The View of European Business

Stuart Popham

14 March 2008

Survey Results

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The 2005 Survey

2005 Survey on European Contract Law175 businesses83% viewed favourably or very favourably the

concept of a harmonised European contract law83% also want the ability to choose between

different laws30% in favour of a European contract law

replacing national laws

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The 2008 Survey

Carried out by the Institute of European and Comparative Law

77 (so far) businesses across Europe

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Choice of contract law remains important

91% regard it as important (45%)or very important (46%) to be able to choose the governing law of a contract

85% often (42%) or occasionally (43%) do choose

66% agree that there is considerable variation in contract laws across Europe

65% would choose a law from outside Europe if no European law was suitable

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What are the preferred laws?

First answers only

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What laws are avoided?

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What are the most used laws?

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International “laws”

70% agree strongly (41%) or mildly (29%) that cross border transactions would be facilitated if there were a European or global contract law to choose

But 81% never (57%) or almost never (24%) use lex mercatoria

or general principles of international contract law 79% never (59%) or almost never (20%) use UNIDROIT’s

Principles or International Commercial Contracts 95% never (91%) or almost never (4%) used PECL

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What influences the choice of law?Substantive contract law 4.51

Corruption 4.19

Quality of judges and courts 4.13

Speed of dispute resolution 4.12

Predictability of outcomes 4.09

Fairness of outcomes 4.03

Costs 3.72

Tax law 3.70

Quality of lawyers 3.65

Language 3.64

Absence or availability of disclosure/discovery 3.31

Absence or availability of class/collective action procedures 3.03

Mediation 3.01

Cross-examination 2.97

Absence or availability of judicial encouragement of settlement 2.83

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Law and jurisdiction 84% agree strongly (36%) or mildly (48%) that

there are considerable variations in civil justice systems across Europe

84% agree strongly (40%) or mildly (44%) that these variations affect their choice of contractual governing law

66% agree that there are considerable variations in contracts laws across Europe

74% agree strongly (34%) or mildly (40%) that these variations affect their choice of jurisdiction to resolve disputes

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The importance of choice of jurisdiction

91% consider it very important (68%) or important (31%) to chose the dispute resolution forum

85% often (42%) or occasionally (43%) do so

64% would choose a forum outside Europe no European forum was suitable

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What are the preferred fora?

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Preferred fora away from home

First answers only

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What are the least preferred fora?

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What are the most used fora?

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What are the most favourable fora?

First answers only

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What are the least favourable fora?

First answers only

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What influences the choice of jurisdiction?Fairness in outcomes 4.43

Quality of judges and courts 4.43

Corruption 4.39

Predictability of outcomes 4.30

Speed of dispute resolution 4.22

Substantive contract law 4.12

Language 4.05

Costs 3.86

Quality of lawyers 3.75

Tax law 3.43

Absence or availability of disclosure/discovery 3.39

Mediation 3.14

Absence or availability of cross-examination 3.11

Absence of availability of class/collective action procedures 3.01

Absence of availability of judicial encouragement of settlement 2.96

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Jurisdictions and trade

82% disagree strongly (60%) or mildly (22%) that variations in civil justice systems deter companies from doing business in certain jurisdictions

57% disagree strongly (24%) or mildly (33%) that differences in civil justice systems constitute a barrier to trade

33% agree mildly and 8% agree strongly

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Financial impact of jurisdictions

Do differences in European civil justice systems have a financial impact on your business?

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A harmonised European civil justice?

79% favourable (43%) or very favourable (36%)

But how?

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“It is very difficult to learn each of the different judicial systems in Europe. It is better to have only one European system.”

“There is a realm to harmonise certain systems. But to harmonise all of the systems would take too long and the results would be worse that what we have right now because of the need to compromise: many good systems would be lost.”

“To a certain degree the scepticism on a European civil justice system might be based more on prejudice than fact, especially also our scepticism about common law. We tend to avoid these jurisdictions nevertheless.”

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Arbitration

61% prefer arbitration to court proceedings because

Confidentiality (50%)Speed (30%)Enforceability (7%)Informality (7%)Cost (4%)Particularities of the transaction (2%)

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Conclusion

There is an internationally competitive market in law and dispute resolution

Parties want, and will exercise, choice

Law and jurisdiction are intimately connected

The principal factors that influence choice are general in nature

Clifford Chance, 10 Upper Bank Street, London, E14 5JJ, UK

© Clifford Chance LLP 2008

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The View of European Business

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