessary to ensure the robust enforcement of complex financial arrangements.
Notwithstanding that parties are free to select English law, it should be noted that this choice cannot be used to evade or supplant the application of any mandatory provisions of law that may apply in another jurisdiction, to the extent that all the elements of the transaction are located in that jurisdiction.
Why English law?
The preference for English law is rooted in its commercial philosophy. At its core, English law respects freedom of contract and enforces agreements as written. This principle is not merely aspirational; it is embedded in centuries of jurisprudence and established legal precedent and consistently upheld by English courts. For lenders and borrowers alike, this translates into contractual certainty—a commodity that is indispensable in international finance and asset management.
English courts also possess unparalleled expertise in financial disputes. The judiciary’s commercial orientation ensures that decisions are grounded in market realities. Damages are awarded with moderation, avoiding the volatility associated with U.S. litigation. Coupled with the fact that English is the lingua franca of international business and that English law boasts centuries of consistent case law, the result is a legal system that inspires confidence and facilitates global commerce.
Predictability is the cornerstone of English law’s appeal. Acceleration clauses, enforcement rights, and disclaimers are habitually upheld. Courts do not rewrite bargains; they uphold and enforce them, especially where sophisticated commercial parties are involved. This approach reduces litigation risk and enhances transactional efficiency.
The global appeal of English law is evident in the legal frameworks adopted by new international financial hubs such as the Abu Dhabi Global Market and the Dubai International Financial Centre. Both jurisdictions have deliberately modelled their commercial law and dispute resolution regimes on English common law principles. This choice reflects a strategic intent: to offer investors and institutions the same predictability, contractual autonomy, and judicial sophistication that underpin English law.
Enforcement of English law judgments
Whilst recognition of the choice of English law is fundamental, lenders also require reassurance that any judgments obtained in respect of their English law finance contracts in the English courts will be upheld and enforced by courts of the debtor’s own jurisdiction.
Generally, final and conclusive money judgments of the English courts enjoy widespread recognition under principles of reciprocity and comity and are regularly and routinely enforced in leading jurisdictions around the world (without re-examining the merits of the English court judgment). This is the case still in European jurisdictions, despite the UK’s non-accession to the Lugano Convention post-Brexit.
The recent implementation of the Hague Judgments Convention further strengthens this position, providing a robust framework for cross-border enforcement. For syndicated lending and secondary market transfers, this assurance is vital. Global financial market liquidity depends on the ability to transfer commitments and enforce rights seamlessly across jurisdictions, and English law delivers that enforcement infrastructure.
Limitations and practical considerations
While English law offers significant advantages, it has limitations. Parties should bear in mind:
- Mandatory local rules cannot be displaced by contractual choice of law, particularly in areas such as insolvency and regulatory compliance.
- Documentation creating security interests should be governed by the law of the jurisdiction where the collateral is located to ensure practical enforceability.
- Recognition and enforcement abroad remain subject to public policy and illegality exceptions specific to each jurisdiction. For example, a foreign court may not recognise an English court judgment to the extent it relates to taxation or financial penalties.
These considerations do not undermine the utility of English law; they simply underscore the need for careful structuring and local advice.
Certainty in an uncertain world
English law’s status as an international public good is neither accidental nor historical nostalgia. It is the product of a legal system that prioritizes predictability, respects contractual autonomy, and delivers creditor protection. For parties engaged in leveraged finance and other cross-border finance transactions, English law offers what few others can: certainty in an uncertain world.