Before we move to section 1, the Chair wishes to point out a correction that should be made to amendment No. 4, which is in the name of Deputy Keating: that the four words "where it secondly occurs" be added to the amendment after the word "as". Apparently these were left out in the printing or typing of the amendment.
Arbitration Bill, 1980: Committee and Final Stages.
Section 1 agreed to.
SECTION 2.
I move amendment No. 1:
In page 3, Part I, line 23, after "telegrams" to insert "or automatically or technologically transmitted messages".
This is a very brief amendment and is a point on which I should be quite willing to take the Minister's advice. We felt that it would be desirable to extend the possibility of the limitations imposed by the section here, on letters and telegrams, to include other possible technological developments which may arise. I am not suggesting that this is necessarily the best wording, but the concept is that, rather than having to go back to the House, to include such some phrase which would allow for technological development, or for automatic or technologically transmitted messages. Would the Minister take the point that there may be a need to supplement letters and telegrams? I am sure that in a few years' time these will be an outdated form of communication. That is the essential point involved in this very modest suggestion.
While it is our intention to oppose this amendment, it is important that I give the justification for that. The definition of arbitration agreement in section 2 is framed to take account of article II (2) of the New York Convention which provides that the term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement signed by the parties or contained in the exchange of letters or telegrams. The purpose of the definition in section 2 is to give effect to that provision in the Convention. It would not be open to us, as a contracting party to the Convention, to unilaterally change that definition.
I may add that it will be a matter for the courts to interpret the definition. It may well be that a court will accept that the definition would cover an agreement come to between the parties as a result of automatically or technologically transmitted messages. For example, the definition of arbitration agreement since the 1954 Act speaks only of an agreement in writing, without mentioning letters or telegrams. Despite this, the courts in the United Kingdom have interpreted the identical provision in the English Arbitration Act of 1950 as including an agreement found in correspondence consisting of a number of letters. There is no reason to suppose that our courts would take a different view. As I have indicated, it seems likely that the courts will regard the definition as also covering other modern methods of transmitting written messages. Effectively, the courts would have open to them the course to interpret the definition to include automatically or technologically operated messages.
I do not wish to unduly delay the House on this point. This is a problem which could arise right through this Bill, to some extent. The spirit of the convention—in my view acceptable to everybody here—does not necessarily have to be reflected in the verbatim extraction of the precise expression of words in the Bill.
I take it that the Minister is assuring us that the reference to exchange of letters or telegrams is sufficiently comprehensive and sufficiently malleable, as it were, to be capable of interpretation in the light of the technological developments which will occur to communication. I suppose we should be satisfied but I do not see why we should not give expression to that concretely in terms of words rather than hoping that a benign judge, endowed with some kind of superior wisdom to those who drafted this Bill, will be able to see something in it and try to stretch the elasticity of those words to include that. It is a pity we cannot do that because part of the approach to good legislation should be to plan for the future and to be able to say that in ten years time the word telegram will probably not be there, that the people will possibly have visual units in their homes connected to their television sets and they will communicate in different ways. This Bill should reflect that evolution.
I am not totally satisfied with the Minister's explanation, which is essentially to throw back to the court or the adjudication of a competent authority to devise in some mysterious way that we mean things other than letters and telegrams when we say letters and telegrams. It is clear what letters and telegrams mean and I do not think they are adequately flexible to embrace the kind of concept we are thinking of. I leave this point with the Minister and it is up to him to take it up if he sees fit.
The definition includes letters and telegrams. While it says that, it does not exclude any other kind of agreement. The Deputy probably has in mind telex and such technological aids for transmitting messages as well as telegrams. The answer is that we are following the Convention which does not refer to telex. It is expected that the court would interpret the definition in that regard. This Bill is legislating for the terms as set out in the convention.
It is our Bill.
I agree and as already stated there is a precedent in the UK where in another area of legislation the courts have been prepared to extend the interpretation to include matters which were not prescribed for in the legislation.
It is rather regrettable that we have to increasingly trust the court in the area of law making, which is really what we are suggesting here. The Minister's hope is that if that event arises at a future date the court will interpret it as we wish it to be interpreted. It seems to me that the onus is primarily on us to give clear and precise definitions and phraseology and legal expression to our intent. The convention, which this reflects, is approximately 13 years out of date and it is unwise for us to be bound hand and foot by the actual wording in that document. It would seem reasonably sensible to say: "There is a point there, let us see how we can reflect it in words". I remain convinced of that and also that sooner or later an issue will come up and we will be keeping our fingers crossed that the courts, as they have done on many occasions recently, will be obliged to bail us out of trouble which it is primarily the responsibility of the law makers to cut away. When that day comes I hope the results will be right. I will leave the matter at that. The Minister may be satisfied but I am not.
Amendment, by leave, withdrawn.
Section agreed to.
Section 3 agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
I am proposing an amendment that this section be deleted. This comes close to the heart of the Bill. As far as I am concerned the nub of it is actually in section 5. If we were to talk the way I would like to talk on section 5 about the essence of the Bill it would mean, in effect, that section 4 of the Bill would have to go. Section 4 merely states:—
Section 12 of the Principal Act is hereby repealed.
Would it be in order to take sections 4 and 5 together?
No. We have to deal with each separately. There is no question of an amendment. The Deputy is entitled to oppose the section.
I wish to refer to section 12 of the Arbitration Act, 1954. Subsection (1) of that section states:
If any party to an arbitration agreement or any person claiming through or under him commences any proceedings in any court against any other party to the agreement or any person claiming through or under him in respect of any matter agreed to be referred, any part to such proceedings may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to that court to stay the proceedings, and that court, if it is satisfied that there is not sufficient reason why the matter should not be referred in accordance with the agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all the things necessary to the proper conduct of the arbitration, may make an order staying the proceedings.
Section 4 of the Bill we are discussing repeals that section. This section leads on to section 5 and I would have preferred if section 12 of the Principal Act were left in the Bill. I oppose it being repealed for reasons which I will develop when we discuss section 5.
