I move: "That the Bill be now Read a Second Time."
On behalf of the Minister for Justice and Equality, Deputy Frances Fitzgerald, I thank Deputies for making the necessary time available to deal with the Second Stage debate on the Choice of Court (Hague Convention) Bill 2015. Members will be aware that the Bill has already passed all Stages in Seanad Éireann. I hope it can be enacted speedily, given that the Hague Convention on 30 June 2005 on choice of court agreements came into force on 1 October. The purpose of the Bill is to make provision for the measures which are required to ensure that the Hague Convention of 30 June 2005 on choice of court agreements can function effectively within the Irish legal system.
While the Bill is short and technical in nature, it is of significance in terms of enabling us to fulfil our EU obligations. It is also of significance because the convention to which it relates has the potential, over time, to create a more predictable legal environment for companies that do business with third countries. That predictability should, in turn, encourage companies to be more confident in expanding their trading relationships with such countries.
The Bill contains 11 sections, all of which are technical in nature. Its key provisions are contained in sections 5, 6 and 9. Section 5 provides that an application under the convention for the recognition and enforcement in the State of a judgment shall be made to the Master of the High Court and that the Master may make an order for the recognition or enforcement of only part of a judgment.
Section 6 provides that if an enforcement order has been made in respect of a judgment, that judgment shall, to the extent authorised by the enforcement order, be of the same force and effect as a judgment of the High Court, and that proceedings for its enforcement may be taken accordingly. Section 6, as published, was amended in Seanad Éireann to make it subject to section 7. The effect of the amendment is that, when it comes to enforcement in Ireland, the interest provisions of the country where the judgment was given shall apply and not the Irish provisions.
A new section 9 was inserted in the Seanad, which has the effect of giving an explicit jurisdiction to the Master of the High Court to grant protective measures to a judgment creditor where that creditor seeks such measures in the context of applying to have a convention judgment enforced. In the absence of such a power, there would be a risk that a judgment debtor would be given the opportunity to put assets in Ireland beyond the reach of the creditor before enforcement could take place. Article 7 of the convention makes it clear that interim measures of protection are not governed by the terms of the convention, and their grant or otherwise is a matter to be regulated by national law. Under our national law, in the absence of an express provision, our courts would not have jurisdiction to grant these measures in respect of convention judgments. It would not be in keeping with the spirit of the convention if, in the context of an enforcement application, every effort was not made to ensure that enforcement would be effective. For this reason, a provision akin to that in respect of the Brussels I regulation and Lugano Convention regimes is to be introduced for Hague Convention purposes.
Other provisions are ancillary to these provisions. Section 1 contains relevant definitions which are self-explanatory. Section 2 authorises the Minister for Justice and Equality to make certain orders in respect of convention matters, most notably that a specified state is a state bound by the convention or that particular declarations or communications have been made. While such orders are in force, they will be of evidential value. This is a standard evidential provision, the rationale for which is to avoid taking up court time in proving that a particular state is a contracting state or the existence or contents of a declaration or denunciation made under the convention. Obviously, such a provision also has the beneficial effect of avoiding costs which would otherwise be incurred in proving these matters.
Section 3 states that the convention has force of law in the State, while section 4 provides that judicial notice shall be taken of the convention, the explanatory report prepared in respect of it and relevant court judgments. The latter provision is in aid of the uniform interpretation of the convention, which is important in an international agreement of this nature and is an objective of the convention.
A provision of the type set out in section 4 has been included in various legislation to come before the Houses in recent years. A recent example is the Jurisdiction of Courts and Enforcement of Judgments Act 2011, which concerns the 2007 Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
Section 7 deals with provisions on enforcement orders for the payment of interest on judgments and the payment of costs. Section 8 deals with the proof and admissibility of certain judgments and related documents and translations. Section 10 contains a technical provision to bring section 20A of the Jurisdiction of Courts and Enforcement of Judgments Act 1998 into line with the provisions of section 7 of the Bill. Section 11 contains standard citation provisions.
At this stage, I will address the background to and detail of the convention. The choice of court convention, to use a convenient shorthand, was negotiated under the auspices of the Hague Conference on Private International Law. The Hague Conference is a body that facilitates the development of multilateral legal instruments across a range of areas. In the past, conventions have been negotiated which touch upon commercial matters, family law matters and administrative co-operation. With 80 members, including the European Union, representing all continents, the Hague Conference on Private International Law is a global intergovernmental organisation. A melting pot of different legal traditions, it develops and services multilateral legal instruments which respond to global needs. Apart from European Union member states, the Hague Conference includes among its membership countries such as China, the United States, Japan, Australia, Canada and Russia.
The convention is geared towards the promotion of choice of court agreements in international business to business contracts. Within the EU, a legal framework is already in place which ensures that choice of court agreements are honoured. However, there is no equivalent framework at the international level, and the convention will fill this gap.
