HCR Law Events

18 January 2023

Opinion: opportunities for innovative technologies and choosing what law to apply

If you had sat down with a blank piece of paper just seven years ago and thought about the challenges that could face original equipment manufacturers (OEMs) in the years ahead, you would have struggled to predict the successive seismic events that have impacted the sector.

A fundamentally changed political and economic relationship with our closest market; a belligerent political environment in the global powerhouse across the ‘pond’ heralding a partial withdrawal from the international rules-based order; sea-changes in the demographics; economies and political landscapes of the far east; shortages of essential raw materials and batteries for new technologies; a desert of semi-conductor supplies worldwide; a global pandemic; a grieving war in Eastern Europe devastating communities and taking energy prices to hitherto unexplored heights; unprecedented fluctuations in container prices…

The list goes on, however the overriding theme of all these traumas is the inter-dependency of global markets that lends continuing truth to the adage, owed to the 19th century Austrian Chancellor, Metternich, that when powerful states (then France, now China and the US) sneeze, the world catches a cold.

Throw in a world that has to now prioritise carbon-reduction and it is fair to say that the landscape of today is, shall we say, unexpected.

Supply chain disruption from these movements of the tectonic plates that affect global trade creates considerable obvious challenges and uncertainties for manufacturers. Whilst most stark for ‘just-in-time’ frameworks, managing inventory has created all sorts of headaches for almost all sectors and production and markets can be broken by gaping holes on the supply side.

Leveraging new tech

Out of this traumatic context however emerge collateral opportunities for industrial adjustment and developments in technology will plainly be taking centre stage in those adjustments.

First to the stage is the drive for new technologies that ease trading impairment across borders and manage inventory; next is the drive for technologies that offer substitute supply solutions to those that have been rendered economically unviable by events; and finally, the drive for technological solutions that are sustainable and serve sustainable objectives. Necessity is, after all, the mother of invention. We are in a new world and harnessing the capabilities of AI on the one hand and the developments of new materials and production technologies on the other offer an unprecedented capability to accelerate the speed of adjustment necessary.

Against that backdrop and despite intensive competition, the UK remains at the forefront of the development of advanced engineering technologies that ideally place it to lead the pack. There is an argument that with conditions that encourage diversification of application of technologies and a culture of innovation, we are better equipped than we have ever been to meet the challenges presented by over half a decade of upheavals. The opportunities for SMEs to drive the sector are legion.

Forethought to choice of law

Delivering on those opportunities however requires businesses to be analytical, indeed, forensic, in their attention to detail. At the top end of competitive sport, you will hear coaches breaking down every component of athletic performance for success; searching out that extra half a per cent of improvement across each facet of execution.

Here lies the case for attention to an oft forgotten component. The supply chain is, in nature, a matrix of legal relationships and that matrix is the stage onto which our advanced engineering technologies are launched. Striving for top performance therefore means not relegating the legal context for managing such relationships to side-thinking (often the tendency), but actively engaging with the question of choice of law to be applied to those relationships at the outset. The parties’ choice of law in an agreement is something that most jurisdictions will respect.

Whilst the competition between States for the laws most suited for international trade has intensified in recent years, the reassurance is that English law continues to provide a safe harbour of rules and authorities that are built on strong mercantile foundations and a responsiveness to business needs. This in turn can provide an advantage of confidence and trust that is central to establishing and maintaining successful commercial relationships.

Therefore, whilst it may not be the right choice for every cross-border engagement and the question of choice of jurisdiction for resolving disputes is a distinct and separate matter, agreeing a trustworthy ‘home’ law can play an important part in achieving successful outcomes for the UK’s advanced engineering competencies.

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About the Author
Dominic Hopkins, Partner, Joint Head of Central England Office

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