The Chair wishes to point out that references to section 5, which are necessary to make the Deputy's point, can be made but we have to debate the two sections separately.
The reason I oppose section 4 of the Bill is that it sets the context in which the area of jurisdiction and freedom of the courses is whittled away and is circumscribed. The grounds within which the courts were able to say if they were satisfied that there was not sufficient reason why the matter should not be referred are implicitly removed from the courts' area of consideration. I believe that that will lead to consequences which we can talk about later. I oppose section 4.
I am afraid I cannot accept the proposals made by the Deputy relating to the power of a court to stay proceedings. His first proposal to delete section 4 would involve the reinstatement of the 1954 Act which deals with the power of the court to stay proceedings in relation to domestic agreements and in relation to agreements to which the 1923 Geneva protocol applies. His amendment to section 5 would substantially re-enact section 120 of the 1954 Act and would result in two legislative provisions having substantially the same effect. More importantly, there would then be no provision giving effect to Article II (3) of the New York Convention which requires the court to stay proceedings unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed. A provision of this nature is necessary if we are to implement the New York Convention. I can deal with the New York Convention in fuller detail in relation to section 5.
Is it necessary, in order to include this reference to nullity and so on, to repeal this section? Surely the results which the Minister desires to achieve, the ratification of the significance of the New York Convention could be got by including a relevant section to that effect which would not cut across the letter or the spirit of section 12 of the 1954 Act and that is effectively what I am trying to have put in here. I do not see why we must repeal section 12 in order to include the essence of what the Minister wishes to include from the New York Convention.
We are repealing section 12 (1) of the 1954 Act and replacing it with section 5 of the Bill. It would be superfluous to have two sections dealing with the same situation.
The Minister is replacing it with a much tighter and more circumscribed section. Why not include a wider umbrella of jurisdiction for the courts in what is included in the Bill rather than tying the hands of the courts and giving them extremely limited freedom to operate in this area, a limitation based only on their perception of an arbitration agreement being null and void or inoperative? Why not take advantage of the volume of case law that has been built up over the years and allow them this wider freedom within which they could operate in line with the New York Convention? I do not understand why it is necessary to restrict the power of the courts, because after all that is the primary and essential guarantor of justice. Anything that impinges on the justice permeating influence of the courts is to be looked on with suspicion. I wonder where the demand came for this section.
I appreciate the Deputy's concern but the Deputy need not fear that there will be any impingement of the freedom of the courts to exercise their jurisdiction.
What does the Minister base that on?
I base it on the quality of the courts and the quality of our system generally.
The Minister is tying their hands.
The Deputy referred to case law, but there is no case law in this regard. In the application to domestic agreements section 5 changes the law. It replaces section 12 (1) of the 1954 Act which enables the court to stay proceedings if satisfied that there is not sufficient reason why the matter should not be referred to arbitration and the party making application for a stay is ready and willing to proceed with the arbitration. The reason for this change is the principle that parties should be held to their agreements. This principle is accepted by the courts. Their practice in relation to applications under section 12 (1) of the 1954 Act is to stay proceedings, in other words to hold the parties to their agreement. Section 5 confirms this practice. This is also the law in other EEC countries and we are bringing our law into line with them. What we have done in section 4 is to repeal section 12 (1) of the 1954 Act and we have replaced it in section 5 of this Bill.
I agree with the concern about ensuring that parties concur with agreements. That is important, but it should not be the paramount consideration. The paramount consideration should be whether justice is being done. That is a function primarily left to the courts. We could ensure that people kept to their agreements if we introduced draconian legislation, but nobody would suggest that. Perhaps we should move on to section 5 where we can discuss this in greater detail.
Is section 4 agreed?
No, my attitude is that I would like to see it repealed as I do not agree with the Minister's proposals. However, I will withdraw my amendment.
Does the Deputy wish me to put it?
No.
Question put and agreed to.
SECTION 5.
Amendments Nos. 2 and 3 are related. Deputy Keating can move amendment No. 2 and we will discuss amendments Nos. 2 and 3 together.
I move amendment No. 2:
In page 4, Part II, subsection (1), line 2, to delete "legal".
This is purely a drafting amendment. The word "legal" is unnecessary there and could possibly create some kind of confusion. I do not understand how anyone could commence any type of proceedings in a court other than legal proceedings. That word has been insinuated into the text as a material difference to section 12 of the Arbitration Act of 1954. If there is a reason for the word I would like to know it, but if not it should be removed.
The word "legal" is not used in section 12 (1) of the 1954 Act but it is used in subsection (2) of section 12 of that Act. I consulted with the parliamentary draftsman and he is happy with the phrase "legal proceedings". It is not really important and the word "legal" can be left in the section without causing difficulties. However, I have no objection to dropping the word and I am prepared to accept the amendment. The word was never in section 12 (1) of the 1954 Act and that is being repealed under section 4 of this Bill; but the word was always used in section 12 (2) of the 1954 Act which is being retained and developed under section 5 of this Bill.
There might ultimately have been a legal argument based on some sort of proceedings instituted by an individual without legal representation as to whether, for example, they were legal proceedings or not. Every time we stitch in a word like this we give lawyers room for manoeuvre and if it is not necessary it should be removed.
Amendment agreed to.
I move amendment No. 3:
In page 4, Part II, subsection (1), in line 10, to delete "and the Court, unless it is satisfied that" down to and including "referred" in line 13 and to substitute "and the Court, if it is satisfied that there is not sufficient reason why the matter should not be referred in accordance with the agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration,".
I will not get this amendment as easily as the last one.
The Deputy should have debated it with amendment No. 2.
