When creating a legal agreement, it is important to include a clause specifying which laws will govern the agreement. In many cases, this clause will state that the agreement shall be governed by English law.
But what does this mean exactly?
When an agreement is governed by English law, it means that the laws of England and Wales will be used to interpret and enforce the agreement. This is true even if the parties involved are located in other countries.
Why is English law commonly used in legal agreements?
There are several reasons why English law is often selected as the governing law for legal agreements:
1. Clarity and certainty: English law is known for being clear, certain, and predictable. It provides a solid foundation for interpreting and enforcing legal agreements.
2. International recognition: English law is widely recognized and respected in international business dealings. This is especially important when parties from different countries are involved in an agreement.
3. Language: English is a widely spoken language around the world, making it easier for parties to understand and communicate about the agreement.
4. London as a legal hub: London is a global center for legal services and dispute resolution. Many international businesses choose English law as the governing law for their agreements in order to take advantage of this expertise.
What are the implications of choosing English law as the governing law?
When an agreement is governed by English law, it means that English courts will have jurisdiction to resolve disputes arising from the agreement. The courts will apply English law to interpret and enforce the agreement.
This can be a significant advantage for parties involved in the agreement. English courts are known for being fair and impartial. They are also experienced in dealing with complex international disputes.
However, it is important to note that English law may not always be the most appropriate governing law for a particular agreement. Parties should consider the specific circumstances of their agreement and seek legal advice before selecting the governing law.
In conclusion, including a clause in a legal agreement specifying that it shall be governed by English law provides clarity, certainty, and international recognition, making it a desirable choice for many international business dealings. However, parties should carefully consider their specific circumstances before making a decision on the governing law of their agreement.