Arbitration Bill, 1954—Second Stage.

I move that this Bill be read a Second Time. The Bill will fill a gap which has existed in our law for a long time in that it will provide an up-to-date and effective law of arbitration. The Bill deals with four types of arbitration. First if all, it provides for what is called voluntary arbitration, the essence of which is that the parties to some dispute refer that dispute to a tribunal of their own choosing instead of to a court of law. Secondly, the Bill deals with statutory arbitrations namely, arbitrations by tribunals constituted under statute to settle particular types of disputes which arise as a result of statute. Thirdly, the Bill covers references to arbitration by the High Court, where matters of account arise in cases before that court. Finally, the Bill includes provision for the enforcement of foreign awards made pursuant to voluntary arbitration agreements between persons subject to the jurisdiction of the different contracting States which are or become parties to the 1927 Geneva Convention on the Execution of Foreign Arbitral Awards. I propose to deal with these four types of arbitration separately.

The settlement of disputes by the decision of a person or body other than the appointed judicial authority has been recognised by all developed systems of law. There was arbitration at Roman law and the institution is to be found in the systems of law prevailing on the European Continent. In countries which adopted the common law system such as Great Britain, the United States and our own country, voluntary arbitration was also recognised. At one time the law of arbitration was substantially the same in both England and Ireland but the English began to modernise this branch of their law as long ago as 1889, whereas our law has remained virtually unchanged for almost 100 years.

It is not surprising, therefore, that the law in this country is defective in many respects. One of the main defects is that a person who has gone to arbitration has to pay the arbitrator his fee for delivering an award without knowing beforehand whether or not the award is in his favour and in the certain knowledge that whether it be in his favour or not, he is not entitled to recover any costs from the unsuccessful party and will be out of pocket not merely by the amount of the arbitrator's fee (which may be quite substantial) but also by the amount of any payments that he may have had to make in respect of legal expenses or to secure the attendance of witnesses (which may be even more substantial). Thus, a person may go to arbitration and secure a favourable award on all the points in dispute and yet be far worse off than if he had never gone to arbitration at all. Suppose a motorist has a claim against his insurance company for an indemnity in respect of an accident which will cost the motorist, say, £300. If the company disclaims liability the motorist cannot enforce his claim by taking court proceedings without first submitting to arbitration, for it is invariably provided in these motor insurance policies that an award of an arbitrator is a condition precedent to the liability of the company. The arbitration may involve the payment of two arbitrators and an umpire to determine the dispute. And when the arbitration proceedings are over, the motorist has got to pay the arbitration fees before he can take up the award and in addition, as I have already explained, to pay his own costs as well. The fees and costs may be little short of the amount in dispute and may even be in excess of that amount, so that a motorist who has a dispute with an insurance company is sometimes left with no option, under the law as it stands, but to forgo his claim.

Another defect in the existing law is that the authority of the arbitrator may be revoked by either party unless the arbitration agreement contains a provision that the submission to arbitration is to be made a rule of court. As a result, each of the parties to an arbitration is at the mercy of the other since the authority of the arbitrator may be withdrawn at the whim of either party so that a person who has incurred heavy expense in connection with arbitration proceedings may find that he has thrown his money away.

The Bill remedies these two defects and provides, in Part II, for various matters which arise in voluntary arbitration under arbitration agreements. The provisions in this part of the Bill are designed to give what I may call judicial cover to arbitration agreements, arbitration proceedings and the awards of arbitrators or umpires, so that arbitrations under Part II of the Bill will have the same sort of standing as actions before the High Court. It will be observed that the High Court is being given a very large measure of control over arbitrations. The court can intervene, as it thinks fit, in a number of ways and, in particular, there is reserved to the court the right to decide questions of law. In this, it is proposed to follow the system that obtains in England and the United States. The giving to the courts in England and in the United States of such large supervisory and controlling powers in arbitration cases has been the subject of adverse comment on the Continent where the powers of the courts with respect to arbitrations are generally more restricted and very precisely defined. The system of arbitration proposed in the Bill appears to have worked very well in England and, in framing our proposals, we have naturally taken into account the experience of a country which belongs to the same legal family, by which I mean a country whose legal system is based on the common law.

Apart from this, we must always have regard to the importance of the commercial relations between Ireland and England and between this country and the United States. I have mentioned the continental attitude to the question of arbitration lest it might be supposed that we had decided to follow the British system without giving any proper consideration to other alternatives.

