I welcome the Minister of State, Deputy Jimmy Deenihan. His senior county football team had a fairly rough ride on Sunday, from which I hope he has recovered.
Choice of Court (Hague Convention) Bill 2015: Second Stage
Question proposed: "That the Bill be now read a Second Time."
On behalf of the Minister for Justice and Equality, Deputy Frances Fitzgerald, I would like to thank Senators for making time available to deal with Second Stage of the Choice of Court (Hague Convention) Bill 2015. The Minister regrets that she is unable to be present here today. However, she welcomes the fact that it was possible to have this Bill initiated in the Seanad so that Senators will have the first opportunity to comment on its provisions.
The Bill is short and technical in nature but it is of significance in terms of enabling us to fulfil our EU obligations. It is also of significance because the convention to which it relates has the potential, over time, to create a more predictable legal environment for companies which do business with third countries. That predictability should, in turn, encourage companies to be more confident in terms of expanding their trading relationships with such countries.
The purpose of the Bill is to make provision for the measures which are required to ensure that the Hague Convention of 30 June 2005, on choice of court agreements, can function effectively within the Irish legal system. The convention was negotiated under the auspices of the Hague Conference on Private International Law. The Hague conference is a body which facilitates the development of multilateral legal instruments across a range of areas. In the past, conventions have been negotiated which touch upon commercial matters, family law matters and administrative cooperation. Apart from EU member states, the Hague conference includes among its membership countries such as China, the United STates, Japan, Australia, Canada and Russia.
The convention is geared towards the promotion of choice of court agreements in international business to business contracts. Within the European Union there is already a legal framework in place which ensures that choice of court agreements are honoured. However, there is no equivalent framework at the international level and the convention will fill this gap.
Negotiations on the choice of court convention, to use a convenient shorthand, concluded in June 2005 after a negotiating period of over two years. This convention is much narrower in scope to one which had originally been contemplated. It evolved out of earlier work which had been ongoing within the Hague conference for a number of years. That work was very ambitious in aim and would have resulted in a convention which prescribed a list of approved grounds of jurisdiction as well as a list of prohibited grounds of jurisdiction. Judgments based on the former list would be entitled to recognition and enforcement in other contracting states to the convention, and would obviously have facilitated the circulation of a greater volume of judgments at global level. However, it became clear that it would not be possible to bring this work to a successful conclusion. Eventually, it was agreed to work on a convention with a reduced scope which would deal only with choice of court agreements in international commercial cases.
The European Commission presented a proposal for a Council Decision authorising signature of the convention in September 2008. One of the reasons informing the presentation of the proposal at that time was the perception that, when in force, the convention would reduce legal uncertainty for EU companies trading outside the European Union. Following the adoption of the proposal by the Council, the convention was signed in April 2009. It was also signed by the United States in January of the same year.
The European Union has exclusive competence in respect of the matters governed by the convention and, therefore, Ireland will not be ratifying the convention in its own right. At the time of the signature of the convention the European Community, as it then was, made a declaration indicating that it exercised competence over all of the matters governed by the convention. Also, that member states would be bound by the convention by virtue of its conclusion by the Community. This is a routine arrangement for international instruments where the European Union has exclusive competence.
Several years elapsed before the Commission came forward with a proposal for the conclusion of the convention in January 2014. The main reason for the lapse of time was the need to bring to a conclusion the revision work on the Brussels I regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. That work was brought to a conclusion in December 2012. The new regulation which resulted has applied since January of this year. It contains amendments which align the choice of court provisions that had existed at EU level with those provided for in the Hague Convention, thereby facilitating the approval of the choice of court convention by the European Union.
The proposal for a decision authorising approval of the convention was adopted by the Justice and Home Affairs Council at its meeting on 4 and 5 December 2014. Under its terms the instrument of approval was to be deposited within one month of 5 June 2015 and, in fact, the deposit took place on 11 June last. Mexico had already acceded to the convention in September 2007. Under the terms of the convention, approval by the European Union triggers the entry into force of the convention on 1 October this year. The timetable for EU approval was influenced by the fact that, as part of the negotiation process, it was agreed that member states would be given some time to make any legislative changes which were needed at the domestic level prior to the approval of the convention which, brings us to where we are today.
