Jurisdiction of Courts and Enforcement of Judgments (European Communities) (No. 2) Bill, 1987: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Kennedy

As I was saying, a Chathaoirligh, with regard to method (1) — service within the jurisdiction — it is a fundamental principle of Irish law that a person who is physically present in Ireland and who is validly served with a writ, or its equivalent, is subject to the jurisdiction of the Irish courts. There must normally be personal service, that is, a copy of the writ or its equivalent must be left with the defendant and, if he requests it at that particular time, the original writ must be shown to him. In circumstances where it appears impracticable to serve the writ personally, the court may order substituted service and direct the writ to be brought to the attention of the defendant in other ways, for example, by advertisement.

In essence, therefore, the general common law rule is that jurisdiction depends upon the presence of the defendant in Ireland and if the writ is validly served the defendant is subject to the jurisdiction of the Irish court for the matter complained of in the writ, regardless of any lack of connection between the defendant in Ireland and regardless of any lack of connection between the action and Ireland. For example, in Colt Industries v. Sarlie (1966) a writ was served on the defendant Sarlie, an American who was staying for a few days in a London hotel. The action concerned an American debt and the plaintiff was an American company. The court, however, held that it had jurisdiction because there had been no fraud inducing Sarlie to enter the country for the real purpose of serving the writ. In the Maharanee of Baroda v. Wilderstein (1972), the Maharanee served a writ on a well-known art dealer, Wilderstein, when he was at the Ascot Races on a temporary sojourn from France. I see the Minister smiling at that remark. The action concerned a painting which Wilderstein had sold to the Maharanee called “La Poesie”. He had certified the painting as a genuine Bouchee and had received the equivalent of £32,000. The Maharanee alleged that the painting was worth only about £500, because it was from the school of Bouchee and not by Bouchee himself. Although the gist of this action was clearly French, and although the Maharanee and Wilderstein were based in France, if the jet set can be said to be based in any particular spot, the court held that the service of the writ within the jurisdiction gave the English court jurisdiction. The jurisdiction thus based on the mere service of process is, however, subject to limitations, the effect of which is to render the court incompetent to determine the issue, notwithstanding that the defendant has been properly served.

The limitations had been judicially classified into three main types, (a), limitations that affect the subject matter of the issue-broadly stated these limitations preclude a right of action if the issue relates to foreign immovables, foreign revenue laws or foreign penal laws; (b), limitations that affect the kind of relief sought — these restrict the power of the court to grant relief affecting the matrimonial stance of the parties; in such a case it is not enough that the respondent has been served with process; the competence of the court is conditioned by such factors as the domicile of the parties and (c), the limitations relating to the persons between whom the issue is joined.

There are certain persons against whom the jurisdiction cannot be enforced and others by whom it cannot be invoked. Finally, the court may decline jurisdiction or State proceedings notwithstanding the fact that the jurisdictional rules have been satisfied in situations such as (i) on the ground that to proceed with the case is contrary to a choice of jurisdiction clause, and (ii), that on the basis of the plea of Lis Alibi Pendends which may be raised where the same cause of action between the same parties is sub judice both in Ireland and in some other country.

A similar jurisdictional liberality, of course, extends to companies. Assuming their compliance with the statutory registration requirements, there is little difficulty about the amenability to Irish courts of companies, either incorporated in Ireland or incorporated outside Ireland but establishing a place of business in Ireland. Indeed, the common law displayed its customary inventiveness in treating companies doing business in Ireland as by analogy with individuals resident in Ireland and thus subject to service.

Service of process on companies depends on presence in Ireland, just as in the case of individuals. Under Section 379 (i) of the Companies Act, 1963, a document may be served on a company: (a), by leaving it at the registered office of the company; (b), by sending it by post to the registred office of the company; (c), if the company has not given notice to the Registrar of Companies of the situation of its registered office, by registering it at the office for registration of companies. Regardless of incorporation and registration under the Companies Acts, a company can still be present "in Ireland" and served with a writ. It is regarded as present in Ireland if it carries on business in Ireland. This concept has been developed by the cases, and we can conclude that a company carries on business in Ireland (a), if business is done in Ireland but it must be business and not merely, for example, a share transfer office for the convenience of Irish customers, and it must be business done in Ireland and not merely with Ireland. The distinction is shown most clearly in the case of an agent. The criterion is whether the agent has been employed in Ireland with authority to enter into transactions which bind the company. On the other hand if he is merely as a conduit pipe for orders this is not carrying on business in Ireland. A particular case here is Okura v. Forsbacka (1914). (b) The company must have a fixed place of business in Ireland and a fixed period of time.

However, in the words of Professor Cheshire:

Neither the impermanency of the place nor the brevity of time during which the business was done in Ireland is in itself sufficient to render the company immune from process.

Thus, in Dunlop Pneumatic v. Action Gesellschaft (1902) the defendants were held to be present in England where they hired a stand for nine days at an exhibition in London and employed an agent to explain and take orders.

In a further case Littaur Glove Corporation v. Millington (1920) a director of the defendant English company, having no place of business in the United States, was staying at a hotel in New York and was making occasional use of an office belonging to a customer of the defendant. A writ was served on him in this office in his capacity as a director of the defending company. Salter J. held that the company was not in any true sense of the term carrying on business in the State of New York. “A corporation is not present in a country if it is merely an agent there to seek customers and to transfer correspondence between them and the corporation in England but has no power to make contracts on the corporation's behalf.”

The second way in which an Irish court assumes jurisdiction is where there is submission by the defendant. Despite the fundamental principle that a court cannot entertain an action against the defendant who is absent from Ireland, it has long been recognised that an absent defendant may confer jurisdiction on the court by submitting thereto. This may be done in a variety of ways such as (1) entering a non-conditional appearance; (2) instructing a solicitor to accept service on his behalf; (3) where a defendant commences an action as a plaintiff he is deemed to submit to a counterclaim and an Irish court would have jurisdiction over the counterclaim; (4) although a defendant who appears to contest the case on its merits will be held to have submitted to the jurisdiction an appearance merely to protest that the court does not have jurisdiction does not amount to an implied submission. In the words of Lord Denning in Re Dulles' Settlement (No. 2) (1951):

I cannot see how anyone can fairly say that a man has voluntarily submitted to jurisdiction of a court when he has all the time been vigorously protesting that it has no jurisdiction.

The third method whereby an Irish court assumes jurisdiction is by service of the writ or notice of the writ out of the jurisdiction under Order XI of the Rules of the Superior Courts. We have seen that the service of the writ is the foundation of jurisdiction in the Irish courts. However, the common law rule that an action in personam will not lie against the defendant unless he was properly served with the writ or its equivalent and was in Ireland at the time of service has been found to be inadequate.

For example, an Irish person could commit a tort in Ireland and escape liability in Ireland by going abroad, or in the case of a foreigner by returning to his own country. This happened even if the tort feasor had property in Ireland. The only remedy of the aggrieved party was to follow the wrongdoer to his place of residence in accordance with the maxim, actor sequitur forum rei.

Owing to considerations of this nature exceptions to the common law rule were introduced by the Common Law Procedure Act, 1952. This Act introduced an entirely new kind of jurisdiction called the "assumed jurisdiction" which gave the Irish courts the discretionary power to summon an absent defendant, whether Irish or sovereign, and who was unwilling to submit to the jurisdiction of the Irish court. The exercise of this jurisdiction is now governed by Order XI of the Rules of the Superior Courts which empowers the courts, on application being made, to permit the issue and service of a summons upon absent defendants in specific circumstances. Notice of the writ, instead of the writ, of course, is served on non-citizens. The issue of the writ or the notice of the writ is under the judge's discretion. Application is made ex parte to a judge on a motion paper founded on an affidavit. In all applications the plaintiff applies for leave to issue the writ and to serve the writ out of the jurisdiction. The long-arm jusisdiction of Order XI has been referred to an “exorbitant jurisdiction” by Lord Diplock in Amin Rasheed Shipping Corporation v. Kuwait Insurance (1984) and per Webster J. in Amanuel v. Alexandros Shipping, (1986).

The justification for the epithet lies in the fact that the Irish courts are not prepared — and, indeed, the English courts are not prepared —mutatis mutandis to concede a similar competence to other courts.

Indeed, the Order XI jurisdiction can be excused only on the ground that a significant connection exists between the cause of action and Ireland, or between the absent defendant in Ireland. Prima facie is sufficient to attract the litigation to Ireland as an interested forum. Moreover, the Order XI jurisdiction is a jurisdiction that may — not which must — be exercised. In other words, the order is not imperative, but discretionary. It merely confers upon the court the power which it is enabled to exercise in cases which come within the spirit and the letter of Order XI. The ultimate question, therefore, in regard to Order XI is will justice in all probability be obtained in the foreign court?