Part III of the Bill deals with statutory arbitrations. These are arbitrations under various statutes where disputes arising under the statutes are settled by particular persons designated by the statutes themselves. The persons appointed under these statutes are, of course, not arbitrators in the true sense, as they are not chosen by the parties, being in fact forced on them by the Legislature. In addition they are generally more "valuers" than "arbitrators", and they settle questions which the particular statute alone has raised. Statutory arbitrations arise under numerous statutes such as the Church Temporalities Acts, the Irish Land Acts, the Railways Acts, the Drainage Acts, the Public Health Acts, Acts which relate to the acquiring of land for public purposes, etc. Deputies will be familiar with cases of the compulsory or voluntary acquisition of land under various statutes such as the Electricity Supply Acts and the Air Navigation and Transport Act, in accordance with which the value of the land is to be decided by the arbitrator constituted under the Acquisition of Land (Assessment of Compensation) Act, 1919. The provisions of the Bill dealing with voluntary arbitrations, with the exception of certain sections, are applied to all these statutory arbitrations. The excepted sections are those which are not pertinent to statutory arbitrations such as the provisions in regard to the death of a party, bankruptcy, biassed arbitrators, the powers of the High Court where an arbitrator has been removed, etc. It is to be noted, however, that, among the sections which do apply to statutory arbitrations, is Section 38 which gives power to the High Court to set aside an award. Not every statutory tribunal may be an arbitral tribunal and it will be always necessary to consider, in relation to each statute, whether the Legislature intended to set up an arbitral tribunal or not. This, of course, will be a matter for the courts.

As will be seen from Section 48 of the Bill, it is proposed that, in applying the provisions of the Bill to statutory arbitrations, the statutory arbitration is to be treated as if it were arbitration under an arbitration agreement. Furthermore, under the section, the provisions of the Bill governing voluntary arbitrations will apply to statutory arbitrations except in so far as these provisions are inconsistent with the particular statute providing for the statutory arbitration or with any rules or procedure authorised thereby.

Part IV of the Bill provides for references by the High Court of matters of account arising in any particular case to an arbitrator who shall be deemed to be an officer of the court. This part of the Act simply re-enacts and brings up to date certain provisions of the Common Law Procedure Act of 1856, but omits the requirement that the reference is to be made on the application of either party. This type of arbitration is known as compulsory arbitration.

Part V of the Act concerns the enforcement of any foreign arbitration award made in pursuance of an agreement, to which the Geneva Protocol of 1923 applies, between persons subject to the jurisdiction of States which are parties to the Geneva Convention of 1927. The award shall be enforceable either by an action in the courts or it may be enforced under Section 41 in the same manner as a court judgment or order. The conditions for the enforcement of foreign awards are set out in Section 56 and the evidence to be produced is dealt with in Section 57. The protocol of 1923 and the convention of 1927 are set out in the First and Second Schedules respectively.

The protocol covers arbitrations arising under contracts relating to commercial matters or to other matters capable of settlement by arbitration, and the convention deals with the execution of awards made in pursuance of arbitration agreements to which the protocol applies. The protocol was defective in that it contained no effective provisions for the execution of a foreign award. This was put right in the convention and the protocol and the convention are to be read together. The main provisions of the convention are repeated in the actual sections of Part V of the Bill. This country is not a party to either the protocol or the convention but accession has been delayed only because of lack of the legislation necessary to ensure their implementation in this country, the settled practice being never to undertake international obligations until after the enactment of such legislation as may be required to give the obligations effect in our domestic law. The Bill before the House will remedy the position and we will be able to enforce effectively foreign arbitral awards in the same way as other countries. It is the intention to accede to these international agreements and this will be done at the same time as Part V of the Bill is being brought into force by Government. Order under Section 1 (3) of the Bill. Under Section 54 the Government may also by Order declare the States which have ratified the convention of 1927 and made the necessary reciprocal provisions as will enable the convention to be operative.

I should like now to refer to some specific provisions of the Bill which I have not touched on.

Section 4 of the Bill provides that the State shall be bound by the proposed legislation, and this is a reasonable and proper provision.