Negotiations on the convention concluded in June 2005 after a negotiating period of slightly more than two years. This convention is much narrower in scope when compared to the one that was originally contemplated. It evolved from earlier work which had been ongoing within the Hague Conference for a number of years. That work was very ambitious in aim and would have resulted in a convention which prescribed a list of approved grounds of jurisdiction as well as a list of prohibited grounds of jurisdiction. Judgments based on the former list would be entitled to recognition and enforcement in other contracting states to the convention and would obviously have facilitated the circulation of a greater volume of judgments at global level. However, it became clear that it would not be possible to bring this work to a successful conclusion, and eventually it was agreed to work on a convention with a reduced scope, which would deal only with choice of court agreements in international commercial cases.
The European Commission presented a proposal for a Council decision authorising signature of the convention in September 2008. One of the reasons informing the presentation of the proposal at that time was the perception that, when in force, the choice of court convention would reduce legal uncertainty for EU companies trading outside the European Union. Following the proposal's adoption by Council, the convention was signed in April 2009. It was also signed by the United States in January of the same year.
The European Union has exclusive competence in respect of the matters governed by the choice of court convention and, therefore, Ireland will not ratify the convention in its own right. At the time of signature of the convention, the European Community, as the European Union was then known, made a declaration indicating that it exercised competence over all the matters governed by the convention and member states would be bound by the convention by virtue of its conclusion by the Community. This is a routine arrangement for international instruments for which the European Union has exclusive competence.
Several years elapsed before the Commission produced a proposal for the conclusion of the convention in January 2014. The main reason for the lapse of time was the need to bring to a conclusion to the revision work on the Brussels I regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. That work was brought to a conclusion in December 2012, and the new regulation that resulted, which has applied since January of this year, contains amendments which align the choice of court provisions that had existed at European Union level with those provided for in the Hague Convention, thereby facilitating the approval of the choice of court convention by the EU.
The proposal for a decision authorising approval of the convention was adopted by the Justice and Home Affairs Council at its meeting on 4 and 5 December 2014. Under its terms, the instrument of approval was to be deposited within one month of 5 June 2015, and the deposit took place on 11 June last. Mexico had already acceded to the convention in September 2007 and, under the terms of the convention, approval by the European Union triggered the entry into force of the convention on 1 October this year - that is, last Thursday. This timetable for EU approval was influenced by the fact that, as part of the negotiation process, it was agreed that member states would be given some time to make any legislative changes which were needed at the domestic level prior to the approval of the convention, which brings us to where we are today.
In general terms, a typical choice of court agreement will specify that the courts of a particular state should have jurisdiction to hear proceedings under the contract that exists between the parties. Such agreements are widely viewed as being beneficial in terms of creating a stable trading environment for international commerce. However, their value is critically dependent upon the extent to which the parties can be confident that their agreement will be upheld by a court if litigation ensues. This arises both in respect of the court chosen being willing to take jurisdiction and also in respect of other courts being willing to recognise and enforce the judgment given on foot of the choice of court agreement.
To take a concrete example, a company may be reluctant to do business with a particular state because it either mistrusts or is unfamiliar with its legal system. However, if a supplier of goods is confident that, in the event of any issues arising regarding the payment of the goods which have been delivered, a court in which it trusts will have jurisdiction to rule on the dispute, it may be emboldened to proceed with the deal. The other party, which wishes to receive the goods, may be equally happy to agree to a court in which it too has confidence. In the alternative, the fact that the state with which the supplier wishes to do business is a contracting party to the choice of court convention may encourage a feeling of security in terms of being willing to accept a choice of court agreement in favour of that country. In this regard, it is noteworthy that research exists which indicates, particularly in the case of large businesses, that significant business decisions can be influenced by uncertainty regarding the court that would resolve disputes or the law that would apply to the contract. In effect, lack of legal certainty may function as a barrier to trade.
The convention aims to ensure the effectiveness of choice of court agreements by providing guarantees that the chosen court will hear the case when proceedings are brought before it. Linked with this is a requirement that any other court before which proceedings are pending must refuse to entertain those proceedings. Provision is made to ensure that judgments given under the convention will be entitled to recognition and enforcement in those states which are contracting parties to the convention.
None of these principles is absolute but the overall aim is to find the right balance between flexibility and certainty.
I will now deal in some detail with the key provisions of the convention and highlight certain articles which are probably the most important in terms of its overall content. Article 1 defines the scope of the convention. The relevant case must be international in nature, the choice of court agreement must be exclusive and the subject matter must fall within the range of what is normally understood by the term "civil and commercial". Article 3 sets out the formal requirements that must be satisfied if a choice of court agreement is to fall under the convention. Article 5 is a key provision in that it mandates the court designated in the agreement to hear a case unless the agreement is null and void under the law of the relevant state. Article 5 is complemented by article 6 which requires a court not designated in the agreement to suspend or dismiss proceedings even if it has jurisdiction under national law. There are a number of exceptions to this rule, including, for example, circumstances in which giving effect to the agreement would be manifestly contrary to the public policy of the state of the court seised or where the chosen court has decided not to hear the case. Article 8 sets out the principle that a judgment given by a court of a contracting state which is designated in an exclusive choice of court agreement must be recognised and enforced in another contracting state in accordance with the convention's provisions. By way of exception to this principle, Article 9 sets out the grounds upon which recognition and enforcement may be refused, for example, where there has been procedural fraud or where a party lacked the capacity to conclude the agreement under the law of the state where enforcement is sought.