The following are the main headings in which Order XI, rule 1, may be made to an Irish court for leave to serve and issue a writ or notice of a writ on a defendant who is out of the jurisdiction; (a) Where an action is being brought to enforce, rescind, dissolve, annul or otherwise affect a contract or to recover damages or other relief for or in respect of the breach of the contract in the following cases:

(i) Where the contract was made in Ireland rule 1 (e) (i).

(ii) Where the contract was made by or through an agent trading or residing in Ireland on behalf of a principal trading or residing out of Ireland, rule 1 (e) (ii).

(iii) Where the contract is by its terms or implication governed by Irish law or is one brought in respect of a breach committed in Ireland of the contract wherever made, rule 1 (e) (iii).

It is sufficient for rule 1 (e) (i) to apply if the contract was substantially made in Ireland — B.P. Exploration v. Hunt (1976). Rule 1 (f) applies if “the action is founded on a tort committed in Ireland.” It was held in Krochan v. Russell and CIE (1937) that leave to serve notice of a writ under rule 1 (f) would not be granted unless the tort had a substantial connection with Ireland. Rule 1 (g) applies “if any injunction is sought as to anything to be done in Ireland or any nuisance in Ireland is sought to be prevented or removed whether damages are or are not also sought.” To come within rule 1 (g) the injunction must be part of the substantive relief to which the plaintiffs cause of action entitled him. Rosbery v. Hilbery, (1925) and The Siskina (1977).

This, then, in general terms is the present jurisdiction of the Irish courts in civil and commercial matters. Under the convention, jurisdiction will be determined in accordance with Title II of the convention. The scope of the convention is defined by the Preamble and also in Article 1 of the convention. The Preamble provides that the member states of the European Communities have concluded this convention desiring to implement the provisions of article 220 of the Treaty of Rome whereby they undertake to secure the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals and to strengthen in the Community the legal protection of persons therein established and for this purpose to determine the international jurisdiction of their courts, to facilitate recognition and to introduce an expeditious procedure for securing the enforcement of judgments, authentic instruments and court settlements.

The first paragraph of Article 1 provides that the convention "shall apply in civil and commercial matters whatever the nature of the court or tribunal." It shall not extend in particular to revenue, customs and administrative matters. The second paragraph of Article 1 provides that the convention shall not apply to four specific areas: (i) The status or legal capacity of natural persons, rights and property arising out of a matrimonial relationship, wills, succession; (ii) bankruptcy, proceedings relating to the winding up of insolvent companies, etc.; (iii) social security; (iv) arbitration. The scope of the convention has been summed up by the Jenard report in the words: "It governs international and legal relations, applies automatically and covers all civil and commercial matters apart from certain exceptions which are exhaustively listed."

Article 1 has given rise to several important judgments of the European Court of Justice. It is clear from the report of the drafters of the convention and from the judgments of the ECJ that the term "civil and commercial matters" was intended to be, and will be, interpreted broadly, whereas the exceptions will be interpreted more restrictively. The first of these four areas expressly excluded from the scope of the convention by the second paragraph of Article 1, namely that the convention shall not apply — and I quote: "... To the status or legal capacity of natural persons, rights in property arising out of matrimonial relationships..." came up for interpretation by the European Court of Justice in De Cavel v. De Cavel (No. 1), (1979), case 143-78. In that particular case Mr. De Cavell, a French man, and Mrs. De Cavell, his German wife, were resident in Frankfurt, Germany. They had a flat there as well as an apartment in France. Mr. De Cavell instituted divorce proceedings against his wife in Paris. One of his allegations was that his wife had taken from their apartment in France some valuable carpets which belonged to him and had also taken some items of furniture and furnishings from their flat in Frankfurt. The husband, therefore, applied to the French court for interim protective measures against his wife preventing her from dealing with their joint property until the court had given its judgment. This was granted and, among other things, the court ordered the placing of seals on the furniture and effects in the couple's Frankfurt flat and the freezing of the two bank accounts in the wife's name in Germany. The interim orders were made, of course, in compliance with French law. The husband applied to a German court for enforcement of the orders under Article 31 of the convention. The German court had its doubts as to whether the interim protective orders could be enforced in Germany and it, therefore, referred the matter to the European Court.

Two grounds in particular were put forward against the enforcement of the orders: (1) since the divorce itself clearly related to status and was consequently outside the scope of the convention, and since the interim orders were ancillary to the divorce proceedings, ought they not to be regarded as outside the scope of the convention as well? And (2), even if they were not to be excluded because they were linked to the divorce proceedings should they not be regarded as relating to "rights and property arising out of a matrimonial relationship" and consequently, ought they not to be regarded as outside the scope of the convention as well?

The European Court of Justice held that such matters were excluded but the judgment is, perhaps, rather obscure. In one passage it states:

The enforced settlement on a provisional basis of proprietary legal relationships between spouses in the course of proceedings for divorce is inseparable from questions relating to the status of persons and from the settlement of rights in property arising out of matrimonial relationships.

This suggests that all such orders are automatically excluded. However, in a later passage in the judgment it is stated that such orders may, in some cases, fall within the scope of the convention.

The court said that disputes related to the assets of spouses in the course of divorce proceedings may, depending on the circumstances, concern or be closely connected with (1) questions relating to the status of persons, (2) proprietary legal relationships between spouses resulting directly from matrimonial relationship or the dissolution thereof, and (3) proprietary legal relationships between the spouses which have no connection with the marriage. Disputes relating to Articles 1 and 2 would be excluded from the scope of the convention but disputes relating to category (3) would fall within the scope of the convention. Thus it seems reasonable to conclude that disputes concerning proprietary legal interests between spouses only fall within the scope of the convention where they have no connection with the marriage itself.

Finally, the court said that for the purposes of the convention interim protective measures should be treated in the same way as final measures and that, in the case of interim protective measures relating to property, the important question is not the nature of the interim measure itself but the nature of the right it is intended to protect.

The main jurisdictional effect on Irish law of the convention will be that it will no longer be possible for an Irish court to assume jurisdiction over a domiciliary of another contracting state by reason only of the service on him of a summons during his temporary presence in Ireland. Article 3 declares:

Persons domiciled in a contracting state may be sued in the courts of another contracting state only by virtue of the rules set out in sections 2 to 6 of Title II, and in particular the following provisions shall not be applicable as against them. In Ireland the rules which enable jurisdiction to be founded on the document instituting the proceedings having been served on the defendant during his temporary presence in Ireland.

Therefore, the Wilderstein case and the other cases in regard to temporary sojourns from one country to another would seem to be about to be brought to an end.

The primary or general jurisdictional case of the convention is, as the Minister has indicated, based on domicile. Article 2 lays down the basic rule for determining general jurisdiction. It provides that:

Persons domiciled in a contracting state shall, whatever their nationality, be sued in the courts of that State ... except where the Convention... specifically allows them to be sued elsewhere.

The convention does not define what "domicile" is to mean but Article 52 of the convention indicates how it may be defined. Title II, Articles 2 to 18, contain: (1) special jurisdictional rules which supplement the general jurisdiction based on domicile, for example. Article 5 sets out several instances where the plaintiff has a choice of jurisdiction; (2) exclusive jurisdictional rules which exclude the general jurisdiction based on domicile, for example, in the case of immovable property. Article 16 gives exclusive jurisdiction to the courts of the contracting state in which the property is situated. These rules correspond broadly to the grounds on which leave to serve out of the jurisdiction may be granted at present under Order XI of the Rules of the Superior Courts.

Article 5 (1), mentioned by the Minister in detail, provides that in matters relating to a contract a person domiciled in the contracting state may be sued in another contracting state in:

... the courts for the place of performance of the obligation in question.

Article 5 (1) has given rise to a number of important interpretations by the European Court of Justice. In de Bloos v. Bouyer (1976), case 14/76, the French defendant company granted a Belgian company an exclusive right to distribute their products in Belgium, Luxembourg and the Belgian Congo. The plaintiff, de Bloos complained that there had been a unilateral breach of contract without any notice by Bouyer and they brought an action in the Belgian court seeking the dissolution of the contract and damages. Bouyer objected to the jurisdiction of the Belgian court and the court upheld this objection. De Bloos then appealed to the court of appeal of Mans which formulated the following question for the European Court of Justice:

In any action brought by the grantee of an exclusive sales concession against the grantor in which he claims that the latter has infringed the exclusive concession, may the term "obligation" in Article 5 (1) of the Convention be applied to the obligation in dispute or forming the basis of legal proceedings?

The European Court of Justice held as follows:

(1) As stated in the preamble the Convention is intended to determine the international jurisdiction of the courts of the contracting States, to facilitate the recognition and to introduce an expeditious procedure for securing the enforcement of judgments.