This amendment is the kernel of the Bill in terms of the concern we have about it and I appeal to the Minister to carefully consider the impact of this section. Will the Minister be good enough to indicate where the demand has come from for this section? Section 5 of the Arbitration Bill, 1980, as proposed, is in effect a replacement of section 12 of the Arbitration Act, 1954, but there is a very different tone and area of latitude in the new section which has treated public interest detrimentally. The answer may be, as the Minister hinted in his Second Stage speech, that we are merely agreeing to the convention. However, there is no way in which we or any other country is bound hand and foot by the use of words involved in the convention. Our desire is to accept the spirit of it without being hidebound by the language used. The Minister in his Second Reading speech said, as reported at column 813 of the Official Report of 6 May 1980:
At present a court has a discretion under section 12 (1) of the 1954 Act on whether to stay proceedings in a dispute covered by a domestic arbitration agreement whereas in the case of a foreign agreement section 12 (2) of the same Act obliges the court, except in certain circumstances, to stay the proceedings. Domestic arbitration agreements are therefore being assimilated to foreign agreements in this regard. I think it is desirable in principle that parties should be held to their agreement.
There is no argument about the latter point. We all believe that it is desirable in principle that parties should be held to their agreement. The only qualification that any of us would have in that regard would be that such an agreement would concur in its implementation with what we commonly accept to be justice. However, whereas the court could, as it were, assess the overall view or perspective of the reasons for staying the proceedings up to now, the proposal is very different. The proposal takes that right away from the courts, deprives the citizen of the right to apply to the courts, and says:
... the court, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings.
That is a serious, significant, fundamental diminution of the freedom of action of the courts and as such is opposed strongly and basically in principle by my party. I do not care what we are according to, the ultimate guarantor of the right of citizens in this country—we have that potential—is our courts system. All of it is not perfect and one of the frustrations that some of us have is the inability to talk about it anywhere. If we ask questions about it here they are ruled out of order and there is nowhere else to ask questions. There are very important questions to be asked about some aspects of court procedure and about individual actions of a number of judges. Nevertheless, the overwhelming burden of good that the courts do is something that we should impinge on only after the most careful deliberation and in the most essential circumstances. This does not accord with section 5. Why is this here at all? The Washington Convention——
We will dispose of the amendment first. If the Deputy wishes to raise any matter on the section he is entitled to do it then, but amendments must go first and must be disposed of before the section is debated. We are dealing with amendment No. 3.
Section 5 of the Bill gives effect to article II.3 of the New York Convention. Its effect goes further than this. As well as requiring a stay in relation to agreement to which the New York Convention applies, it requires a stay in the case of all arbitration agreements whether they are agreements to which the Geneva Protocol of 1923 or the Washington Convention applies or whether they are domestic agreements. There need be no fear whatsoever that the powers of the High Court as they obtain at present are being interfered with, minimised or reduced in any way.
It is important also to state that article II (3) of the New York Convention provides that the court of a Contracting State when seized of an action in a matter in respect of which the parties have made an arbitration agreement shall, at the request of one or other of the parties, refer the parties to arbitration unless it finds that the said agreement is null and void, inoperative or incapable of being performed. There was a somewhat similar provision in the 1923 Geneva Protocol on Arbitration Clauses to which effect was given in section 12 (2) of the 1954 Act which is being retained which will be replaced by section 5. The Washington Convention provides in article 26 that consent of the parties to arbitration under this convention shall, unless otherwise stated, be deemed consent to arbitration to the exclusion of any other remedy.
May I comment on that?
As long as we remain on amendment No. 3. It is very difficult for the Chair to follow some of the reasoning.
In this regard our High Court has full and complete power under the Arbitration Act, 1954 to supervise arbitration proceedings in this country and to ensure fairness and justice to all parties. It can intervene in the proceedings where there is undue delay in conducting the proceedings or where there is or is likely to be a lack of impartiality on the part of the arbitrator, where the arbitrator has misconducted himself or the proceedings or where the question of fraud by any party arises. The powers of the High Court include the power to appoint arbitrators where there is failure by a party to appoint or lack of agreement among the parties as to the arbitrator to be appointed, the power to remove arbitrators or revoke their authority, the power to set aside an arbitration agreement and the power to send the matter back for reconsideration to the arbitrator. Also any party to arbitration proceedings here can request the arbitrator to state any question of law for the decision of the High Court and if the arbitrator refuses the High Court can require him to do so. None of these powers of the High Court is affected by this Bill.
What section 5 does is to require a court to stay proceedings where there is a valid arbitration agreement unless the agreement is null and void, inoperative or incapable of being performed or where the court is satisfied that there is, in fact, no real dispute between the parties for settlement by arbitration. This requirement has been part of our law in regard to arbitration agreements in which the 1923 Geneva Protocol applies since section 12 (2) of the 1954 Act was enacted. We could not have ratified the Geneva Protocol if we had not included the provision in the 1954 Act. The provision is necessary also in relation to arbitration agreements for the purposes of the New York Convention and the Washington Convention and we could not ratify those conventions in the absence of that provision.
I have tried, without repeating much of what has been said, first of all to confirm that there is no minimisation of the courts' powers. Secondly, this subsection deals purely with a provision, in the absence of agreement, to put a stay on proceedings until such time as arbitration has an opportunity.
I take it that amendment No. 3 is opposed?
None of us is hostile to the concept of arbitration. It is simply a question of being very chary indeed about reducing the power of the courts. The Minister has assured the House that that is not the case but if the English language means anything, the potential for action in section 12 of the Arbitration Act, 1954 which the court has is wider fundamentally then the potential for action in the new section, the new section being much more circumscribed.
Another document which is relevant here is the Constitution of the country and there is at least an argument that this section could be unconstitutional by virtue of the fact that it impacts detrimentally on the constitutional provisions relating to the power of the court in our State. I do not see why the Minister, even espousing the cause of embracing the conventions referred to, could not accept my amendment which says simply that in line 10 where the Minister's proposal is that the court unless is it satisfied, and so on, would read "and the Court, unless it is satisfied that there is not sufficient reason". giving the court the power to decide what is a sufficient reason rather than restricting it and trying its hands on the definition of a concept which is null and void. I will take a practical circumstance which might help. Some of the points that the Minister has mentioned are good theoretical points, such as the possibility of reference to the High Court, point of law and so on.
