Services are the theme at the WTO Public Forum in Geneva this week, and legal and professional services will certainly feature in the 113 sessions. When they do, the framing will probably be the familiar one – trade negotiators on behalf of a profession trying to get its people into new markets, blocked by domestic licensing regulations and visa regimes.
That framing misses something unusual about this particular sector. Of the two things legal services actually export, the law itself and the people who are licensed to practise it, one moves across borders with extraordinary ease, and it isn’t the latter.
A commodity trader in Rotterdam and a counterparty in Mumbai can agree that their contract is governed by English law and nothing about that requires permission from anyone apart from the agreement of the contracting parties. No customs procedure, no market-access commitment, no recognition agreement. The law arrives by private choice, invisibly, in a clause. Our recent report for the UK Ministry of Justice identified eleven countries and offshore financial centres that have built commercial specialisms on a common-law base, and four special economic zones founded on an English-law framework operating inside a civil-law host system. Several of them are recent, deliberate acts of policy rather than colonial inheritance. For example, Kazakhstan’s Astana International Financial Centre (AIFC) has its own jurisdiction, an English-language court applying common-law principles, and a bench recruited from common-law judiciaries. Around $20 billion has been raised through it since 2018.
Legal frameworks are not imported the way legal services are. In most cases two contracting parties simply choose a foreign law, and it arrives in their deal without the host state being consulted so those rules are in use locally from that moment. However, the capability to advise on them is not, and cannot be conjured at the same speed. So, the work the contract generates is often serviced from wherever the expertise already sits, not necessarily where the transaction happens. The gap between how freely the law travels and how slowly the people are able to follow is where the domestic value goes missing.
It also explains something about how services trade is measured. When a company contracts under English law without instructing an English lawyer, English law has done real economic work for England & Wales though nothing has been exported. The statistics pick up the fee when counsel is instructed or a dispute reaches London and miss the rest entirely. Part of the difficulty is structural. The four modes of supply under GATS all describe something in motion; a service supplied across a border, a customer travelling to consume it, a firm establishing an office, a professional going to do the work. A body of law adopted by private contractual choice is none of these. There is no mode for it, so there is no line for it in the statistics, and what cannot be counted is difficult to argue for in a negotiating room.
Now consider the practitioners. A lawyer qualified in one jurisdiction who wants to advise in another will likely face the challenges of qualification recognition, local licensing, restrictions on foreign ownership of firms, limits on which reserved activities they can perform, and immigration rules that vary by country. Where regulations on mutual recognition of professional qualifications (MRPQ) exist, they are usually narrow, hard-won, and slow to implement. These are the restrictions trade negotiators recognise. In GATS terms they are barriers to commercial presence and to the movement of natural persons- Modes 3 and 4 – and they are among the hardest concessions to win in any services negotiation.
Much of the work we have done with regional trade bodies has been on professional mobility including the Central European Free Trade Association (CEFTA), the Association of South East Asian Nations(ASEAN), the East African Community (EAC) and the MRPQ architecture being built under the the African Continental Free Trade Area (AfCFTA) has been about making incremental progress in these negotiations.
Borders can stop a lawyer, but they cannot stop a choice-of-law clause, a client who travels for advice under Mode 2, or a firm instructed across a border under Mode 1. Mode 4 gets the negotiating attention because it requires regulatory intervention to deliver.
Hook Tangaza advises governments, regulators and professional bodies on the trade in legal and professional services. Our report for the UK Ministry of Justice on the international use of English law is available here