Section 5 excludes arbitrations under agreements relating to the terms and conditions of employment. These are not arbitrations properly so called at all as the arbitrator has no power to make a final enforceable award, nor do the parties to the arbitration intend in any way that he should. The section specifically excludes arbitration under Section 70 of the Industrial Relations Act, 1946, which empowers the Labour Court, with the consent of the parties, to refer an actual or apprehended trade dispute to arbitration. Arbitrations dealing with conditions of employment and trade disputes are really informal matters and it was decided that it should be made quite clear that the Bill was not to apply to them. If the proposed legislation did apply, these arbitrations would have to be carried out in accordance with formal rules, and the law as to the swearing of witnesses, discovery of documents, costs, removal of the arbitrator by the High Court, etc., would apply to them. I think everybody will agree that such arbitrations, if they can be properly so called, should not be treated in this manner. The arbitrators are really mediators who make recommendations and it is up to the parties to accept these recommendations or not to accept them as they so think fit.

Section 8 provides for the repeal of the existing statutory enactments as to arbitration, which are set out in the Third Schedule.

The Bill, except the provisions dealing with foreign arbitration awards, is under Section 1 (2), designed to come into operation on the 1st January next. Part V, as I have pointed out, will be brought into operation by Government Order.

I trust I have given Deputies a clear idea of what the Bill sets out to achieve. Arbitration has many advantages in the settling of disputes, especially where technical knowledge or special skill or training is required. It is regarded as cheaper than law as a general rule and it is less formal and usually more expeditious. The type of arbitration the Bill covers arises where there is a justifiable dispute or a dispute which in the ordinary way would be decided by the courts. The Bill has been placed before the various bodies and persons interested and their suggestions for improvement have, where possible, been incorporated.

The provisions of the Bill are generally on the same lines as the relevant British statutory provisions so that we will have the same law of arbitration here and across the water. The law will also be the same as in the Six Counties. The advantages of this to everybody concerned, and particularly to the business and commercial community, are obvious.

I recommend the Bill to the House. I realise that portions of it are technical and may not be easily understood at a first glance, but I hope to deal with any difficulties or suggestions on the Committee Stage when we can go through the Bill section by section.

I suppose this Bill is really overdue. The fact is that the law here is not as up to date in the matter of arbitration as it is in England and, for that reason, I suppose it is necessary to bring it up to date. As this Bill is more of a Committee Stage Bill than a Second Stage Bill, I do not propose to say anything about it on the Second Stage. We are not opposing the Second Reading.

Major de Valera

A couple of remarks on this Bill at this stage might not be out of place. The Bill or some legislation to deal with arbitration is clearly necessary. The position is that there was an Act in force in England that was occasionally, I might almost say commonly, adopted in its terms here explicitly in agreements. That was more or less the position but that Act did not actually apply here and the law was not very satisfactory. I have a recollection that there was an amending Act in England in recent years and I presume the Minister and his Department in drafting the Bill had reference to the experience and the working out of that Act. Altogether there would seem to beprima facie a case for introducing such a piece of legislation here. The Government does wisely to bring it in at this time. I shall not say there is a certain amount of slackness in the House, but this is a good opportunity for bringing in legislation that is not as urgent as another type of legislation that frequently takes up the time of the House, particularly when we come to the Estimates.

There is one complaint in regard to arbitration that will be remedied by this Bill. We can consider the relevant provisions more closely on Committee Stage. Practitioners, more than once, have had occasion to complain that under an arbitration clause a dispute —and it is a condition precedent to arbitration that there must be some matter in dispute—will be referred to arbitration after what amounts to the preliminary comings and goings in the course of law, in other words, the preliminary activities of counsel and solicitors, perhaps starting with correspondence and going right along until someone finds it is a matter for arbitration and it goes to arbitration. That whole procedure is just as expensive as if you were going into a full-scale legal action.

I have heard it commonly stated that when a matter has gone to arbitration and when the award is made there is no provision in regard to costs and the person who has been successful before the arbitrator finds himself at a disadvantage in the matter of costs. Frankly, I have not had actual experience of that—it would be the solicitors who would come directly in contact with that—but I have heard that complaint made because the arbitrator had not jurisdiction to determine costs the way our law lay, unless there was some explicit agreement. From a cursory glance at this Bill it does appear that that situation would be remedied. There is a section enabling the arbitrator to determine costs and there is provision for taxation.

That is just one example of the type of matter that should be dealt with in a Bill of this nature. I would strongly recommend the Minister, particularly on Committee Stage, on each section, to consult the solicitors, in particular, with regard to the difficulties that have arisen in the past in regard to arbitration. I do not think it would be quite enough in this country to take the English precedent, even tried English precedent, without checking it against the circumstances here, as operating here. I would strongly recommend to the Minister, right through this, that the solicitors' body as a whole should be consulted and, indeed, the Bar also —but I think the solicitors are more directly concerned.

