This is an important section which gives the country the protection of the law. It will result in a decrease in monetary interest when leasing aircraft and so on. It will also help poorer countries to acquire aircraft and modernise many fleets. Given that it will be of major benefit to many countries, why have just six countries signed up to the convention?
International Interests in Mobile Equipment (Cape Town Convention) Bill 2005: Committee and Remaining Stages.
Sections 1 to 3, inclusive, agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
Other European countries are going through the same process as Ireland and we expect to see quite a large number of countries signing up to the convention over the coming months. As the Deputy knows, the convention will come into effect when eight countries have signed up to it. Given that the registry is to be located in Ireland, we obviously want to be to the fore in delivering on this.
The Deputy is correct that the convention will be of enormous benefit in terms of air transport and Irish airlines will benefit greatly therefrom. On orders that have already been made and others which I hope will be made in the near future, Irish airlines will be able to purchase aircraft at more favourable rates than those that now obtain in the absence of the convention.
I stated on Second Stage that I was surprised by the absence of an EU dimension. The Minister may have mentioned this; I heard most of his reply but may have missed some. Does the lack of an EU dimension not have implications? Do our trade relations and various contractual or treaty-related relations with the European Union not have implications? Will every EU state be acting entirely independently in this matter? Consider airbuses in this regard. Half their parts may be manufactured in Germany and almost all of the other half in France, while the rest may be manufactured in Spain and Britain. The EU does our negotiating in terms of world trade and it therefore surprises me that it seems to be a question of every country for itself in this case.
It is open to every country to sign up to the convention in its own way. However, the difficulties manufacturers and financiers of aircraft are experiencing are not necessarily focused in Europe. The financial base and regulatory legal base in Europe are quite good. The difficulty is that an aircraft is a mobile not a fixed asset. If an airline goes broke and its aircraft happen to be located in another country, it is often difficult to get the first charge on the airline. This is why the convention is very much in the interests of airlines. It allows them to obtain much more favourable rates.
The EU Commission will also sign up to the convention.
Will it?
Yes. All the states in Europe will do so and I have no reason to say they will not.
I have a few questions on the contents of the Capetown convention, none of which is very awkward. Will we be able to address them when we discuss the Schedule to the Bill?
Yes.
Question put and agreed to.
Sections 5 to 7, inclusive, agreed to.
SECTION 8.
Question proposed: "That section 8 stand part of the Bill."
Does "all courts and tribunals" refer to all courts and tribunals in this State?
Yes.
Question put and agreed to.
Section 9 agreed to.
SECTION 10.
Question proposed: "That section 10 stand part of the Bill."
Is it correct that the Government is investing €40,000 in this company? This seems to be a very small amount to obtain a 20% shareholding in a company. Will the Government have any directors on the board or will it just have the shareholding? The Bill states clearly that the State will not have to invest further in the company. It states the company will not be profit-making and will be self-financing. However, if it starts to lose money, I presume the fact that the State will have a 20% shareholding therein will mean the Government will have to come to its aid. Will any other country have a shareholding in the company or is the Government taking a 20% shareholding therein just because it is to be based in Ireland?
The Senator is right in that in some respects it is a statement by Ireland of a commitment to this company and its work. On Second Stage I said that Ireland won this responsibility and registry despite tough competition from other countries, particularly Singapore and Canada. It was a tribute to all involved that we won the contract to locate this company here.
The 20% shareholding is a gesture on behalf of the Government. As the Senator says, €40,000 is a small sum but given the market indications and the comments of other companies, it will be self-financing. There is no doubt about that. An assistant secretary in my Department is a director of the company on behalf of the Government. We are under no obligation to provide extra funding. This is a gesture to establish the company and demonstrate our intent for the future.
Will the operation of the register yield any profits? If so, to what purpose will they be put?
That is an important question but no profits are envisaged. The company will be self-financing and its income will be reinvested in the company to conduct its business.
The explanatory memorandum for this Bill is extremely helpful, which is not always the case with such memoranda. I will not, however, celebrate the major spin-off benefits this company provides for legal and accounting firms. They do not deserve my sympathy but I acknowledge the benefit the company can bring in consolidating company activities here.
The Senator is correct. A significant amount of aircraft leasing finance is conducted through the Irish Financial Services Centre. Ireland has captured a large worldwide market in financing through its legal base, regulatory regime and finance companies. A key factor in winning this contract was Ireland's commitment to that activity. The legal base for this company is a cutting-edge development.
Question put and agreed to.
SECTION 11.
Question proposed: "That section 11 stand part of the Bill."
This is a somewhat worrying section. It states:
A court or tribunal may not make an order or decision that would have the effect of binding the Registrar if the order or decision would prevent the Registrar from providing the services prescribed . . .
Is that constitutional? It seems unconstitutional to suggest that we can write legislation which tells the courts they can never make an order.