However, in reality it is not like that. An arbitration agreement, first of all, is mainly a private affair. It will be done presumably in a room somewhere off the main concourse. Unlike the courts, I presume there will not be a public disgallery, that the press will not be present and that there will be no public dissemination of what is going on. This fundamentally changes the nature of working towards agreement. The typical example could be a builder selling a house. As I understand it, almost all builders have an arbitration clause in their contracts. This means that the couple buying a house will be put in the position—they have no choice today when looking for a home—of accepting the arbitration if it comes to that. It is a bit of nonsense to pretend that somehow both parties, acting in full and sovereign entitlement and knowledge of their rights, decide they will agree to arbitration if something goes wrong. In reality, it is very much the strong against the weak in circumstances like that. The weak, the would-be purchaser, is in no position to tell a builder that he wants the arbitration clause out of the contract: he would not get the house. The same is true of many insurance contracts.
There will be people who will abuse this section, who will see it as a means of prevarication and therefore I do not know how we can be assured that there will not be grounds for worrying about delays in the procedure. There will always be unscrupulous people in our society who will abuse whatever legal provision exists. In the construction industry as an example, there is a minority there as everywhere else who will see that they will be able to get behind closed doors the kind of subjugation of the public interest which they would not get in a public court because judges would be able to act with wide autonomy and because the press would report an abuse and the public could come in from the street and see it.
This measure shifts the focus of argument into a smoke-filled back room with two or three people present and the dice loaded heavily against the public interest. I am asking the Minister to broaden the measure to give power to the courts to say: "There is another reason why the proceedings can be stayed or not", rather than the only reason which the Minister is willing to allow which is that the arbitration agreement is null and void, is inoperative or incapable of being performed. By definition that would mean that there was no need for the court to adjudicate at all—if it is null and void, it is null and void and the court has no function.
The Minister is perhaps unconsciously misleading himself because there is no way that it is reasonable to pretend that there is not a significant and detrimental impact on the power of the courts in this section. It is just not true, and if the Minister looks at it again I think he will find that is so. I am very concerned about public access to information, to the arbitration proceedings. I do not know and have not been told from where the demand has come from for this section. So often in this House we respond because somebody is looking for something. If there are people looking for this section it is only those who have a vested interest in ensuring that the manner of subjugating people to an agreement is taken out of the limelight to a backroom somewhere. Arbitration is good and helpful but I say, for the sake of the public interest give the courts the freedom to operate which traditionally they have had under section 12 of the Arbitration Act and which I think the Constitution gives them and the public would grant them if asked, rather than insert this restrictive clause. If the Minister analyses it he will find merit and weight in what I have said. The proposed amendment is simply to broaden those reasons and achieve, hopefully, the advantages to which I am drawing attention.
First, the situation has not changed in that there was a somewhat similar provision in the 1923 Geneva Protocol on Arbitration Clauses to which effect was given in section 12 (2) of the 1954 Act. This is being replaced by section 5 of this Bill. Section 12 (2), now section 5, gives a further extension of cover to the two Conventions. I see the court's position as not really altered at all but we are allowing for a situation where arbitration can effectively operate in a certain specified way. Deputy Keating has suggested that parties to arbitration agreements may be at a disadvantage, that the arbitration may be used as a delaying tactic and so on. There is no question of any party to arbitration being put at a disadvantage vis-à-vis the other party. Under our laws arbitrators must act fairly and impartially and the High Court has full power to ensure that they do so.
The usual arbitration clauses provide that each party will nominate an arbitrator of his choice and that these two arbitrators will appoint a third. If an arbitrator misconducts during the proceedings or does not conduct the proceedings properly he can be removed by the Court and the Court can set aside the award. Where there is or is likely to be a lack of impartiality on the part of an arbitrator the Court can revoke the authority of an arbitrator. Where the dispute concerns any question of fraud by any party the Court can set aside the arbitration agreement. Any party to an arbitration hearing if dissatisfied with the decision of the arbitrator can have a case stated on any question of law for decision by the High Court. The High Court has power to ensure that the arbitration proceedings are not used as a delaying tactic. If one party attempts to delay matters by refusing to appoint an arbitrator or by failure to agree with the appointment, the Court can make the appointment. If arbitrators do not proceed with due dispatch they can be removed by the Court. If the Court finds there is no real dispute between the parties in relation to the matter to be referred to arbitration and the arbitration agreement is brought forward purely as a delaying tactic, the Court will refuse to stay the proceedings under section 5. On that basis, I totally reject Deputy Keating's points that arbitration takes place in a smoke-filled room and that it is removed from proper coverage by press and the media, because the powers of the Court leave a remedy open, a very clear and specific remedy, in almost every area relating to arbitration, if either party is dissatisfied with the operation of arbitration. That is a very significant power. Even after arbitration, if any of the parties are dissatisfied they can come back again to the Court. All the Court is providing for is that arbitration should operate in a certain situation but if it does not operate properly and fairly and meet the situation appropriately there are still remedies and mechanisms whereby the Court can take certain action and the ultimate remedy can be found by either party in the courts.
Only on a point of law. Is it not fair to say that the courts have the power to which the Minister refers at this point?
They have.
One could perhaps deduce that some extra provision had been built in here. The reality is that part of the process of justice being seen to be done is being removed from the forum of the courts and if in the end things go wrong the court can be invoked. Would the Minister accept that even with the fairly public scrutiny of court procedure at present, it is difficult enough on occasions to concur in the view that justice is always done or seen to be done even in the public courts? I do not know if the Minister would agree with that but it is my strong view. One sees extraordinary occurrences in the courts. How can we assume that the interests of justice being done or being seen to be done are going to be served by removing one tier of it out of that forum into a situation where the courts are not given the power they had? They are given a restricted power to adjudicate only on the nullity or the degree to which the agreement is void. I say this kindly but if the Minister were in good faith in this, I do not see why he would not include this enabling facility for the court to say; "There is another reason, apart from it being void and inoperative, which makes us think that we should proceed in this way." We are now rewriting that clause. That is very important. I do not believe there is any way round that. The Minister referred to section 12 (2) of the 1954 Act, but subsection (1) is quite specific and is being replaced by section 5 in terms of the impact this Bill will have.