In general terms, a typical choice of court agreement will specify that the courts of a particular State should have jurisdiction to hear proceedings under the contract which exists between the parties. Such agreements are widely viewed as being beneficial in terms of creating a stable trading environment for international commerce. Their value is critically dependent upon the extent to which the parties can be confident that their agreement will be upheld by a court if litigation ensues. This arises both in regard to the court chosen being willing to take jurisdiction and also in regard to other courts being willing to recognise and enforce the judgment given on foot of the choice of court agreement. To take a concrete example, a company may be reluctant to do business with a particular State because it either mistrusts or is unfamiliar with its legal system. If a supplier of goods is confident that in the event of any issues arising in regard to the payment of the goods which have been delivered, a court in which it trusts will have jurisdiction to rule on the dispute, he or she may be emboldened to proceed with the deal.
The other party, who wishes to receive the goods, may be equally happy to agree to a court in which they, too, have confidence. In the alternative, the fact that the state, with which the supplier wishes to do business, is a contracting party to the choice of court convention may encourage a feeling of security in terms of being willing to accept a choice of court agreement in favour of that country. In this regard, it is noteworthy that research exists which indicates, particularly in the case of large businesses, that significant business decisions can be influenced by uncertainty regarding the courts that would resolve disputes or the law that would apply to the contract. In effect, lack of legal certainty may function as a barrier to trade.
The convention aims to ensure the effectiveness of choice of court agreements by providing guarantees that the chosen court will hear the case when proceedings are brought before it. Linked with this is a requirement that any other court before which proceedings are pending must refuse to entertain them. Provision is made to ensure judgments given under the convention will be entitled to recognition and enforcement in those states which are contracting parties to it. None of these principles is absolute but the overall aim is to find the right balance between flexibility and certainty.
I will now deal in some detail with the key provisions of the convention and highlight the articles which are probably the most important in terms of the overall content of the convention.
Article 1 defines the scope of the convention. The case must be international in nature, the choice of court agreement must be exclusive and the subject matter must fall within the range of what is normally understood by the term civil and commercial. Article 3 sets out the formal requirements that must be satisfied if a choice of court agreement is to fall under the convention.
Article 5 is a key provision in that it mandates the court designated in the agreement to hear the case unless the agreement is null and void under the law of that state. Article 5 is complemented by Article 6 which requires a court not designated in the agreement to suspend or dismiss the proceedings even if it has jurisdiction under its national law. There are a number of exceptions to this rule, for example, where giving effect to the agreement would be manifestly contrary to the public policy of the state of the court seised or where the chosen court has decided not to hear the case.
Article 8 sets out the principle that a judgment given by a court of a contracting state which is designated in an exclusive choice of court agreement must be recognised and enforced in another contracting state in accordance with the convention's provisions. By way of exception to this principle, Article 9 sets out the grounds upon which recognition and enforcement may be refused, for example, where there has been procedural fraud or where a party lacked the capacity to conclude the agreement under the law of the state where enforcement is sought.
Article 13 lists the documents to be produced when enforcement is being applied for. Article 16 deals with transitional arrangements and sets out the basic principle that the convention will only apply to exclusive choice of court agreements concluded after the convention comes into force for the state of the chosen court. Articles 19 to 22, inclusive, contain provisions setting out the range of declarations which a contracting state may make. In this regard Article 19 permits a contracting state to refuse to apply the convention to cases where, except for the choice of court clause, there is no connection between that state and the parties or the dispute.
Article 20 allows a state not to enforce a judgment where all the factors, other than the choice of court clause, are internal to it. Article 21 allows a state to exclude a specific matter from the scope of the convention and the European Union has availed of this provision for certain types of insurance contract. Article 22 allows for the making of reciprocal declarations to extend the scope of the convention to cover non-exclusive choice of court agreements. An example of such an agreement would be one which designated the courts of two or more contracting states to the exclusion of all others.
Article 26 deals with the relationship of the convention with other international instruments and is of interest because it deals with the situation where a regional economic integration organisation such as the European Union becomes a contracting party to the convention. In essence, where a case is purely regional in terms of the residence of the parties, the convention gives way to any relevant regional instrument which might be in place. Furthermore, it will not affect the rules governing the recognition or enforcement of judgments between the member states of the regional organisation. Within the European Union the recognition and enforcement regime is much more liberal than that which is in place under the convention.
I mentioned that Mexico hasd already acceded to the convention. Both the United States and Singapore have signed it and it is hoped that EU approval will encourage other states to become parties to it. Ratification of the convention by as many states as possible should encourage commercial actors to avail of choice of court clauses when doing business in those states because they can be secure in the knowledge that they can rely upon its provisions.