I do not wish to be awkward but this section contains a sweeping statement. While I do not suggest it will happen, a court may wish to commit the registrar to prison for fraud but this section implies he or she would be immune from any judicial supervision of his or her activities. The aim of the section is clear but it seems rather loosely drafted. Although I have not endeavoured to amend it, I encourage the Minister to reconsider the wording before the legislation passes through the Dáil.
I understand the Minister does not want the registrar to be entangled in legal actions brought by malicious people trying to avoid paying their debts. Nevertheless, we should avoid creating an entity which is above the law. I am sure the Attorney General advised the Minister that it was all right, but the section is problematic if it provides a certain course of action may never be taken, if it prevents the registrar from doing his job and if the courts have to stay out of the matter. This is not a major issue but I am concerned about the wording.
Like Senator Ryan, I am not a legal person in the sense that he described. The Office of the Attorney General and the Parliamentary Counsel have gone through the Bill with a fine-tooth comb. If they thought the wording was unconstitutional, it would not be in the Bill. The Senator is, however, right in a sense. The purpose of section 11 is to prevent one dispute from affecting the services provided for other registry users. The register itself is voluntary. However, the benefits of being a member of the registry are substantial.
I accept that.
It would be unusual for people not to want to be in the registry. As the Senator said, the purpose is to prevent the whole system getting tied up and all the other registry signatories and members being affected, so that people can still benefit from their services. Now that Senator Ryan has made the point, I will consider the matter again before bring the Bill to the Dáil.
Question put and agreed to.
Section 12 agreed to.
SECTION 13.
Question proposed: "That section 13 stand part of the Bill."
I was reading through the Bill and looking for things to ask the Minister. Despite my best efforts, I could not think of any amendments. Section 13 is peculiarly worded. I do not remember sections of other Bills concerning ministerial orders providing that "The Minister shall arrange for every order made under this Act to be laid before each House of the Oireachtas as soon as practicable after it is made." I thought the usual wording was "every order made shall be laid before the Houses of the Oireachtas". Is there somebody new in the Office of the Parliamentary Counsel? Is there a reason for the slightly different wording?
I am not aware of any particular reason for that.
I do not think it makes much difference.
The wording has the same effect.
Question put and agreed to.
Sections 14 to 16, inclusive, agreed to.
SCHEDULE 1.
Question proposed: "That Schedule 1 be Schedule 1 to the Bill."
I have a few questions regarding Schedule 1. The first relates to Article 2, on page 11. I would like the Minister to elaborate on the role that what are termed "railway rolling stock" and "space assets" are playing in the Bill. The context of the Bill is helicopters and other aircraft, therefore, I was a little perplexed about these references, particularly space assets. I am curious about this, and would like to know more.
Perhaps I did not deal with this quite correctly at the previous Stage. The convention covers a whole range of things. The protocol deals specifically with what we are dealing with in the Bill. There will clearly be further protocols, and we will be returning to deal with those later, possibly by order. That will allow us to deal with some other interests. The purpose of the "space assets" provision is to deal with the commercial operation of satellites, which is part of the world in which we live today, and that will be increasingly the case. A considerable number of satellites are now launched by the private sector and, nowadays, even some smaller companies are able to finance this.
Is the question agreed to?
Not quite, although I will not hold up Members for long. I have a question on Article 44.1, on page 27. It states: "The courts of the place in which the Registrar has its centre of administration [which will be in this country] shall have exclusive jurisdiction to award damages or make orders against the Registrar." I am not sure how the protocol's provision that orders may be made against the registrar is reconcilable with section 11, which provides that no order may be made against the registrar that would stop him doing what he is supposed to be doing.
I want to ensure I have the right answer for the Senator. The difference is that an action may not be taken against the registry in another country. An action may only be taken against the registry under the laws of the land in the country where the registry is located, which is Ireland.
Question put and agreed to.
SCHEDULE 2.
Question proposed: "That Schedule 2 be Schedule 2 to the Bill."
I am happy that the provisions of Schedule 2 are included, but I wonder about the reasons behind them. Articles 1.2(a) and 1.2(b), on page 35, define aircraft and aircraft engines. Article 1.2(b) mentions “aircraft engines (other than those used in military, customs or police services)”. Is there a reason for that expulsion? The less trade there is in such items the happier I would be.
The thrust of the Bill is concerned with commercial operations. As I think I made clear on Second Stage, the Bill does not get involved with military operations of any hue, shape or size, or with state operations. What we might interpret as state operations might carry different connotations or involve different power bases in other countries. We need to be clear about that.
So the provisions are entirely about civilian aircraft engines.
They are entirely about civilian aircraft engines.
Is the convention concerned with all types of aircraft, including helicopters?
It covers all civilian, commercial operations.
Including helicopter operations.
Yes.
Is the question agreed to?
I have a further brief point. I wish to compliment whoever wrote the definition of a helicopter on page 36. It is to the credit of whoever drafted it and whichever international body is concerned. If I were asked to write a definition of a helicopter, I would not do as well. It is very good and I am impressed.