If the arbitration clause is misused a person can stop or delay an impact detrimentally in the interests of justice being served because it is more difficult for people in a backwater to have the same kind of focus on their rights if they are weaker, than it would be in a public court. We all know it is not very easy there either. For example, people are waiting for judgments for years. Even the courts, with the best will in the world presumably, have difficulty now and again.
How will we adjudicate what the criteria are in the arbitration room, hall or convention? For example, will there be public access to the arbitration proceedings? Are members of the press entitled to be there? Are members of the public entitled to be present?
We are debating the section rather than the amendment. The Chair is anxious to dispose of the amendment. Then we can debate the section.
If I could be sure about this we probably would not have to have the amendment. Whichever way one looks at this the reality is that part of the very important concept of justice being seen to be done by our courts in accordance with the Constitution is now being put into a backwater. People who are inarticulate, relatively impoverished or in some way unable to compete will find that their rights will not be helped here. I have no doubt that this section is not connected with their rights. I do not know why it is there. I do not know it there has been a demand for it. I am suspicious of it. People with good intent devised this section, but in my view they are misguided.
The courts have built up precedents, clauses which were used in the earlier Act and which will now presumably be bypassed. I suggest that the amending section will benefit the strong against the weak. The weak people will be unable to contest a proposed agreement which has an arbitration clause. For example, how can a young couple buying a house tell a builder they want a different contract? They will not get the house. That is the way this operates in real life.
The Minister said on 6 May 1980, at column 813, Volume 320, of the Official Report:
Of course any party to arbitration proceedings here is entitled to require the arbitrator to state a case on a question of law for the decision of the High Court.
It would be improper to suggest that they have a right to be consulted on issues outside that very strict definition of a case on a question of law.
For those and other reasons which I tried to outline I feel this section is profoundly wrong and will be shown to be wrong. We are cutting the ground from under the courts in some respects. We cannot have an arbitration procedure which operates openly and above board while at the same time giving the courts the same rights they traditionally enjoy to ensure that for any reason they see fit they can comment one way or the other on those proceedings. We are not doing that. Their right to comment in section 5 is restricted to the question of null, void and inoperative or on appeal to the High Court on a point of law. That cannot be construed as being other than severely disadvantageous to the rights of the citizen, particularly those who are not in a position to purchase the best legal brains and to provide the best backing for their case. We have an obligation to these people and to others.
The builders and contractors are an obvious example where the buyer is effectively forced to enter into a contract with an arbitration provision in order to get the house. Disputes as to defects, for example, must be settled under arbitration. No one is going to tell me that the might, of the building and construction industry can be pitted equally in an off stage room against a young couple trying to start life. It does not work like that.
The Minister assured us that justice will not be circumvented and that the courts will not be undermined in that regard, but who is to assess the degree to which the arbitration has been fair and just? The safer avenue is to allow the courts to adjudicate. All I want is to retain the power the courts have under the 1954 Act and under certain clauses of the Constitution, not to give them more power. The Minister might consider that. Public policy dictates that justice should be seen to be done. That should be a potent element of a justice policy in the community.
Let us take the case of a young couple buying a house. If there was an arbitration case brought by such a couple, I have no doubt that its impact would be strengthened if the case was heard publicly rather than privately in this type of arbitration procedure. The question of justice being seen to be done has always been a tenet of justice in this community. It will not be seen to be done to the same effect if this clause is not amended as I suggest.
I agree arbitration has its merit. There is the question of relative speed perhaps, but the Minister casually said I can be assured there would not be any grounds for prevarication. I do not see anything to assure me of that. Arbitration hearings could be speedier, more informal, there could be less animosity or division and less general harm arising from these arbitration proceedings—and that is the idea behind it—but that may not be so. It must be remembered that we are talking about a situation where there is a clear dispute, where the parties are already somewhat antagonistic to each other's interests. Accordingly it is very important that we should not try to rewrite their interests, particularly with reference to their powers to go before the courts. I want to know why we should reduce the power of the courts. I believe we should be trying to widen their jurisdiction.
These are the grounds on which I would like the section to be amended, and I want the Minister to say if these traditional safeguards of public access—scrutiny by the press, openness in every sense of the word, including publication of minutes—are referred to. I have no doubt that the kind of arbitration procedure envisaged by him is not the type that will welcome what would be interpreted as being an intrusion. In those circumstances the closed door analogy, whatever about the smoke-filled room, is relevant and accurate. Therefore we must take a stand on this. I cannot accept—and no reasonable reading of the sections would accept—but that there is a significant departure from the power of the courts in this regard. Chequered as they are in some aspects of the way they perform their duties at present, the reality is that the courts do a great deal of good. If I have any regret it is that they have to do some of the work that we should be doing.
Our Constitution is constantly being re-written by the manner in which the courts have had to adjudicate on major issues because we, the politicians, had not the courage and the wisdom to act before being forced to do so by the courts. Let us not diminish the power of the courts. Let us at least let them retain the power they have. That is why I plead with the Minister to accept this amendment which extends the possibility for the court to act to accord to the section of the 1954 Act which, when it was being introduced, presumably was seen as a wise move in itself. That we need a protocol after all which this Arbitration Act of 1954 reflects is a matter outside our control in the same way as the New York Convention and the Washington Convention are outside our control. What we are in control of and what we should be quite certain about controlling is the type of legislation on our Statute Book. I have no doubt that if the public were widely aware of the effect of, whatever about the thinking behind the section, they would not be at all happy about it. I have no doubt that a test case will arise about it and I hope on that occasion we will not have some unfortunate person having to go to the European Court of Human Rights to obtain his rights. I have grave qualms about the constitutionality of this section as well. I would be grateful if the Minister would consider these points with particular reference to the openness of the arbitration proceedings and if he would be quite specific about why he will not grant this modest extension which I seek for the courts to act with reference to the reasons why they can act and which are circumscribed in section 5 of the Arbitration Bill, 1980.