(2) These objectives imply the need to avoid, as far as possible, creating a situation in which a number of courts have jurisdiction in respect of one and the same contract.

(3) Because of this Article 5 (1) of the Convention cannot be interpreted as referring to any obligation whatsoever arising under the contract in question. On the contrary, the word "obligation" in Article 5.1 confers the contractual obligation forming the basis of the legal proceedings.

Article 5.3 which the Minister dealt with in great detail, provides that in matters relating to a contract, a person domiciled in the contracting state may be sued in the courts of another contracting state where the harmful event occurred. Of course the phrase "where the harmful event occurred" is ambiguous for if the tort feasor acts in country A, for example, and causes harm in country B, it is not clear whether the harmful event should be regarded as having occurred in Country A or country B. In Bier v. Mines De Potasse d'Alsace, 1976, the European Court of Justice was called upon to clarify this matter. The defendants in this case, a very topical case, were a French concern operating in Alsace. They discharged approximately 11,000 tonnes of chloride each day into the river Rhine which considerably increased the salinity of the water. Bier was a nursery man living near Rotterdam who used water from the river Rhine for irrigation purposes. Because the water was so polluted, he was obliged to take expensive measures to purify it. Thus the defendant's action in discharging pollutants into the river Rhine in France had caused harm to the plaintiff in Holland. The question arose: which court had jurisdiction under Article 5.3, the French Court or the Dutch Court? The European Court of Justice held that the phrase in Article 5.3 “where the harmful event occurred” must be understood as being intended to cover both the place where the damage occurred and the place of the events giving rise to it. Thus the plaintiff has two choices of jurisdiction.

This decision must be seen in the light of the recent decision on Greham v. Medical Incorporated and Pine Valley Associates, where our Supreme Court formulated jurisdictional rules for the determination of the locus of a tort different from those set out by the European Court of Justice in the Bier v. Mines De Potasse case. However, when this convention, which is derived from the EC Treaty, becomes law, it will have supremacy over the provisions of our national law or any national law which conflicts with it. Under the convention also, the jurisdiction of our courts will be enlarged, as the Minister has said, in cases concerning insurance and consumer contracts.

Sections 3 and 4 of Title III give the policy holder and the consumer a choice of jurisdiction not presently available. It has been excellently summed up in the Minister's speech when he says "as in the case of maintenance, these provisions reflect concern for the weaker party — that is the policy holder and the consumer respectively." I certainly welcome that. The doctrine of forum non-conveniens, which enables an Irish court to decline jurisdiction in favour of a foreign court which it considers would be more suitable to determine the issue, will cease to have application in actions, including domiciliaries of contracting states.

Under existing Irish law, the first and over-riding essential for the effectiveness of a foreign judgment in Ireland is that the adjudicating court should have had jurisdiction in the international sense over the defendant. There are three conditions which must be satisfied for the enforcement in Ireland of a foreign judgment in common law: (1) the judgment must have been given by a court of competent jurisdiction; (2) the judgment must be final and conclusive; and (3) the judgment must be for a definite sum of money.

However, despite the fact that a foreign judgment upon which the defendant is sued is final and conclusive, it is still open to the defendant to escape liability not only by pleading that the foreign court had no jurisdiction but also by pleading one of three further defences: (1) that the foreign judgment was obtained by fraud; (2) that the enforcement of the foreign judgment would be contrary to public policy of Irish law; and (3) that the foreign judgment was contrary to natural justice. Under the convention. Title III deals with the recognition and enforcement of foreign judgments. The intention of the drafters of the convention is summed up in the following statement from the Jenard report:

As a result of the safeguards granted to the defendant in the original proceedings, Title III of the convention is very liberal on the question of recognition and enforcement. It seeks to facilitate as far as possible the free movement of judgments and should be interpreted in this spirit.

The Jenard report continues:

This liberal approach is evidenced in Title III, first by a reduction in the number of grounds which can operate to prevent recognition and enforcement of judgments and second, by the simplification of the enforcement procedure which will be common to the member states.

Recognition is governed by Articles 26 to 30. The effect of Article 26 is that a judgment given in one contracting State shall be automatically recognised in another contracting state without any special procedure being required.

The Jenard report states:

Under Article 26, there is a presumption in favour of recognition which can be rebutted only if one of the grounds for refusal listed in Article 27 is present.

The Jenard report highlights two novel developments: (1) that judgments no longer have to be Res Judicarta; and (2) in general, the jurisdiction of the original court does not have to be investigated. There are two main exceptions to recognition. Under Article 27.1, a judgment need not be recognised where recognition would be contrary to the public policy of the state in which recognition is sought. The Schlosser report, referred to by the Minister, adverted to the fact that fraud is regarded in the Irish courts as a special ground separate from public policy and it has been suggested by the Schlosser report that the obtaining of a judgment by fraud “can, in principle, constitute an offence against the public policy of the State addressed.” Furthermore:

... that a court in the State addressed must always ask itself whether a breach of its public policies still exists in view of the fact that proceedings for redress can be or could have been lodged in the courts of the State of origin against the judgment allegedly obtained by fraud.

Under Article 27.2 a judgment will not be recognised:

... where it was given in default of appearance, if the defendant was not duly served with the document which instituted the proceedings or with an equivalent document in sufficient time to enable him or her to arrange for his or her defence.

There does not appear, however, to be any objective standard of what constitutes "sufficient time" and it is stated in the Jenard report that it is for the court in which recognition is sought to decide whether the defendant was given sufficient time to arrange for his defence.

Finally, in regard to enforcement the drafters of the convention clearly realised that the progress made by the jurisdictional provisions of Title II would in the words of the Jenard report "be rendered nugatory if a party seeking enforcement in a contracting State of a judgment given in his favour were impeded by procedural obstacles." Because the recognising court is strictly limited in its powers to look into the judgment and because the defendant is adequately protected in the original proceedings, the Jenard report considers that "it is proper that the application for enforcement be enabled to proceed rapidly" and "that enforcement be obtained without unnecessary complications."

In conclusion, I believe the convention will have far-reaching implications for the Irish legal system and, indeed, the Irish legal profession. Irish lawyers will have to familiarise themselves with the provisions of the convention in many disputes which have an international aspect. Our judges will have to apply the rules contained in the convention regardless of whether they had been pleaded or not. A great lot of the discretion formerly exercised by our judges in fact will be restricted. Be that as it may, in general I welcome this Bill. Go raibh maith agat.

Mr. McEllistrim

I welcome this Bill. The purpose of the Bill is to enable Ireland to ratify the EC convention of 27 September 1968 on jurisdiction and the enforcement of judgment in civil and commercial matters and the Protocol of 3 June 1971 on the interpretation of that convention by the Courts of Justice of the European Communities, both instruments as amended by the convention of 9 October 1978, to provide for the accession of Denmark, Ireland and the United Kingdom. The convention of 25 October 1982 provided for the accession of Greece to the 1968 convention and 1971 Protocol. Accession to the convention and to the Protocol which has been in force between the original six member states——

Acting Chairman (Mr. Cregan)

The Minister wishes to be excused for two minutes.

Mr. McEllistrim

——since 1973 was a condition of our membership of the European Communities under Article 220 of the Treaty of Rome and article 3 of the Act of Accession of 1972. Adjustments to the 1968 convention and the 1971 Protocol to suit Denmark, Ireland and the United Kingdom were included in the 1978 Accession Convention. Enactment of the Bill will enable Ireland to ratify that convention and thereby accede to the 1968 convention and 1971 Protocol, as adjusted. Enactment of the Bill will also enable Ireland to ratify the Greek Accession Convention of 1982. The Minister has explained in some detail the provisions of both the Bill and the convention. Rather modestly he has not mentioned that he was the Minister who signed the convention providing for the accession of Ireland, Denmark and the United Kingdom to the judgments convention back in 1978. The Minister must be particularly proud to have this opportunity now to steer through the legislation necessary to allow the judgments convention come into force for Ireland.

I know that the judgments convention, as amended by the 1978 convention, came into force for the first time in any EC state in November 1986. It came into force for Britain at the start of this year. I am sure the Minister is anxious to have it in force in Ireland as soon as possible and I understand that is one of the reasons that the Seanad rather than the Dáil is now dealing with this Bill.

The convention and the Bill are rather technical and I imagine that the average man in the street would have great difficulty in trying to understand them. Nevertheless, the principle behind this measure is quite clear. The other EC states will enforce Irish judgments in their countries and in return we will enforce their judgements here in Ireland. This is not a new concept. As far as I understand, Irish courts already enforce certain types of foreign judgments. However, the existing arrangements are disorganised. Not all countries will enforce Irish judgments, even though we may enforce theirs and all countries impose some kind of restrictions on the enforcement of judgments against their own nationals. The judgments convention will put all countries on an equal footing and ensure that Irish judgments will be automatically enforceable in other EC countries.