Article 13 lists the documents which are to be produced when enforcement is being applied for. Article 16 deals with transitional arrangements and sets out the basic principle that the convention will only apply to exclusive choice of court agreements concluded after the convention comes into force for the state of the chosen court. Articles 19 to 22 contain provisions setting out the range of declarations which a contracting state may make. In this regard, Article 19 permits a contracting state to refuse to apply the convention to cases where, except for the choice of court clause, there is no connection between that state and the parties or the dispute. Article 20 allows a state not to enforce a judgment where all of the factors, other than the choice of court clause, are internal to it. Article 21 allows a state to exclude a specific matter from the scope of the convention and the EU has availed of this provision in relation to certain types of insurance contract. Article 22 allows for the making of reciprocal declarations to extend the scope of the convention to cover non-exclusive choice of court agreements. An example of such an agreement would be one which designated the courts of two or more contracting states to the exclusion of all others.
Article 26 deals with the relationship of the convention with other international instruments and is of interest because it deals with the situation where a regional economic integration organisation such as the EU becomes a contracting party to the convention. In essence, where a case is purely regional in terms of the residence of the parties, the convention gives way to any relevant regional instrument which might exist. Furthermore, it will not affect the rules governing the recognition or enforcement of judgments between the member states of the regional organisation. Within the EU the recognition and enforcement regime is much more liberal than that which exists under the convention.
I referred earlier to the fact that Mexico has already acceded to the convention. Both the USA and Singapore have signed it and it is hoped that EU approval will encourage other states to become parties to it. Ratification of the convention by as many states as possible should encourage commercial actors to avail of choice of court clauses when doing business in those states because they can be secure in the knowledge that they can rely upon its provisions. I am pleased to say that Ireland has a solid and deepening trade relationship with Mexico. In 2013, trade between the countries was of the order of €1.277 billion, constituting €928 million in the export from Ireland of goods and services and €349 million in the import from Mexico of goods and services. Ireland's principal merchandise exports to Mexico are soft drink concentrate, chemical materials and products. Ireland's main merchandise imports from Mexico are medical devices, miscellaneous plastics, stents and telecommunications and sound equipment. The value of Ireland's exports of goods to Mexico in 2014 increased by 76%, from €692 million to €1.216 billion.
Of the states which have signed the convention, the USA is Ireland's biggest goods export market, with the value of goods exported in 2014 standing at almost €20 billion. As a trading bloc, the 28 member states of the European Union traded goods worth €515 billion with the USA in the same year. The €54 billion trade between Ireland and the USA in the preceding year, 2013, can be broken down evenly between imports and exports of both goods and services. Ireland's most significant exports to the US are organic chemicals which are mainly used in the pharmaceutical industry, and medical and pharmaceutical products. Ireland's main imports from the USA are royalties and licences, and research and development services. Trade with Singapore is understandably more modest. Trade between Ireland and Singapore in 2013 was valued at a little over €2 billion, which breaks down as €1.359 billion in the export of goods and services, and €717 million in imports. The trade relationship is mainly focused on computers, computer parts and storage devices. The EU trade bloc has a healthy trade relationship with Singapore expressed in trade in goods to the value of some €47 billion in 2013.
As already stated, EU accession to the convention should have a beneficial effect in terms of encouraging other states which are members of the Hague Conference on Private International Law to become parties to it. In addition, the convention is also open to states which are not members of the conference. Even in markets where the EU is already very active, widespread adherence to the convention could have the potential to lead to further growth in trade. To take two examples where Ireland has a specific interest, Ireland's trade relationship with Australia in goods was valued at €802 million in 2013, while trade in goods between the EU as a whole and Australia in that year was valued at €33 billion. Of the EU's €59 billion trade in goods with Canada in 2013, €2.5 billion came from the exchange of goods between Ireland and Canada. Ireland's relationships with both Canada and Australia are not, of course, focused solely on trade but rather are grounded in the deeper ties of family, cultural affinities and shared democratic political traditions.
The details I have just outlined highlight the importance to all our economies of international trade. The progressive elimination of barriers to trade means that now, more than ever, predictability and certainty are vital in the area of business and commercial relationships within Europe and beyond. Business people need to be sure that they can readily enforce contracts and secure judgments for what can, in some cases, be large sums of money. Measures aimed at promoting such security have the twin effects of both protecting existing trade and encouraging new trade. In recent years, much emphasis has been placed at EU level on initiative, Justice for Growth. The Bill and the convention to which it relates are a small but practical example of the way in which justice policy can contribute towards improving the conditions for EU businesses which are active in trading with partners outside the EU.
The EU has exclusive competence in respect of the matters governed by the choice of court convention and Ireland will not be ratifying it in its own right. Nevertheless, the implementing measures which are set out in this Bill are required to ensure that the convention can be applied within our legal system. I look forward to hearing the views of Deputies on the Bill, which I hope can be enacted speedily given that the convention came into force on 1 October last. I commend the Bill to the House.