The Chair feels we must dispose of amendment No. 3 at this stage. It should have been disposed of with amendment No. 2 and we have been debating it for half-an-hour since.
The whole point of the Arbitration Act, 1954 was to ensure that arbitration is conducted in an impartial and fair manner and the practice of the Court is to ensure that and to stay proceedings. In other words, the Court accepts that people who have agreed to arbitration should be held to their agreements.
Arbitration has been an established feature of our law and, as in all other developed countries for a very long time, a method of resolving disputes. Our law in relation to arbitration is contained in the 1954 Act and I am not aware of any suggestion that the Act is repugnant to the Constitution. The important point is that arbitration does not exist as an independent system but is at all times subject to the control of the High Court. Rules for the proper conduct of arbitration hearings are laid down in the 1954 Act and it is the function of the High Court to ensure that these rules are complied with. Under the Act the High Court has extensive powers to regulate the activities of arbitrators to ensure fairness and justice. The Deputy mentioned a young couple having no option to accept the arbitration clause in a building agreement. In fact the practice of the court has been to stay proceedings in all cases up to now and, as I said earlier, the court's powers in this regard are enormous and there can be no situation where the arbitration system can misuse or abuse its power without the Court having a very direct input. If there is any evidence of fraud or misuse or any delaying tactics by any of the individual parties by way of not agreeing to a particular arbitrator, or by not appointing an arbitrator, there is a remedy to be found in the Court and the Court has, under the 1954 Act, held that power. There is no minimisation or reduction of that power.
What about the openness and the access to it?
The mechanism for access is provided there also.
Is the Minister saying that any member of the public can walk into these arbitration proceedings?
No. The arbitration mechanism is available to the public. It is an established practice.
What is it? Can a member of the public walk in? Can a member of the press walk in?
No. But where parties are consenting or agreeing to arbitration it is an established and acknowledged practice that they should be allowed to proceed and if there is any misuse of the system then the Court has enormous powers in that regard and the supervision and control of the arbitration system is very much in the hands of the courts.
Nevertheless, the reality is that where a member of the public or a member of the press can walk into a public court he cannot walk into an arbitration proceeding. The Minister mentioned evidence to indicate that something improper was going on. How is that to be monitored?
The Deputy is implying that because the press or the public at large are not involved where an arbitrator is dealing with a matter between two parties who have agreed to this course that something dangerous could be going on behind closed doors.
Not necessarily. But it could be.
The Deputy is implying that. The reply to that is that if there is any evidence of that there is access to the High Court. If there is dissatisfaction with the decision of the arbitrator he can have a case stated on any question of law for the decision of the High Court.
The Minister said that an example. I gave of a couple buying a house was a case where the court would stay proceedings.
That is correct.
Would I be right in thinking that under section 5 it might not be so enabled if the agreement was in fact null and void or inoperative? That is the point. If it has been doing this until now it has been doing it for a reason and I believe that its power to do this now can only arise if the agreement is null and void, inoperative or incapable of being performed, or there is not in fact any dispute between the parties, whereas until now it could do so for reasons other than that and obviously did.
That is not so. Under the proposed new legislation it must now come under the controls of section 5.
That is my point.
We have provided for that.
Where exactly?
On the basis that if it is null and void the proceedings go ahead.
That is what I am getting at. Up to now the Court had power outside of that. It could stay the proceedings. Did it stay proceedings under circumstances outside of the circumstances specified in lines 10 and 11 here?
It had power to stay the proceedings.
That is my point. But it will not have that now to the same degree.
There is no minimisation of the court's power in this regard.
But it is clear. It is not exactly black and white but it is in black and green here. The reality is that the Minister is now saying that the proceedings can only be interfered with if the court is satisfied that the arbitration proceeding is null and void, inoperative and incapable of being performed and so on. Up to now the range of power was wider. It could say for a particular reason not related to these points that it was going to stay the proceedings, to expedite the proceedings, or whatever the expression is. That power is now limited and nobody can pretend otherwise. That is the kernel of this Bill, the restriction on the right of the court to adjudicate on the widest parameter of concern and evidence as it sees in its wisdom as being relevant to the interests of the public in this regard.
That is the kernel of it and I believe, and the Minister has in fact indicated to me, that there is reason for concern in that regard, that there is evidence to show that up to now the court could stay proceedings and it did not have to refer to a short list. The courts are going to have to refer to a list now and I have no doubt when they do that that there are those whose interests would be served by the amendment I am proposing who will no longer be so served. That is what this section is about and this is the primary cause and nub of concern of our party with regard to this Bill. It has a detrimental impact on the courts. I do not think there is any way we can accept that. We could argue about it all evening but I believe that is the case. I think the Minister has corroborated that.
Question proposed: "That the words proposed to be deleted stand part of the Bill."
The Committee divided: Tá, 53; Níl, 35.
Tá
- Ahern, Kit.
- Allen, Lorcan.
- Andrews, David.
- Andrews, Niall.
- Brady, Gerard.
- Brady, Vincent.
- Briscoe, Ben.
- Browne, Seán.
- Burke, Raphael P.
- Callanan, John.
- Calleary, Seán.
- Cogan, Barry.
- Conaghan, Hugh.
- Connolly, Gerard.
- Cowen, Bernard.
- Crinion, Brendan.
- Killeen, Tim.
- Killilea, Mark.
- Lawlor, Liam.
- Lemass, Eileen.
- Leonard, Jimmy.
- Leonard, Tom.
- Leyden, Terry.
- Loughnane, William.
- McEllistrim, Thomas.
- MacSharry, Ray.
- Meaney, Tom.
- Daly, Brendan.
- Doherty, Seán.
- Farrell, Joe.
- Faulkner, Pádraig.
- Filgate, Eddie.
- Fitzgerald, Gene.
- Fitzpatrick, Tom (Dublin South-Central).
- Fitzsimons, James N.
- Fox, Christopher J.
- French, Seán.
- Gallagher, Dennis.