I understand that great care has been taken in drawing up the jurisdictional rules to protect the weaker party. The general rule is that you can only be sued in your own country so there is no danger of me being sued in some far away place, like Sicily, where I would not be able to defend myself without great expense.

I notice special provision has been made to look after consumers and deserted wives who are normally at a disadvantage in legal proceedings. This is to be welcomed. It is only right that a husband who deserts his wife cannot escape his financial responsibilities by fleeing to another country.

It is a sure sign of progress when nearly all the countries in Europe can agree that we all have trust in the courts of the other states. We are all democracies and despite the differences between the various legal systems we all cherish the same concept of justice. We will be reaching the stage where we will have a common market in justice. When the convention is in force and if someone crashes into my car it will be of minor importance whether the person lives in Kerry, Dublin or indeed in any European city. The judgment of the Irish court will have the same force in Germany as it has in Ireland.

The advantages of the convention are clear. The business and commercial sector, particularly those involved in international trade, will benefit from a clear set of jurisdictional rules which will apply through the EC. Irish judgments will be enforced automatically in all the contracting states. While the major benefits of the convention will accrue to the business sector, I am glad to see that the rights of the individual are not being neglected. I have already mentioned the special provision to look after consumers and persons seeking maintenance.

I note that the Bill pays special attention to the problems facing deserted wives trying to enforce maintenance orders. Section 7 of the Bill, which deals with enforcing maintenance orders, is by far the longest section and I commend the Minister for the detailed attention given to that problem facing the weaker members of our society. The legislation will also help those who are claiming insurance when foreigners crash into Irish citizens. Now, under the Bill, an insurer domiciled in the contracting state may be sued in another contracting state in the courts where the policy holder is domiciled or in the court of the contracting state in which proceedings are brought against the leading insurer.

We will have a much better opportunity to discuss each section more thoroughly on Committee Stage and I look forward to discussing the Bill more thoroughly then. The sooner this convention comes into force the better. I am sure the Minister will do everything in his power to achieve this. I hope this Bill will get a speedy passage through this House and through the Dáil.

Mr. Hogan

I welcome the Minister for Justice, Deputy Collins, to this House. This is my first opportunity to see him in the House. I hope we can assist him in putting a stream of legislation through it. I welcome his initiative, like that of the Minister for Industry and Commerce initiating legislation in the Seanad in order to speed up the legislative process. I hope his colleagues will continue that practice and let the Seanad get its teeth into its responsibilities.

I welcome the European Communities Convention. This Bill is entitled "Jurisdiction of Courts and Enforcement of Judgments (European Communities) (No. 2) Bill, 1987". As various speakers have pointed out already, the purpose of the Bill is to ratify the EC convention of 27 September 1968. It is based on Article 220 of the European Treaties Bill referred to by the Minister. This provides that:

Member States shall, so far as is necessary, enter into negotiations with each other with a view to securing for the benefit of their nationals the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts or tribunals and of arbitration awards.

The legislation makes a fundamental change in case law and our legal profession, as Senator Kennedy pointed out, will have to deal with many civil and commercial cases. If cases are challenged, and channelled through the High Court, the High Court may become over burdened with work. It is probably over burdened at the moment. Many of the legal problems and claims that will arise over legal liability and limited liability in the Companies Bill legislation will find themselves in the High Court as well. The Minister for Justice may have to provide extra accommodation in the High Court to deal with the backlog that may arise.

We have become accustomed over the years to hearing of people evading their responsibilities to the Revenue Commissioners. We have heard of people who are escaping their responsibilities in Ireland and going abroad to avoid paying what they owe either in taxation or in maintenance orders. I am glad this legislation will tidy up those matters in relation to the European Communities.

I realise that it does not enter into the area of extradition or criminal law which is a separate matter. But in the area of civil and commercial matters we have had malpractice, Public disquiet has been expressed about this and it has been getting media attention over the years. This legislation will assist in changing courts procedures to ensure that people who evade their responsibilities will be brought to justice in EC countries. The object of the convention is to enable judgments given in the member state to be recognised and enforced in another member state as quickly and, above all, as cheaply as possible. That there is a need for this may be seen from the large number of bilateral conventions which exist. It is necessary because of the huge number of bilateral conventions that exist not only in the European Communities but throughout the world.

We are bringing together all these bilateral conventions under the one heading in this legislation. The legal systems in operation in member states are different. We must be conscious of this when dealing with civil and commercial cases. We do not want to see any individual or national in this country victimised under the legal system of another member state. The Minister will have to keep a close eye on this Act in the initial stages to ensure that the legal system in an other member state of the European Community does not treat Irish citizens unfairly when they are being tried abroad. I have some reservations about this legislation. Perhaps we will not know the extent to which this may take place until we have seen the Act in practice for a time.

Persons who have lawful claims require speedy and effective protection in cases where the legal relationship out of which the claim arises extends beyond national frontiers into another member state. Recently we signed the Single European Act. We aspire under that Act to speed up the decision making process in Europe and to bring together the member states in all aspects of life and in all aspects of decision making. I see this very important legislation as a step forward and a step towards improving decision making in legal matters. I look forward to the day when all member states of the EC will have a common legal system. This will make it much easier for nationals in this or any other country to have their claims on civil or commercial and criminal matters finalised as speedily as possible.

One of the aims of the Community is to make it easier for people to carry on their activities beyond the frontiers of their home state. Here one has in mind the right of free establishment, the freedom to supply goods and services, free movement of capital. Of course, the removal of existing barriers to inter state trade may enable some types of debtor or obligee to escape from the grasp of the claimant. The general improved protection of claimants will operate to the benefit of every person who has obtained judgment in any court or tribunal throughout the Community.

The European Communities judgments convention is a double convention. The application of its rules has a double aspect. First, they are to be applied in a state in which the proceedings are commenced. The court must decide whether it has jurisdiction under the convention. Secondly, they must be applied in the state in which application is made for enforcement of a judgment given in another contracting state. The court in the state addressed must apply those rules of the convention which deal with recognition and enforcement. The two parts of the convention complement each other in that the first part, relating to jurisdiction, creates certain safeguards for the benefit of the defendant, and this enables the enforcement procedure to be simplified and speeded up.

The application of a simple convention does not involve this dual aspect. In our present context the rules would be applied only in the state in which application was made for enforcement of a judgment given in one of the other contracting states. Under a simple convention the court has to decide whether the judgment was pronounced by a foreign court whose judgments it is bound to recognise and enforce. The jurisdictional element comes into play only indirectly, and it is for this reason that such conventions are known as conventions a regles de compétence indirectes. My French is not the best but that is what is meant in the legal jargon of the European Communities.

The binding nature of the rules of the convention is one of their characteristic features. Identifying and defining domicile will probably be the most difficult feature of the legislation. The sense is that the courts must have their own motion to decide whether they have jurisdiction. We could have a difficulty in establishing who has the right of jurisdiction in taking the case. The arguments will be to-ing and fro-ing between member states for a long time and this could slow up and make protracted the cases which will be taken under this legislation. Once jurisdiction has been established the case can be taken rather speedily.

As the convention does not alter national laws, it is for the law of each contracting state to determine whether the court must have proof of the facts on which its competence is based or whether it may, or must, make its own inquiry into the matter. A court must use the utmost care in determining whether it has jurisdiction, for the court in which enforcement is sought abroad is not to inquire into the competence of the court of origin. Once jurisdiction is established the court must take its decision within that jurisdiction and all other European countries are obliged to enforce it.

Where after careful examination, the court which is seized comes to the conclusion that it has jurisdiction under the convention, it must exercise that jurisdiction. It must not decline jurisdiction merely because by the application of the doctrine of forum conveniens it considers that the interest of the courts in another contracting state is substantial. Where the plaintiff is entitled to choose between a number of courts, and the court which is seized is competent, it must not remit the case to the courts of another contracting state. These provisions give rise to a fundamental change for the courts in Ireland and in the UK. Hitherto the courts of these two states have been able to reach a decision only on the basis of submissions of fact of law made by the parties.

The binding nature of the rules of the convention can also be seen when one examines the provisions governing enforcement. The court in which the enforcement is sought abroad is not to inquire into the competence of the court of origin as stated in Article 28, save in relation to matters which are termed under exclusive jurisdiction, that is, insurance, consumer contracts and cases falling under Article 16.

The insurance matter which falls under exclusive jurisdiction is something the Minister could examine. Fairly frequently I come across cases where non nationals, non-members of the EC, on holiday in Ireland unfortunately had an accident with an Irish national. There might be a protracted case to be taken and a very uncertain course of action to be taken by the Irish national. I have come across a number of cases where, for example, a person from Australia who goes back, having had an accident in Ireland, and is very difficult to trace. It is even more difficult to make him take responsibility for his action in this country. This is something which the law does not provide for adequately. I ask the Minister to have this matter investigated to see if the law could be tightened up. Perhaps it would have to be taken in the context of the European Communities.