There is one point perhaps that I might appropriately make here, having some little personal knowledge. At the same time I have no axe to grind, so to speak, in the matter. It is an illusion in this country to think that arbitration will be any cheaper or that any of these extraneous machineries will be any cheaper or more expeditious to the parties than the normal course of law and of the courts. Remember, in any event, the law will rule. There are certain misconceptions in regard to the law of arbitration, mainly to the effect that the arbitrator can do anything, law or no law, which, of course, is not correct. He will be bound by the law, except in so far as there are explicit agreements to the contrary. We need not go into technical details here.

The point I should like to make is that it is largely an illusion to think that by such clauses as arbitration clauses and provisions for special tribunals of that sort the parties will be saved costs. You may save one particular type of party the costs but, generally speaking, from the point of view of equity between individuals, citizens and parties, arbitrations and similar proceedings can be every bit as, if not more expensive than the courts. It is a point to be borne in mind.

Again, I have not any particular axe to grind in the matter, but it might be appropriate, as I have some slight knowledge of it, to say that I am not so sure that, unless there is something technical in the nature of the issues, if you are going to have arbitration you should not have arbitration on the same basis as you have trial in court, in other words, that arbitration should be a job for trained lawyers. I say that with all deliberation and completely from the point of view of the community at large, not from the point of view of any particular profession or interest. When all is said and done, it will be a question of the rights of the parties; it will be a question of the construction of agreements and all that kind of thing. That, clearly, is a function for a trained lawyer.

I am not quite so sure, taking arbitration by and large, where a number of things have to be decided, that it should not be restricted to people with these qualifications. Of course, there is a qualification to that, naturally, in the case of a question of fact on some technical matter. Just as you bring in a medical referee, as they used to do in workmen's compensation cases, you might get some independent engineers to decide an engineering problem or an engineering matter. That is a somewhat different thing from determining an award or substituting arbitration for a proceeding in court.

I do not know whether or not the Minister should consider something along these lines but, by and large, having said that, it seems that the Bill, on the face of it, is more or less what is wanted. As Deputy Boland said, it is a Bill that can be dealt with on the Committee Stage better than on Second Reading. Quite obviously, the provisions in regard to foreign awards and these things that the Minister has told us about in his opening statement are necessary enough.

The one thing that we must guard against in our approach to this Bill is the idea that arbitration gets away from the law, that you completely wipe out the law. That can be only so in so far as explicitly provided. Even then it must accord with the general principles of justice. I think that is all we can usefully contribute on this stage of the Bill. Section by section we can deal with it on the Committee Stage. Would the Minister consider whether this Bill is one for Committee in the House or one for consideration by a committee selected by the House, to report back to the House? It is the type of Bill where perhaps deliberation in a committee room by a number of Deputies in the usual way might be more satisfactory. On the other hand, if there is time in the House, I suppose the more general principle should be followed, that most of our business should be done here.

In connection with Deputy de Valera's point, we have consulted the Law Society. On the question of arbitration, many employers would prefer to have the arbitration in private in connection with certain businesses, instead of having public arbitration. That is to say, many business people would prefer to have questions in dispute decided privately by arbitration. In regard to the Committee Stage, I think it would be better to have the matter discussed here by Deputies in the whole House rather than set up another committee and postpone the matter.

There is not enough for a committee here at present.

Major de Valera

That was one of the points I was making, that arbitration in private would have an interest for the big business but arbitration can be a difficult thing enough for the private citizen. Supposing there is some agreement between a private citizen and some concern, the first difficulty that is arising to-day in that type of agreement is the cost question; the second one is that it is questionable whether it is not in the interest of the single individual, as against the more powerful concern, that the matter be dealt with publicly. However, that is inherent in the nature of arbitration.

The arbitration depends on agreement.

Major de Valera

The Taoiseach will appreciate that there are agreements and agreements and that there is compulsion and persuasion.

The whole of this Bill is based upon the fact that people have voluntarily entered into the agreements.

Major de Valera

We are not in any way opposing the Bill.

It is a question I want Deputies to understand, that this Bill is for the purpose of providing machinery to enable arbitration awards that have been voluntarily entered into between private individuals to be carried into effect.

Question put and agreed to.
Committee Stage ordered for Wednesday, 17th November.