- Gibbons, Jim.
- Hussey, Thomas.
- Keegan, Seán.
- Kenneally, William.
- Molloy, Robert.
- Moore, Seán.
- Morley, P.J.
- Murphy, Ciarán P.
- O'Hanlon, Rory.
- O'Kennedy, Michael.
- Power, Paddy.
- Tunney, Jim.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, John P.
Níl
- Barry, Myra.
- Barry, Peter.
- Barry, Richard.
- Begley, Michael.
- Bermingham, Joseph.
- Burke, Joan.
- Cluskey, Frank.
- Collins, Edward.
- Conlan, John F.
- Cosgrave, Liam.
- Cosgrave, Michael J.
- D'Arcy, Michael J.
- Deasy, Martin A.
- Desmond, Barry.
- Donnellan, John F.
- Enright, Thomas W.
- FitzGerald, Garret.
- Fitzpatrick, Tom (Cavan-Monaghan).
- Flanagan, Oliver J.
- Gilhawley, Eugene.
- Griffin, Brendan.
- Harte, Patrick D.
- Keating, Michael.
- Kenny, Enda.
- L'Estrange, Gerry.
- Mannion, John M.
- Mitchell, Jim.
- O'Brien, Fergus.
- O'Brien, William.
- O'Keeffe, Jim.
- O'Toole, Paddy.
- Quinn, Ruairí.
- Taylor, Frank.
- Treacy, Seán.
- Tully, James.
Tellers: Tá, Deputies Moore and Briscoe; Níl, Deputies L'Estrange and W. O'Brien.
Question declared carried.
Amendment declared lost.
Section 5, as amended, agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."
Subsection (2) provides that the Minister for Foreign Affairs may by order declare that any state specified in the order is a party to the New York Convention and, while such order is in force, the order shall be evidence that such state is a party to that convention. It sounds a bit arbitrary. What effectively can the Minister for Foreign Affairs do? How effective can his statement be that "state X" is part of the convention? It seems to me to be a little trite. Let us assume that a state is not party to the convention. What are we talking about?
The purpose of the subsection is to provide evidence for the purpose of any court proceedings that a state in respect of which an arbitration award is being made is a party to the New York Convention and that accordingly the award comes within the provisions of Part III. The evidence will be provided by an order made by the Minister for Foreign Affairs declaring that the state concerned is party to the convention.
Can the order be accepted as evidence in court?
The evidence will be by way of an order by the Minister for Foreign Affairs that the state is party to the convention. Subsection (3) empowers the Minister to revoke or amend an order made in this respect. It is the usual provision.
Question put and agreed to.
SECTION 7
I move amendment No. 4:
In page 4, Part III, subsection (2), line 42, to delete "as" where it secondly occurs.
This is a small point. Being a former English teacher one gets concerned about propositions and things like that. Perhaps the lawyers have very good reason for this form of usage. In line 42, subsection (2) the words occur "treated as binding for all purposes on the persons as between whom". Is the second "as" necessary? Unless there is some great reason for its use, the amendment proposes its deletion. "Between whom" seems a more normal use of the language than "as between whom". I do not propose to go to war over it.
I agree with the Deputy that "as" adds very little. It was included because it already appears in section 55 of the 1954 Act. Section 55 of that Act is identical with section 7 of this Bill except that section 55 relates to the effect of awards under the 1927 Convention, whereas section 7 of the Bill is concerned with the New York Convention, and it is desirable that the text of both provisions should be identical.
I should like to use this point as an example of how, if possible, we should tidy up somewhat archaic expressions. The law is not only a matter of argument between lawyers: it is something that the public should be able to read and make sense of. It is a small point but it epitomises to some extent the unnecessary cumbersome circumlocutory language often used in Bills simply because it has been used since the beginning.
The amendment is an improvement and I accept it.
Amendment agreed to.
Section 7, as amended, agreed to.
Section 8 agreed to.
SECTION 9
I move amendment No. 5:
In page 5, Part III, subsection (3), line 49 after "award" to add "or if the competent authority is satisfied that there is other sufficient reason for the non-enforcement of the award".
I wish to have added after the word "award" the words "or if the competent authority is satisfied that there is other sufficient reason for the non-enforcement of the award". I think that there has been a mistake in the stencilling of the amendment, that "line 49" should read "line 40".
It is line 40 and not 49.
It would then read: "it would become public policy to enforce the award, or if the compenent authority is satisfied that there is other sufficient reason for the non-enforcement of the award". This comes at the end of the list of reasons why enforcement of the award might be refused. The point is to allow the widest possible discretion to people who are competent authorities in this regard to adjudicate on the reasons why the enforcement of an award might be refused. We might strengthen it if we said they were other reasons apart from those listed from (a) to (f) and subsection (3). The amendment I am proposing would mean that such a reason could be considered. It would not materially affect the spirit of the convention. There could be a reason which could come up which we have not allowed for and this clause would allow for it without having to bring it back to the House again.
The purpose of the section is to give effect to Articles V and VI of the New York Convention. Article V sets out the grounds by reference to which enforcement of an award can be refused. If we are to ratify the convention we can neither add to nor subtract from these grounds in our implementing legislation. The grounds for refusal of enforcement in the section are comprehensive and are designed to protect the interests of each party. One of the grounds for refusal is public policy. It is a matter for the Courts to determine the extent of public policy in this area and to refuse enforcement if it would offend against our ideas of justice.
Every country that becomes a party to this Convention accepts an obligation to ensure that Convention awards will be enforced in its territory unless those grounds for refusal, which are the same for all countries, apply. Thus we are assured that Irish arbitration awards will be enforced under the conditions in all the other contracting states and that the Courts in those countries would be confined to the same grounds of refusal as are contained in section 9. This amendment should be opposed.
The last point the Minister made is not relevant. On Second Stage the Minister said:
It is appropriate that we should undertake to enforce only awards arising in a country which, in its turn, will enforce Irish awards.