The convention applies irrespective of the nationalities of the parties, to all cases brought before the courts or tribunals of the contracting states. Thus, contrary to Article 220 of the EC Treaty, it is not limited to nationals of the European Communities member states. The reason for this is two-fold. If free circulation of judgments is to be ensured, any distinction between judgments according to the nationality of the plaintiff or defendant must be abandoned. On the other hand, it would, in many cases, be difficult for the court to determine a person's nationality or to get proof of it. The rules governing jurisdiction have, therefore, been based on domicile rather than on nationality.

The convention applies not only to judgments in commercial matters but also to decisions given in private law disputes, irrespective of the type of claim and of whether the result is described as a judgment, decision, decree or award. It covers orders for enforcement, decisions made in taxation of costs, enforcement of authentic instruments and of settlements approved by the court. It applies not only to enforcement of judgments given in debt cases, but also be judgments relating to the supply of goods or the provision of services.

There is, unfortunately, some difficulty in deciding what is meant by "civil and commercial matters." Civil law and, to a large extent, commercial law are both branches of private law. The clarification of certain sectors of law under the heading "private" or "public" does not depend on any uniform set of criteria in the six original member states. In view of the difficulty of defining private law and public law with any exactitude, the Accession Convention provides simply that revenue, customs and administrative matters are, in particular, excluded. But, of course, the questions of whether a judgment falls within the scope of application of the convention and, if it does, must therefore be recognised and enforced, are ones which must be answered by the court to which the application for enforcement is made.

Certain fields of law are excluded from the scope of application of this convention. These are for the most part classified as private law and they are matters relating to the status or legal capacity of natural persons, rights in relation to property arising out of what we know as matrimonial relationships, wills and succession, for example.

In the original member states the expression "rights in property arising out of matrimonial relationship" does not refer to maintenance applications but to the rights and corresponding duties which each spouse has vis-a-vis the other in regard to property which they own jointly. I am glad this section has not been taken under the jurisdiction of the European Communities because the sysstem of justice would relate very differently from one country to the other. In Ireland we have a traditional legal system in relation to inheritance and succession which is complex and complicated and we do not want to make it more complicated under the European Communities system.

The basic rule under the convention is that persons who are domiciled in a contracting state are to be sued, whatever their nationality, in the courts of that state. Domicile is not defined in the convention which brings about a difficulty and will create an ambiguity in regard to what exactly domicile will mean from one state to the other. It is different from the notion of domicile as understood in Ireland and the United Kingdom, for example and it is by no means the subject of any consensus in the continental member states.

It should be emphasised, however, that the convention is not built on a uniform definition of domicile. Article 52 contains conflicts rules for the purpose of determining the domicile of natural persons and Article 53 refers to the conflicts rules for the purpose of determining which law is to be applied in ascertaining the location of a seat of a company or other legal person or association of natural or legal persons.

In France and Luxembourg a person's domicile depends largely on his permanent address; in Belgium one's domicile is at the address registered in the resident's register and in Germany the domicile is determined by reference to the closeness of one's connection with a particular borough or district. Under the Irish and UK system domicile will mean something different from what it will mean to other member states of the European Community. This could create difficulty in finalising cases under this Act.

In the case of payment of a capital sum to provide income by way of compensation under tortious injury award, the courts of the defendant's domicile and those of the place where the harmful event occurred are competent. In this connection it should be noted that the European Court decided that the latter place may be either the place where the damage was inflicted — for example, in an accident case — the place where the damage was experienced. This underlines the fact that we need a common legal system in order to have proper cases taken under this legislation and good decisions coming therefrom.

Where a person domiciled in one of the contracting states is in the position of plaintiff he is entitled to sue a person who is domiciled outside the Community in the courts of the state of the plaintiffs domicile upon the basis of any ground of jurisdiction which applies in the case of a national of that state including the exhorbitant grounds. Thus a Portuguese citizen domiciled in France could, under Article 14 of the French Civil Code, sue in a French court a person having no domicile within the European Community, regardless of the defendant's nationality. In the course of a case there frequently arises a preliminary question which has been decided already by a foreign court. The court seized must then decide whether to recognise that foreign judgment. Article 27 sets out the grounds on which recognition can be refused. If, in the opinion of the court, the criteria for recognition are satisfied, it must accord recognition without any special procedure being required. If for any reason it refuses to accord recognition, the party who seeks it can apply for a declaration, as provided for in the enforcement procedure that the judgment is to be recognised.

A judgment will not be recognised by a foreign court if it is contrary to the public policy of the State addressed, for example, if it was obtained by fraud; secondly, if it was given in default of appearance; thirdly, if it conflicts with another judgment given in relation to the same parties in the State addressed or; fourthly, if the court of origin in pronouncing judgment on a preliminary question relating to one of the matters excluded in the scope of the convention has contravened the provisions of the conflict rules of the State addressed.

An additional ground for refusing recognition is where the court of origin has failed to apply one of the rules of exclusive jurisdiction, for example, insurance matters, credit sale and hire purchase. It was the expressed wish of all member states when bringing forth this convention and this legislation to simplify and speed up the enforcement of judgments within the Community. Certain formalities have to be fulfilled before enforcement is granted, for example, the applicant must show that he or she has an address for service in the place where the court has jurisdiction or, at least, must designate a representative in those states in which the furnishing of such an address is not required. Furthermore, he must submit a copy of the judgment of which enforcement is sought together with all documents establishing that it is enforceable under the law of the state of origin and was served on the defendant. A summons must be issued in that state of origin or the case can be thrown out. Additional documents have to be produced if the foreign judgment was given by default. A translation of these documents must be provided only if the court requests. Legislation or other similar formality is not required.

In summing up, it would be fair to say that proceedings under the convention give every assurance to the parties and enable the successful party to obtain rapid enforcement of the foreign judgment. The essential features of the convention which contribute to achieve this result are (a) that the application of the convention by the courts of their own motion can be taken in each member state, (b) that the criterion of nationality has been replaced by that of domicile which might cause difficulty in arriving at consensus and (c) the exhaustive rules relating to the international jurisdiction of the courts within the EC will apply. There will be unification in all member states of simplified procedures for obtaining recognition and enforcement and there will be a uniform interpretation guaranteed by the European Court of Justice. In the final analysis there will be appeal of last resort to the European Court of Justice.

Finally, I would like to say that the European Court of Justice in dealing with an appeal of last resort will be a last resort in that it will not be taken on board by many of the Supreme Courts of member states because of the length and protracted nature of a case like that. I welcome the Bill.

Mr. Lydon

Like Senator Hogan, I welcome the Minister to the House and I also welcome the Bill. The purpose of this Bill is to enable Ireland to ratify the EC convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters and also the Protocol of 3 June 1971 which was the interpretation of that convention by the Court of Justice of the European Communities — to ratify both of these instruments as amended, first, by the convention of 9 October 1978 providing for the accession of Denmark, Ireland and the United Kingdom, and the convention of 25 October 1982 providing for the accession of Greece.

As the Minister stated, the Convention of Accession had its origins in Article 220 of the Treaty of Rome. That Article obliged the member states to enter into negotiations with a view to securing for the benefit of their nationals the simplification of formalities governing the reciprocal recognition and enforcement of judgments of courts and tribunals. When Ireland, Denmark and the United Kingdom entered the Community on 1 January 1973 the convention on jurisdiction and enforcement of judgments in civil and commercial matters was already in existence, as well as the 1971 Protocol on the interpretation of the convention by the European Court. Article 3 of the Act of Accession of the new member states require them to accede to the 1968 convention and the 1971 Protocol, subject to necessary adjustments.

Any adjustments made by the Convention of Accession must be considered in that context. It was not open to the new member states to challenge the fundamental provisions of the convention and Protocol. It was not, for example, open to them to question the inclusion of direct jurisdiction provisions or the exclusion of status or other matters or, indeed, the fundamental principle of interpretation by the Court of Justice. The new member states were limited in the negotiations to seek necessary adjustments to suit their particular circumstances.

The negotiations, which lasted from 1972-1978, were conducted by a working party representative of all member states and the Commission. This country was represented by an official of the Department of Justice and of other Departments as required, for example, Mr. Justice Kenny in relation to maritime matters gave valuable assistance. I would like to compliment our own officials on the way they conducted these negotiations and the final outcome.

I would like to look at the currently applicable principles of Irish law to the assumption of jurisdiction by our courts in cases which, inter alia, through the nationality or domicile of the parties involved or the location of the cause of action, potentially raise questions of private international law, and also to discuss the rules which our legal system employs in determining whether a judgment rendered by the courts of a foreign jurisdiction is enforceable in Ireland. I would like to do this so that the Members can acquire a more informed view which will enable them the better to appreciate the implications for Irish law and practice of the EC convention on jurisdiction and the enforcement of judgments in civil and commercial matters.

