For an international investor weighing a new investment with an English dimension, whether via an English counterparty, contracts with a nominated jurisdiction clause, or in assets that may ultimately sit within the reach of the courts of England and Wales, it is worth considering any legal protections and potential risk from the outset. It can be easy to focus on the money: on commercial terms, deal structure, valuation, and tax.
However, in the event that things go wrong: that a party defaults, a partner acts in bad faith, or assets are put beyond reach, it is helpful to know how these circumstances can be dealt with before they become acute.
The question we ask is: 1) what legal risks are international investors likely to be exposed to, and 2) what remedies are available in our domestic courts? Equipped with this knowledge, investors can built risk mitigation frameworks into investment decisions from the very outset.
Choice of Forum
Many cross-border investments end up connected to our courts via the nomination of England and Wales via a jurisdiction clause in a contract, or the agreement that disputes will be resolved here. English law is well-developed and nuanced in this field, with a high degree of consistency in judgments, and judges with a wealth of specialised experience from the highly-specialised lists themselves – including the Chancery Division and the Financial List.
It is important, however, that international investors consider the real impact of their choice of forum. It is not a mere formality – the way that contracts are interpreted and enforcement may be effected truly differ jurisdiction to jurisdiction, and it is recommended that the investing party take consolidated advice on this aspect. Choosing England and Wales has real consequences for how a dispute, if one arises, will actually be fought and won.
So, for an investor, what are the benefits of this jurisdiction? One is the predictability of outcome. While precedents can always change the law, our courts are relatively predictable. A well-drafted English law contract, interpreted by an experienced commercial court, is less likely to produce surprising results than one governed by an unfamiliar or less tested legal system.
Secondly, and equally important, though less-often considered at the negotiation stage, is how the law can protect an investor’s position if things go wrong. We consider each of these benefits in turn.
Assessing Litigation Risk
Before committing capital, an investor should understand where a dispute connected to the investment may be brought.
Where a contract contains a clear jurisdiction clause, this question is generally straightforward. From 1 January 2021, the United Kingdom has been a contracting state to the Hague Convention of 2005 on Choice of Court Agreements, implemented into domestic law by the Private International Law (Implementation of Agreements) Act 2020. Under that convention, other contracting states, including the member states of the European Union, are obliged to respect an exclusive choice of the English courts and, broadly, to decline jurisdiction themselves. A clearly drafted exclusive jurisdiction clause in favour of England and Wales, should the choice of this jurisdiction be advantageous, is therefore a useful risk management piece.
Where no such clause exists, or where a prospective defendant is based outside England and Wales, the position is set out in Part 6 of the Civil Procedure Rules and accompanying Practice Direction 6B, which specify the gateways through which the proceedings may be permitted to be served on an international defendant. The gateways cover, among others, claims relating to a contract made by or governed by the laws of England and Wales, claims in tort where damage was sustained within the jurisdiction, and claims against necessary or proper parties to proceedings already validly brought against another defendant. The permission of the court is generally required, and the claimant must satisfy the court that this jurisdiction is clearly the appropriate forum. An investor structuring a transaction with a view to potential future claims (either made by them or against them) should understand, before signing, whether the agreement affords access to English proceedings via one of these gateways.
Remedies
A key remedy in investment-related proceedings is the protection against the dissipation of assets. The courts have a wide statutory power under s.37 of the Senior Courts Act 1981 to grant an injunction in cases where it appears to the court to be just and convenient to do so. A freezing injunction is an order restraining a party from dealing with, diminishing the value of, or otherwise dissipating assets. In appropriate cases, such orders can extend to a party’s assets worldwide, and they can be granted without prior notice where there is a real risk that assets would be at risk prior to effecting service.
For an investor, the practical significance of this is considerable. Should, following investment, a situation arise where funds are misappropriated, a party breaches fiduciary duties, or assets are diverted through a chain of corporate structures, a freezing order can ensure that those assets cannot further be dealt with before the underlying dispute is determined. Investors with concerns about a party’s conduct or about the jurisdictions at play in a transaction may place additional value on access to the English legal system, even where the contemplated transaction has minimal connexion with this jurisdiction.
The burden of proof in order to obtain a freezing order or injunction should, however, be taken into account. In order to obtain a freezing injunction without notice, an applicant submits to a strict duty of full and frank disclosure of all matters that might reasonably bear upon the outcome. Failure to observe that duty can lead to the injunction being discharged, and can expose the applicant to a claim in damages, regardless of the underlying merits of the claim itself. This is not a basis fully to avoid the remedy, but it is a reason to ensure that experienced advisers are instructed and that any such application is properly contemplated and made with diligence.
The English courts also have, as above, wide powers to make disclosure orders for information or documents at an early stage, including from third parties, where disclosure is necessary to identify a wrongdoer or trace the destination of diverted assets.
CPR Rules 31.16 and 31.17 deal respectively with pre-action disclosure and non-party disclosure. They sit alongside long-established equitable principles of similar effect. In recent years the rules have been extended to clarify the circumstances in which the service of such applications may be effected on international parties. Where investors are concerned that there is the potential for assets to be diverted through corporate structures in multiple different jurisdictions, combined disclosure and freezing orders are useful mechanisms in conjunction to ensure that any such movement of these assets is a) limited and b) known. As such, international investors should seek advice as to the available reliefs pursuant to the terms of any agreement and consider the jurisdictions which may come into play.