Senator Ryan is an engineer.
Indeed, I am an engineer.
Is Senator Ryan happy with that?
Yes. I do not think that the Minister drafted Schedule 2, but I will give him credit for it.
Senator Ryan knows well I did not draft the Schedule.
Question put and agreed to.
Title agreed to.
Bill reported without amendment and received for final consideration.
Question proposed: "That the Bill do now pass."
Can any sanctions be taken against countries that do not sign up to the convention?
The marketplace.
If an aircraft moves to such a country, and if that country has a national air carrier flying into the jurisdiction of the country with the problem, can any sanctions be taken?
The short answer is "No", at least as far as the Bill is concerned. I am sure that sanctions may be taken under existing law, but it is far better to have this legislation in place, so that it is clear that those who voluntarily become members of the register, which is both open and voluntary, have the protection of the convention, whereas those outside it will be operating in a different way. Airlines that do not operate under the convention will be paying substantially more for their aircraft than those that will operate under it, as the financial arrangements for them will be far better. For instance, Ryanair's current huge order means that it will be an immediate beneficiary under the proposed financial arrangements. Ryanair will benefit enormously from that.
There was much debate on Second Stage about the importance of this Bill in terms of what it might do for airlines with regard to ensuring continued development of low-cost carriers and also, perhaps, a change of emphasis away from forcing down airport and other related charges.
Senator Paddy Burke referred to countries which might remain outside the convention. Will such a situation provide a safe haven for airlines which are less than scrupulous and seek to defy the courts, the provisions of the Bill or its protocols? Will they be allowed to fly into any or one particular destination which is not a signatory to the convention? Will it effectively limit the extent to which the convention will work? If one jurisdiction does not sign up, will it act as a safe haven for unscrupulous operators?
I understand the Senator's point but do not agree because it is quite clear that all the main players will want to sign up to the convention. The main manufacturing countries, namely, the United States and European countries, will want to sign up. The major finance houses which will provide resources to the individual airlines to purchase aircraft will do so at a significant advantage in terms of financing arrangements. Those countries located outside of the convention will be at a significant disadvantage in terms of being able to buy and fund the purchase of aircraft. Even if they do so, they will pay a premium.
The real benefit is in continuing to ensure the passenger gets the best possible value in terms of ticket price by being able to fund airline purchase at as low a cost as possible without compromising integrity. Countries that opt out will be at a disadvantage. It will be very difficult for many of those airlines to compete because the financial base would be completely wrong.
Airlines that are party to the convention, whether Irish or otherwise, which go into countries that are not party will be covered by arrangements under the registry. That is the major protection on offer. I thank Senators for participating in this helpful and interesting debate. It is non-contentious legislation and good people have worked hard to win this internationally prestigious registry for Ireland. It enhances the basis of our financial systems and the esteem in which we are held internationally. This adds weight as we move forward. I thank Senators on all sides of the House for their support.
I am not allowed mention the name of the person who set up the International Financial Services Centre because he is not acceptable. The IFSC is one of a number of very enlightened ideas that Mr. Haughey had while Taoiseach. Regardless of other matters, he deserves credit for a considerable amount of vision in this regard. He received much mockery about the IFSC from places not far from where I sit. However, he has been more than vindicated in respect of that decision. These issues would not matter as much to us nor we would have such possibilities without the IFSC.
I agree with the Minister and wish both him and his officials well with regard to this legislation. The cost of air traffic has been considerably reduced in the past number of years, and this legislation will also help in that regard. I welcome the Bill.
I also welcome the passage of the Bill and compliment the Minister, his staff and all involved in negotiating the Cape Town Convention and Protocol. As I said on Second Stage, it is important to maintain low-fare business in Ireland because it is vital in ensuring the growth and development of our tourism industry. A number of flights announced by Ryanair in the past are commencing from Shannon Airport today, which is a welcome decision. We must also recognise the tremendous work done by the Department and others in ensuring the registry is based in Ireland. As the Minister said, this is extremely prestigious.
I do not agree with Senator Ryan on too many occasions——
Senator Dooley is coming around.
I agree with his recognition of the work done by former Taoiseach, Mr. Charles Haughey, with regard to the IFSC. I have long recognised the importance of that decision. I do not know to what Senator Ryan refers when he says Mr. Haughey's name is not popular. It is extremely popular with myself and my colleagues, and it is great to have an opportunity to recognise the work done with regard to the IFSC. It has placed Ireland to the fore of international markets as a centre of excellence in terms of professionalism and our legal and financial expertise. It has allowed us to develop to a point where we can quite seamlessly win a contract such as this. I have not heard it announced in the media, because we regularly get these types of projects as a result of the foundation laid by Mr. Haughey, as well as other business people involved in the endeavour.
Question put and agreed to.
Sitting suspended at 3:45 p.m. and resumed at 4 p.m.