There are three headings under which I will deal with this. The first is the assumption of jurisdiction by Irish courts; the second is the enforcement of foreign judgments in Ireland and the third is the defences available to the defendant. The Irish legal system, unlike the EC convention, draws a clear distinction between the question of assumption of jurisdiction and the issue of enforcing a foreign judgment. In the former cases we are concerned with jurisdiction in the domestic sense — the circumstances in which our courts are capable of exercising jurisdiction over a defendant either present in or absent from Ireland.

In the latter case of enforcing judgments of a foreign court, while jurisdiction, or more precisely lack of jurisdiction, is invariably the primary point of inquiry, particularly where enforcement in Ireland is being resisted, our courts at this level are concerned with jurisdiction in the international sense, in other words, whether, according to our rules of private international law, the foreign court properly assumed jurisdiction. Thus our courts are not concerned with the likelihood or otherwise of their decision being enforced abroad in a country in which the defendant may have located all or part of his assets, either in cases where the Irish court is deciding whether to assume jurisdiction or deciding whether to exercise it in cases where the jurisdiction undoubtedly exists. We can, therefore, note at the outset that changes will occur in this practice following the implementation of the EC convention at least in those areas to which the convention will be applicable.

The primary jurisdictional base of the EC convention is domicile — persons domiciled in the contracting state are, in general, subject to suit only in the courts of that state. The employment of the concept of domicile indicates a recognition on the part of those responsible for the convention that there should exist a significant connection between a defendant and the forum in which the litigation takes place. At common law in Ireland such a significant connection is not a precondition of our courts having jurisdiction over a defendant. Our primary jurisdictional base is predicated on a notional control over a defendant evidenced by the ability of the plaintiff to personally serve the defendant with the relevant court processes for originating litigation in our courts. Clearly then, the residence of the defendant within Ireland will enable our court to take jurisdiction. No one can have any objection to this because a significant connection between the defendant and the forum exists in that case. However, if the ability to effect personal service is a touchstone in this context, is it applicable only to the defendant whose presence is due to residence within the jurisdiction? The answer is no.

Mere presence for whatever purpose, providing service has been properly effected, gives our court jurisdiction to deal with a cause of action which might have no connection with Ireland involving litigants who also might have no connection with Ireland. This exorbitant jurisdiction which has been referred to already has been unequivocally established by case law in England. It is equally applicable in Ireland.

Article 3 of the convention renders it inapplicable to defendants who are domiciliaries of contracting states. However, it retains its efficacy in respect of litigation not covered by the convention.

Personal service is therefore the primary basis of jurisdiction in Ireland and there are no pre-conditions to its availability, such as domicile, residence, nationality of the parties, or that the cause of action is located in or substantially connected with Ireland. All these factors are irrelevant. The only qualification appears to be that the defendant should not have been fraudulently induced to enter the jurisdiction in order that service might be effected.

If a company is registered in Ireland under the Companies Act, 1963, service can always be effected by leaving the process at its registered office. Similarly, if a company is incorporated outside Ireland but establishes a place of business in Ireland — the so-called "overseas companies"— it is required to provide the registrar of companies with the names and addresses of one or more persons resident in the State authorised to accept on behalf of the company service of process and also to provide the address of the company's place of business in the State. Service can then be effected on the person or persons so named or delivered to the address so provided.

If a company is neither registered in Ireland nor establishes a place of business in Ireland, but, being incorporated outside the State, conducts business in Ireland, can it, by analogy with private individuals, be said to be present within Ireland for the purpose of effecting service? The courts have answered this question in the affirmative by equating presence with carrying on its business in the country. Two pre-conditions, however, must be satisfied. One, there must be an agent employed in Ireland with power, or who has had the power to enter into contracts on behalf of the company. The second is that the agent must have operated at a fixed place of business for a definite time. Assuming that these requirements are satisfied, service on the agent within the jurisdiction would make the company amenable to the Irish courts.

If a potential defendant is not subject to the jurisdiction by virtue of personal service obtained as a result of his residence here or his fortuitous presence we face the prospect of instigating proceedings against an absent defendant. This is effected through reliance on Order 11 of the Rules of the Superior Courts, 1962, which is headed "Service out of the Jurisdiction".

The first thing to note about the procedure under Order 11 is that the plaintiff cannot serve a defendant out of the jurisdiction as a matter of right. The prior permission of the court is required and the court may in its discretion allow such service or refuse to permit it. Given the nature of the practice — service on a defendant either resident or present in another country — there are many judicial utterances which clearly indicate that permission is not something which should be given lightly. Three general considerations can immediately be identified. One, since the application is necessarily ex parte, the affidavit which grounds the request must contain a full and frank disclosure of all material and relevant facts. Two, applications must fall not only within the letter of the sub-headings of Order 11 but must also be within the spirit of Order 11. Three, in the event of doubts the benefit thereof should be extended to the absent defendant.

Various judicial reservations expressed about the desirability of the concept of extended jurisdiction provided for in Order 11 have been indicated. However, the sub-headings of Order 11, within which the plaintiffs claim must fall before permission to serve out may be given, mitigate to an extent any guilty feelings of jurisdictional imperialism by reflecting a genuine interest of the forum in respect of the litigation. This is evidenced in the connection, reflected in the sub-headings, between Ireland and both the defendant and subject matter of litigation. This feature of connection with the jurisdiction finds an echo in article 5 of the EC convention which gives the plaintiff alternatives to suing a defendant in the contracting state in which he is domiciled. These alternative jurisdictions are founded on similar connectional principles to our own Order 11.

There are certain contractual provisions to the courts of the place of performance of the obligation in question whereas Order 11 gives the Irish court the choice of assuming jurisdiction where a contract is entered into in Ireland, breached in Ireland, or where it is governed by Irish law. But Article 5 (3) is more expansive in the area of tort in that, while Order 11 (1) (f) refer simply, and as has transpired rather unhelpfully, to a tort committed within the jurisdiction. Article 5 (3), as interpreted by the European Court of Justice, gives a dual point of reference to the expression "where the harmful event occurred" as either the place where the damage occurred or the place where the event gave rise to and is at the origin of that damage occurred. Apart from the not infrequent difficulty of bringing a case within the sub-headings of Order 11, a plaintiff who has managed to comply with the requirements still faces the additional obstacle of showing that Ireland is the convenient forum for the proposed litigation. After all, a contract might have been entered into in Ireland thus giving the Irish court the ability to assume jurisdiction under Order 11 but having no connection with Ireland in any other respect. The factors which a court will take into account in deciding whether Ireland is the appropriate forum include, inter alia, the location of the witnesses and, if documentary evidence will be involved the present location of that evidence. Clearly major expense to the defendant without any significant personal advantage to the plaintiff would justify the Irish court in declining to hear the case. Secondly, whether the plaintiff will receive a full and fair trial of all the issues abroad. Unlike Scotland, the presence of moveable property in Ireland is not in itself sufficient to give an Irish court jurisdiction over an absent defendant. A plaintiff who wishes to assert a claim against a defendant, even in respect of the assets, must first establish the jurisdiction of the Irish court by either of the methods outlined earlier. Clearly, therefore, an absent defendant with assets in Ireland who is unwilling to submit to the jurisdiction of the Irish court is likely, upon receiving notice of the issue of the Irish court process, to attempt to remove his assets from Ireland to protect them from execution at the suit of a plaintiff who will have obtained a judgment in default of appearance. It is in this context, and specifically to prevent this latter occurrence, that the English courts recently reactivated a procedure which has been referred to by the Minister in his contribution as a Mareva injunction. A Mareva injunction is described as follows. The whole point of the Mareva injunction is that the plaintiff proceeds by stealth, so as to pre-empt any action by the defendant to remove his assets from the jurisdiction.

I can make only a brief reference to the pre-conditions which have been established by the courts for the exercise of this extremely important jurisdiction. Suffice it to say that the plaintiff must establish the jurisdiction of the court. The plaintiff must show that he has good cause of action within the jurisdiction and, finally, which is the whole raison d'être of the procedure, that the defendant is attempting to remove his assets from the jurisdiction with the intention of thwarting any possibility of the plaintiff satisfying his judgment. The assets of the defendant within the jurisdiction are not attached as a result of the order. The defendant is merely enjoined from removing them from the jurisdiction.

Initially, the injunction, which has become very popular — for example 1979 applications were being made at the rate of about 20 per month — was only employed against defendants who were foreign based. This limitation on the jurisdiction was noted but left open by the House of Lords and an extension was later denied by the High Court. However, recently it has been held both in the High Court and in the Court of Appeal that the procedure is applicable to any defendant whether permanently resident within the jurisdiction or not. Finally the injunction will not have the effect of making the plaintiff a preferred creditor with a greater standing than the defendant's secured creditors.