For an investor concerned that assets connected to an investment have been diverted through several corporate entities registered in different countries, this combination of disclosure and freezing relief is often the most valuable tool the English courts have to offer, and it is worth an investor understanding, at the outset of a relationship, whether the structure of the investment would allow such relief to be sought if the need arose.
Dispute Resolution – Arbitration
Many cross-border investment agreements provide that arbitration rather than litigation is the primary mechanism for dispute resolution. It is therefore worth being clear, when weighing whether or not to include an arbitration clause, that an affirmative choice does not remove the courts from the picture. Rather, where the arbitration is seated in England and Wales, the courts then occupy a supporting and supervisory role.
The Arbitration Act 1996, as amended with effect from 1 August 2025 by the Arbitration Act 2025, remains the principal statute governing arbitrations seated in England and Wales. Under section 9, if a party commences court proceedings in breach of a valid arbitration agreement, the other party may apply to stay those proceedings to allow the dispute to proceed through the arbitral process. A well-drafted arbitration clause can, should arbitration be preferred (for example, on account of data privacy or relationship maintenance), be a useful tool.
Sections 66 to 69 of the Act deal with the enforcement of, and the limited grounds for challenging, arbitral awards, including challenges based on a lack of substantive jurisdiction or serious procedural irregularity. The 2025 amendments introduced a clearer default rule on the law governing an arbitration agreement, confirmed the power of tribunals to dispose of weak claims or defences on a summary basis, and refined the framework for jurisdictional challenges. These changes served to reinforce London as a leading seat for international arbitration.
For an investor, the choice between litigation, arbitration, or a structure combining the two, should be made with a view to where enforcement is likely to be needed, and what metrics are important for the outcome.
Enforcement
A judgment or award is only as useful as the ability to enforce it. This is an area where forward planning at the investment stage is essential.
Arbitral awards benefit from a very wide international enforcement regime pursuant to the New York Convention of 1958, now ratified by more than 170 states. This makes arbitration an attractive choice where an investor anticipates that enforcement may ultimately be needed in a jurisdiction with limited reciprocal arrangements for court judgments.
Court judgments are less universally recognised, although the position has improved. Following the United Kingdom’s departure from the European Union, the reciprocal enforcement regime that previously applied between England and EU member states under the Brussels regime ceased to apply. In its place, a network of alternative arrangements has developed. The Hague Convention of 2005 assists with the enforcement of judgments under an exclusive English jurisdiction clause. For a wider range of cases, the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters entered into force for the United Kingdom on 1 July 2025. This convention establishes a broader framework for the recognition and enforcement of English judgments in other contracting states, including the member states of the European Union, and applies to proceedings commenced on or after that date.
Outside these conventions, older statutory regimes continue to operate in relation to a defined list of countries, principally the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933, which provide for registration and enforcement of judgments from certain Commonwealth and other listed jurisdictions. Where none of these regimes applies, an English judgment may still generally be enforced abroad through common law principles of recognition, though the precise route and its real prospects of success depend heavily on the law of the country where enforcement is sought.
For an investor with assets spread across several jurisdictions, this patchwork is a good reason to think carefully before signing about where a dispute is likely to end up and where a resulting judgment or award will actually need to be enforced. The right choice of forum, and of governing law, may differ depending on where the investor expects, say, the asset to be at the time of enforcement. It is prudent to ask that question before the investment completes rather than after a dispute has arisen.
Costs and Funding
English litigation operates on the general principle that costs follow the event, meaning that an unsuccessful party will typically be ordered to contribute to the successful party’s legal costs, in addition to bearing its own costs. This is a meaningful difference from jurisdictions where each party bears its own costs regardless of outcome, and it affects the economy of making or defending a claim.
Third party litigation funding and after-the-event insurance are well established sectors of the English market and can be utilised by international parties, particularly where a claim is strong on the merits but the party prefers not to carry the full cost and cash flow burden of the litigation at the outset. Security for costs applications, by which a defendant can ask the court to order a claimant based outside England and Wales, or one with no substantial assets within the jurisdiction, to provide security for the defendant’s potential costs, are also a feature of cross border disputes.
A few general themes are worth carrying into the structuring of any new investment with a dimension in this jurisdiction. Governing law and jurisdiction clauses should be drafted deliberately, with real thought given to where it may be preferable for an investor to bring or defend a claim and where any resulting judgment or award will need to be enforced, rather than treated as a standard form to be agreed without discussion. The availability of protective remedies such as freezing injunctions and disclosure orders should be understood in advance, as these can prove the difference between a recoverable claim and an empty judgment, and their value depends on whether the structure allows access to the English courts in the first place. The choice between litigation and arbitration should reflect the likely enforcement destination of any eventual judgment or award, not simply market convention. Finally, the practical economics of a future dispute, including the costs regime and the availability of third party funding, are worth factoring into the overall risk assessment of an investment from the start.
The courts of England and Wales and their framework of protections and remedies offer international investors a sophisticated toolkit, but those protections are of most value when they have been considered and built into the structure of an investment from the beginning. Consolidated advice should be taken prior to closing, in order to afford the best possible risk mitigation and ultimate return.
