City lawyers have warned that London's status as an international litigation centre will come under threat should the Government push ahead with proposals to privatise the courts service.

A report by The Times this week (28 May) suggested the Ministry of Justice (MoJ) is considering putting court buildings and staff "in the hands of private companies" in a bid to save as much as £1bn a year, with funding generated in part by fees from wealthy litigants.

Though the MoJ has denied suggestions of a "wholesale privatisation" of the courts, confirming only that it is looking at ways to make the system more effective and efficient, litigators have stressed that privatisation could harm London's international standing. 

The UK's courts have become the number one destination for major international disputes, such as the epic legal battle between Russian billionaires Boris Berezovsky and Roman Abramovich – with some arguing this could be challenged.

Litigation partner Ted Greeno (pictured), who will join Quinn Emanuel Urquhart & Sullivan in September, said: "The proposal to increase court fees for commercial cases is potentially very damaging because it would be a gift to those other jurisdictions around the world which are trying to challenge London's dominance in the international dispute resolution market.

"I suspect it would only take the loss of one super-case to another jurisdiction, and the consequent loss of tax revenues generated, for all the increased revenues from court fees to be wiped out. And it is no exaggeration in my view that the loss of cases to other jurisdictions would be much greater.

"The proposal to increase fees therefore fails to look at the bigger picture. It may well bring down the MoJ's budget in the short term, but it is likely to increase the deficit in the long run, as well as damage UK plc. We need 'joined-up Government' on this."

Addleshaws senior partner Monica Burch commented: "London in particular competes as a centre for dispute resolution with other international cities and with international arbitration centres, and I would be concerned that those behind the proposals understand the contribution that this makes to the UK economy.

"I am also concerned about a proposal that makes the court system private and revenue generative. Courts make decisions in democratic countries where the rule of law prevails, that government at times will find uncomfortable or politically difficult – those decisions are the ones which need to be made and need to be seen to be made without fear or favour or interference."

Timothy Dutton QC of Fountain Court Chambers added: "I agree that increased funding could be made available from commercial, mercantile and chancery work, depending on the value of it. Fees could be graduated according to the value of the dispute. However, a proposal to privatise the court estate or its management gives rise to problems – there is a risk that courts will not be seen as completely independent of any private interest and judges could be put into the invidious position of having to negotiate court arrangements with private contractors."