The final method whereby a defendant who would not otherwise be amenable to the jurisdiction can find himself subject to the jurisdiction of our courts is where he voluntarily submits. This can occur, for example:

(1) by virtue of a contractual term, or

(2) by the defendant bringing an action as plaintiff and finding himself subject to a counter claim.

As with any legal system our courts have a general discretion to stay actions where justice so requires. In our present context there are two well defined circumstances in which this discretionary power may be exercised: (a) where the plaintiff establishes or seeks to establish the jurisdiction of our courts in contravention of a clause which provides for jurisdiction to lie with a foreign court; and (b) where the plea of Lis Alibi Pendens is available to a defendant. There is a third context which is rather more equivocal, namely, where a defendant requests the Irish court, whose jurisdiction is clearly established, to stay the action on the ground that Ireland is forum non conveniens.

Article 17 of the EC Convention in common with our own courts, recognises the desirability of giving effect to foreign jurisdiction clauses. The first step for a court in this context is to decide whether the clause provides for the exclusive jurisdiction of the foreign court, or merely an optional jurisdiction in the sense that the parties will not object to the assumption of jurisdiction by the named foreign court. This initial issue is determined by the proper law of the contract. If the nonexclusive jurisdiction of a foreign court is chosen, the existence of the clause will undoubtedly be a factor available to a defendant who seeks to have the proceedings in Ireland stayed or to have notice of the summons under Order XI set aside. If the exclusive jurisdiction of a foreign court is chosen, it is the general practice of our courts to give effect to that choice by staying proceedings commenced in Ireland or by refusing leave to serve out of the jurisdiction. The court does, however, have a discretion.

Generally speaking, the action would be stayed unless the plaintiff shows that it is just and proper to allow it to continue. The most usual grounds for refusing a stay would be that the issue between the parties is essentially factual and the evidence relevant thereto is to be found almost entirely in Ireland and that a trial abroad would constitute real hardship to the plaintiff and not mere inconvenience.

The issue of Lis Alibi Pendens arises when simultaneous proceedings are pending in Ireland and in a foreign country involving the same parties and on the same or similar issues. This eventuality, which is clearly possible under the EC Convention, is provided for in Articles 21 to 23. Our courts deal with this eventuality in one of three ways:

(1) Putting the party so suing to an election;

(2) Refusing an election and simply staying the proceedings in Ireland;

(3) Staying the proceedings in the foreign country by enjoining the plaintiff from continuing the foreign litigation.

This does not involve an interference with the foreign proceedings but is merely an exercise by the Irish court of its in personam jurisdiction over the plaintiff.

The burden to be discharged by the defendant varies in accordance with whether the issue is: (a) the plaintiff suing the same defendant here and in the foreign country; or (b) the plaintiff here is defendant abroad and vice versa. The burden is greater in respect of (b), that is, where the plaintiff here is the defendant abroad and vice versa, but in both cases the defendant will be obliged to show that to refuse a stay would cause hardship and oppression. The third context in which a court has discretion to grant a stay is where proceedings have been instituted in Ireland by personal service and such service does not involve disregard of a foreign jurisdiction clause or give rise to a question of Lis Alibi Pendens.

Personal service on a defendant within the jurisdiction, irrespective of whether he resides here or is merely a fleeting presence, establishes the jurisdiction of our courts. It is apparent from this that neither the parties nor the issue involved may have any real connection with Ireland but may instead be a case of a reluctant foreigner being made subject to our jurisdiction by another foreigner. It follows that in this situation the defendant is likely to be faced with the prospect of great inconvenience and possibly hardship if the litigation is to continue in this jurisdiction and he wishes to remain involved. What we are thus faced with is a case in which our courts undoubtedly have jurisdiction but a jurisdiction which the defendant would prefer they declined to exercise.

Is there a justification for having a general doctrine of forum non conveniens which would be available to a defendant in this context? What powers, if any, reside with our courts to prevent the possibility of “forum shopping” which our very liberal jurisdictional rules appear to encourage? It is possible when the EC Convention becomes operative and ratified in this jurisdiction that our courts may be used as a method of gaining access to funds of a non-domiciliary of a contracting state which may be temporarily located within the Community.

Scottish law has clearly recognised a plea of forum non conveniens and it has been suggested that a similar document existed in English law, although they are not referred to by that expression. Recent English authorities have sought to clarify precisely the circumstances in which a stay will be granted and they indicate that, while no general doctrine of forum non conveniens, in the sense that it exists in Scots law, is available in English law, the future approach of the English courts will be such that it will almost certainly render the need for such a doctrine superfluous as a method of preventing forum shopping.

The oft quoted criteria for granting a stay in this context were enunciated by Scott LJ in St. Pierre v. South-American Stores Ltd. in 1936:

(1) A mere balance of convenience is not a sufficient ground for depriving a plaintiff of the advantages of prosecuting his action in an English court if it is otherwise properly brought. The right of access to the King's court must not be lightly refused.

(2) In order to justify a stay, two conditions must be satisfied, one positive and the other negative, (a) The defendant must satisfy the court that the continuance of the action would work an injustice because it would be oppressive or vexatious to him or would be an abuse of the process of the court in some other way and, (b), the stay must not cause an injustice to the plaintiff. On both, the burden of proof is on the defendant.

Mere inconvenience is, therefore in itself, insufficient to justify a stay. Indeed in the earlier decisions, where a court declined to exercise an undoubted jurisdiction it appears that the vexation and oppression were evidenced in what was a clear attempt by the plaintiff to harass the defendant and force him to a settlement rather than an illustration of a bona fide desire on the part of the plaintiff to pursue the cause of action to a judicial conclusion.

The decision of the House of Lords in MacShannon v. Rockware Glass Ltd. in 1979 continued the liberalisation. This former case countenanced a more flexible interpretation of the expressions “vexation” and “oppression” which Scott LJ had employed and suggested that in future a defendant may secure a stay if he persuades the court that there exists an alternative, more appropriate forum, to which he is amenable and that obliging the plaintiff to resort to that forum will not deprive the plaintiff of any real, rather than imaginary, legitimate personal or judicial advantage in Ireland.

Weintraub, who was a distinguished American international lawyer, in Commentary on the Conflict of Laws 1971 page 155 states:

It is true that the adoption of forum non-convenience will produce additional issues for the parties to argue and the courts to decide. The question, however, is whether intelligent use of the doctrine produces benefits in terms of both increased efficiency in the administration of justice and fairness to the parties that outweigh its costs.

When we come on to the enforcement of foreign judgments in Ireland the chief significance for this jurisdiction of the EC Convention in the area of the enforcement of foreign judgments is that the rigid jurisdictional rules imposed by the convention render the enforcement of a resulting judgment a matter of procedure rather than a process which might involve detailed consideration of our rules on enforcement. While, of course, recognition and enforcement of the judgment of the court of another member state is not in all cases obligatory the opportunity of refusal to enforce is considerably reduced. In order, therefore, to better locate the significance on our legal system of this aspect of the convention I will outline the current applicable principles of Irish law in regard to the enforcement of foreign judgments.

The initial point might be made that a plaintiff who is successful in an action against a defendant in domestic Irish law is precluded from suing again on the same cause of action. This doctrine of merger — cause of action being merged in the judgment — is not a doctrine which is applied in relation to foreign judgments. The effect of this is that the plaintiff has an option of either resorting to his original cause of action or proceeding on foot of the judgment. Generally speaking, plaintiffs will proceed on foot of the foreign judgment, but one possible advantage of this "illogical survival"— the non-merger principle is that if the defaulting judgment debtor is out of Ireland when enforcement is sought in this jurisdiction application to serve notice out of the jurisdiction will be necessary and reliance on the judgment would reduce the grounds of Order XI available to the plaintiff to the sole heading allowed for service out when the defendant is "domiciled or ordinarily resident" in Ireland.

There are three requirements for the enforcement in Ireland of a foreign judgment of common law:

(a) The judgment must have been rendered by a court of competent jurisdiction.

(b) The judgment must be final and conclusive.

If we look at the first one, a precondition of the enforcability of a foreign judgment in Ireland is that, in the view of the Irish court, the rendering court was justified in a certain jurisdiction over the defendant. As a result of the case law in this area we can assert with some confidence that the following will be acknowledged as an acceptable jurisdictional basis of our courts:

Residence of the defendant within the jurisdiction of the judgment rendering court.