It is obvious that the reciprocal nature of the scheme is accepted but that does not mean that we do not have a particular domestic response on occasion. There may be reasons why some other issue could come up which we are not allowing for, for example, something which could be particularly Irish or domestic. It is a dangerous precedent to spell out reasons for refusing. As soon as the ink is dry an issue could come up on which everyone would agree there should be action but unfortunately the Act would not allow for it. Skilled legal people will ensure that that argument is pursued.
Each of these may be carefully scrutinised by highly trained legal people whose job it is to look after the interests of one party. I feel it is limiting and that we should broaden it. If it is broadened in such a way that we are dealing with a country which does not accept enforcement of an Irish arbitration award, it does not arise. There could be good and valid reasons, other than those set out in section 9, why awards could not be enforced. Why limit the jurisdiction of the courts which are concerned with justice? We may have examples of contractual legal arguments over the years, individual issues and precedents being set, which we are now keeping off court, because they do not come under this jurisdiction. That is regrettable. This section could be availed of by unscrupulous people with economic weight and power to grind their adversary into subjugation.
It would do nothing but strengthen the Bill if we added "or if the competent authority is satisfied that there are other sufficient reasons for non-enforcement of the award". Presumably the competent authority would be the court. It would be unfortunate to be wise with hindsight.
The reality of the situation is that unless we accept the conditions for non-enforcement which are laid down by the convention we cannot ratify it and we cannot minimise, reduce, alter or change it in any way. It is a question of accepting, as has been done in other countries that have ratified it, the grounds as stated. There is no record of a foreign arbitration award ever coming before our courts for enforcement. Accordingly, there is no case law on this subject to which section 9 would have any relevance. Foreign arbitration awards have rarely, if ever, come before the United Kingdom courts for enforcement and there is little or no English case law on the subject either. There is some Irish case law on other aspects of arbitration to which section 9 is not relevant.
The Minister accepts, and I do, that there are circumstances like this where, by the acceptance of such a convention we, wittingly or otherwise, accept significant changes on the jurisdiction of the courts. Perhaps we have to do that to be in accord with the convention but it is something we should guard against. We should be able to accept most of the convention without having to accept the very language of it. We are ultimately the arbiters of our own destiny in that regard. These are international documents whose structure is often fabricated with a total different value system and set of economic, social and other priorities.
We should not blandly accept the full implications of it if there is an argument or a case to be made that it impinges on the jurisdiction of the courts. Such a case can be validly made in this regard. The Minister feels he cannot accept the amendment because we have to buy all or nothing of the convention and that is regrettable. Those who signed the agreement in 1957 might not have been fully aware that we would not have power to change even a comma, cross a "t" or dot an "i" on the reasons for refusal of enforcing the award. We should have more sovereignty than that.
Amendment, by leave, withdrawn.
Section agreed to.
Sections 10 to 13, inclusive, agreed to.
SECTION 14
Question proposed: "That section 14 stand part of the Bill".
Section 14 states:
The Minister for Finance may discharge any obligations of the Government arising under Article 17 of the Washington Convention...
We are talking about financial dischargements in that regard. The Minister referred to this in his opening speech. What exactly does that mean? What financial implication is there? How much will it cost us and where will the money come from? Is it part of the budget of the Minister for Finance or what is involved?
The section refers to obligations of the Government arising under Article 17 of the Washington Convention which obliges the contracting States to meet any deficit of the International Centre for Settlement of Investment Disputes established under that convention. Is there a ceiling on the deficits of the Inter-national Centre or are we giving a blank cheque? I am not necessarily opposed to the idea of an unlimited amount. The principle of arbitration is good and we should not be carping or grudging in our co-operation here but, if possible, I should like the Minister to tell us what we are talking about in terms of costs. Further, I should like the Minister to tell us how our assessment is made. Is it done per head of population? What are the criteria for deciding our contribution?
This section deals with expenses. It covers two types of payment but we will deal with the matter referred to by the Deputy, namely, possible payment under Article 17 of the Convention which provides that where expenditure of the International Centre established under the Convention exceeds its receipts the excess shall be borne by the contracting states. Since the centre came into existence in October 1966, its expenditure has been covered entirely by the value of services and facilities made available by the World Bank free of charge and by income from the sale of publications. So far it has not been necessary to call on contracting states to meet excess expenditure under Article 17. I presume that should such a demand arise it would be out of public moneys voted in the usual way.
What is the annual budget?
It would be impossible to know that.
Are we talking in terms of millions of pounds?
I would not expect so.
I should like to know how the assessment is made. Is it worked out on the basis of population? If the Minister has not that information to hand, perhaps he would let me know later.
Article 17 states that if the expenditure of the centre cannot be met out of charges for the use of facilities or out of other receipts, the excess shall be borne by the contracting states who are members of the Bank in proportion to their respective subscriptions to the capital stock of the Bank and by contracting states who are not members of the Bank in accordance with rules adopted by the Administrative Council. Thus, Article 17 provides for a system of calculation.
Question put and agreed to.
SECTION 15
Question proposed: "That section 15 stand part of the Bill".
This section states that the order may contain such modifications or exceptions as may appear to the Minister for Justice to be expedient for the purposes of the order. Is that the usual form of words? It seems to me to be rather general.
It enables the Minister to apply by order the provisions of the Foreign Tribunals Evidence Act, 1856, which empowers evidence to be taken in the State for the purpose of proceedings before a Foreign Tribunal to arbitration proceedings under the convention. An order by the Minister might be required if it became necessary to take evidence here in regard to arbitration proceedings conducted under the Convention outside the State.
Question put and agreed to.
Sections 16 and 17 agreed to.
FIRST SCHEDULE.
Question proposed: "That the First Schedule be the First Schedule to the Bill."
The Schedule refers to "... arising out of the differences between persons, whether physical or legal." In that context what does "physical" mean?
In this instance the word "legal" means companies and "physical" refers to persons.
I assume that "differences" mean disputes?
Yes. In this section the words "physical" and "legal" describe situations.
Question put and agreed to.
Second Schedule agreed to.
Title agreed to.
Bill reported with amendment and passed.