There is no doubt that this is the most appropriate basis. I bow to the Minister in this regard. I will mention the other ones. There are three of them. The other is that the judgment must be final and conclusive. What we require for the purposes of enforcement in this context is that the judgment must be regarded by the rendering court as res judicata. The third one is that an in personam judgment must be for a fixed sum. In order for a judgment in personam to be enforceable in Ireland the foreign court must have definitely and finally determined the amount which is required to be paid by the judgment debtor.

In referring to the judgment rendered by a court of competent jurisdiction, the question of submission to the jurisdiction becomes more contentious when a defendant, who would not otherwise be amenable to the jurisdiction of a foreign court, appears as defendant to contest a jurisdiction which the court has served over him. This is an issue to which Irish lawyers must pay particular attention where, for example, a client resident in Ireland is served with a notice of a process taken out in England or in the Six Counties and he has no assets or little assets in that jurisdiction.

Clearly, if the client voluntarily appears in response to the process and involves himself fully in the litigation, with or without a counter claim, and loses, he will be unable to resist enforcement of the judgment against his assets in Ireland on solely jurisdictional grounds. Equally, if the defendant ignores the process and plays no part whatever in the foreign proceedings, the judgment will be unenforceable in Ireland. However, if the defendant should have assets in England, or again in the six occupied counties of Ireland, he obviously cannot ignore the foreign action since a judgment in default of appearance will result and will be satisfied against his assets in that jurisdiction although, of course, his assets in Ireland will remain protected. I have been asked by the Minister to conclude at this stage and I bow to his wishes.

Minister for Justice (Mr. Collins)

I dtosach ba mhaith liom mo bhuíochas a ghabháil leis na Seanadóirí a bhí páirteach san díospóireacht seo, go mór mhór mo bhuíochas a ghabháil leo as ucht an fáilte a chuir siad rómham an chéad turas dom sa Seanad nua seo.

I thank the Senators who were involved in this debate here this afternoon and I am thankful to the Senators who welcomed me to the Seanad for the first time. I hope to be back very often with quite a number of Bills which I have in the Department of Justice which, I hope, we can initiate in this House. This Bill, as Members know, was before the Dáil. I went through it last week, not for the purposes of lightening the load of the Dáil, as was alleged by Members of the Dáil one particular morning but for the purpose of having the Bill initiated in the Seanad so that we can start the processing of this important legislation. I thank the Senators for their contributions to the debate and their general welcome for the Bill.

Before I respond to the particular points raised I should like to make some general comments. While ratification of the 1968 Brussels Convention is one of the obligations arising from membership of the European Communities, I would not like the impression to be created that ratification is a mere technical exercise. The Bill is a very significant step forward in the development of private international law in Ireland. This will be the first occasion when the State has entered into a multilateral international agreement to accept common rules of international jurisdication and to undertake to recognise and enforce foreign judgments.

The implication of this will be better appreciated if put in a historical context. In many respects private international law has been the Cinderella branch of Irish law. Of course, the development of law is influenced by the social and commercial realities of the society within which it operates. Questions of private international law arise only when there is an international aspect to a case. Until recent times such cases, particularly in the commercial sphere, have not arisen frequently in Irish courts because, for historical reasons, we did not have very active trade links with continental European countries.

Traditionally our international trading links have been with other common law countries and because of the similarities between our legal system and other common law countries there was little demand to supplement Irish private international law by, for example, the ratification of appropriate international conventions. Gradually, however, it has come to be recognised that the common law rules on their own are no longer adequate to deal with the legal problems which can arise in today's world. That this is so is reflected in the developments in our private international law in the last decade or so. For example, the common law does not permit the enforcement of foreign maintenance orders for periodic payments, on the basis that they are not final and conclusive.

To resolve this problem with respect to relations between the UK and Ireland both countries entered into an agreement in 1974 providing for the reciprocal recognition and enforcement of maintenance orders, which agreement was given effect in Ireland by the Maintenance Orders Act, 1974. This was the first ever international agreement entered into by Ireland providing for the reciprocal enforcement of judgments. As Senators are aware the 1968 Convention will extend this arrangement to all member states of the EC.

Since 1981 foreign arbitral awards have been more readily enforceable in Ireland by virtue of the Aribitration Act, 1980, which was passed so as to enable Ireland to ratify, inter alia, the 1958 New York Convention on the recognition and enforcement of foreign arbitral awards, which was drawn up to replace a more cumbersom procedure contained in an earlier convention to which we were a contracting party since 1954.

Ratification of the 1968 Brussels Convention will represent a very significant step in this development of our private international law. Ratification will, in addition, have great practical advantages particularly to business people for whom legal certainty, in so far as this can be achieved, is a matter of no small importance. When the convention is in force it will be known in advance which country's courts will have jurisdiction in the case of a particular dispute and, perhaps of greater significance, the enforcement of any subsequent judgment in another Community country will be more or less guaranteed.

The existing position under which a plaintiff has no guarantee any judgment he might obtain in an Irish court would be enforced in a Community country has probably deterred people from initiating proceedings which they would otherwise have taken. The 1968 Convention will eventually apply in all the 12 member states of the European Economic Community. Members may be interested to learn that negotiations involving all the 12 member states and a number of the EFTA states with a view to concluding a parallel convention to the 1968 convention are in progress at the moment.

I would like to deal specifically with some points raised by the Members in their contributions. I will start by thanking Senator Pat Kennedy for his welcome for the Bill and complimenting him on his most erudite contribution to the debate. Senator Kennedy, quoting an editorial in The Irish Law Times said that the enactment of this legislation would mean a major change in the rules of civil procedure in Ireland. It is true that the rules of court governing procedure, particularly in the area of service outside of the jurisdiction, will have to be amended. This will be carried out by the various rules committees of the courts following the passing of this Bill.

Senator Kennedy, when dealing with Article 5 (3) of the convention, which concerns jurisdiction in cases of tort, compared the Supreme Court decision in Grehan v. Medical Incorporated with the European court decision on Article 5 (3) in Bier v. Mines De Potasse. While the decisions may not be on all fours in matters of detail they are, in general, in harmony. Both favour a pragmatic approach generally favouring the plaintiffs rather than a strictly legalistic approach to decide the place of a tort. In the case I mentioned the Court of Justice decided that “the place where the harmful event occurred” is to be defined so as to give the plaintiff the option to commence proceedings either at the place where the damage occurred or at the place of the event giving rise to it.

In Grehan v. Medical Incorporated, which related to personal injury caused in Ireland as a result of the insertion in the plaintiffs heart of a defective heart valve manufactured in the United States Judge Walsh interpreting Order XI, Rule 1 (f), which allows service out of jurisdiction in a case where a tort was committed within the State, decided it was sufficient, in order to come within this rule, that “any significant element occurred within the jurisdiction.”

Senator Hogan also raised the possibility of victimisation of an Irish citizen by a foreign court. The convention is based on mutual trust in the integrity of the courts of the contracting states. We share a common cultural background with all of the states involved, and all equally cherish the concept of democracy and justice. There is no reason to belive that, for example, the judgment of a Dutch court will be in any way less just then the judgment of an Irish court.

Under existing law we already recognise this in the Irish courts' willingness to enforce certain types of judgments from foreign courts. We expect the other countries in the European Economic Communty to recognise the integrity of our courts. It is not unreasonable for them to expect the same for their courts. If it should appear that there has been a blatant miscarriage of justice, the convention does allow, under Article 27, the Irish courts to reject such a judgment.

Senator Hogan raised the question of the increase in the workload of the High Court. To avoid increasing the workload of the High Court unnecessarily the Bill provides, in section 5, that applications for the enforcement of judgments shall be made to the Master of the High Court. It is hoped in this way that most of the burden of processing applications for enforcement shall fall to the Master and not to the High Court itself.

Senator Hogan was worried about the possible differences in the meaning of the word "domicile" between Ireland and other countries in the European Economic Community. He is quite right when he says that the traditional concept of "domicile" used in Ireland is different from the continental concept. It is for this reason that this Bill provides a special definition of "domicile" in section 13 and the Fifth Schedule to the Bill to bring us into line with the continental view of "domicile".

I thank Senator Lydon and Senator McEllistrim for their generous welcome for the Bill and for their very valuable contributions to the discussion which we had here this afternoon. They gave examples of how the Bill will prove of particular benefit to the country and, in particular, to the business community. I look forward to a very detailed discussion when we have an opportunity to move on to the Committee Stage.

It is an extensive Bill. It is not as complicated as it looks or as it sounds. I hope Members will find an opportunity to study the Bill between now and Committee Stage. Any amendments will be welcome and will be dealt with entirely on their merits. I would welcome anything which would lead to a good and fruitful discussion. Whenever the House so orders I will come back for Committee Stage.

Question put and agreed to.

Committee Stage ordered for Thursday, 18 June 1987.

Sitting suspended at 5.30 p.m. and resumed at 6.30 p.m.

Seanad Éireann debate - Wednesday, 10 Jun 1987