I am pleased to say Ireland has a solid and deepening trade relationship with Mexico. In 2013, trade between the countries was of the order of €1.277 million, comprising €928 million in the export from Ireland of goods and services and €349 million in the import from Mexico of goods and services. Ireland's principal merchandise exports to Mexico are soft drink concentrate and chemical materials and products. Ireland's main merchandise imports from Mexico are medical devices, miscellaneous plastics, stents, and telecommunications and sound equipment. The value of Ireland's exports of goods to Mexico in 2014 increased by 76%, from €692 million to €1.216 billion.
Of the states that have signed the convention, the United States is Ireland's biggest goods export market, with the value of goods exported in 2014 standing at almost €20 billion. As a trading bloc, the 28 member states of the European Union traded goods worth €515 billion with the United States in the same year. The €54 billion trade between Ireland and the USA in the preceding year, 2013, can be broken down evenly between imports and exports of both goods and services. Ireland's most significant exports to the United States are organic chemicals, which are mainly used in the pharmaceutical industry, and medical and pharmaceutical products. Ireland's main imports from the United States are royalties and licences and research and development services.
Trade with Singapore is understandably more modest. Trade between Ireland and Singapore in 2013 was valued at a little over €2 billion, broken down as €1.359 billion in the export of goods and services, and €717 million in imports. The trade relationship is mainly focused on computers, computer parts and storage devices. The EU trade bloc has a healthy trade relationship with Singapore, expressed in trade in goods to the value of €47 billion in 2013.
I mentioned earlier that EU accession to the convention should have a beneficial effect in terms of encouraging other states which are members of the Hague Conference on Private International Law to become parties to it. I should add that the convention is also open to states which are not members of the conference. Even in markets where the European Union is already very active, widespread adherence to the convention could have the potential to lead to further growth in trade. To take two examples where Ireland would have a specific interest, Ireland's trade relationship with Australia in goods was valued at €802 million in 2013, while trade in goods between the European Union as a whole and Australia in that year was valued at €33 billion. Of the EU's €59 billion trade in goods with Canada in 2013, €2.5 billion came from the exchange of goods between Ireland and Canada.
The details I have just outlined highlight the importance to all our economies of international trade. The progressive elimination of barriers to trade means that now, more than ever, predictability and certainty are vital in the area of business and commercial relationships within Europe and beyond. Business people need to be sure they can readily enforce contracts and secure judgments for what can, in some cases, be large sums of money. Measures aimed at promoting such security have the twin effects of protecting existing trade and encouraging new trade.
In recent years a lot of emphasis has been placed at EU level on "justice for growth". The Bill and the convention to which it relates are a small but practical example of the way in which justice policy can contribute towards improving the conditions for EU businesses which are active in trading with partners outside the European Union.
The Bill contains ten sections, all of which are technical in nature. The key provisions are contained in sections 5 and 6. Section 5 provides that an application under the convention for the recognition and enforcement in the State of a judgment shall be made to the Master of the High Court who may make an order for the recognition or enforcement of only part of a judgment. Section 6 provides that if an enforcement order has been made in respect of a judgment, the judgment shall, to the extent authorised by the order, be of the same force and effect as a judgment of the High Court and that proceedings for its enforcement may be taken accordingly.
Other provisions are ancillary to these sections. Section 1 contains relevant definitions which are self-explanatory.
Section 2 authorises the Minister for Justice and Equality to make certain orders in relation to convention matters, most notably that a specified state is a state bound by the convention or that particular declarations or communications have been made. While such orders are in force, they will be of evidential value.
Section 3 states the convention has force of law in the State, while section 4 provides that judicial notice shall be taken of the convention, the explanatory report prepared in relation to it and relevant court judgments. This provision is in aid of the uniform interpretation of the convention which is important in an international agreement of this nature.
Section 7 deals with provisions in enforcement orders for the payment of interest on judgments and the payment of costs. Section 8 deals with the proof and admissibility of certain judgments and related documents and translations. Section 9 contains a technical provision to bring section 20A of the Jurisdiction of Courts and Enforcement of Judgments Act, 1998 into line with the provisions of section 7. Section 10 contains standard citation and commencement provisions.
As I indicated, the European Union has exclusive competence in the matters governed by the convention and Ireland will not be ratifying it in its own right. Nonetheless, implementing measures are required to ensure the convention can be applied within our legal system and the purpose of the Bill is to make provision for these measures. I look forward to hearing the views of Senators on the Bill which the Minister hopes can be enacted before the convention comes into force on 1 October. I commend the Bill to the House.
I welcome the Minister of State, Deputy Jimmy Deenihan.
As Fianna Fáil spokesperson on justice and equality, I support the Bill which implements a Government decision to agree to the proposals contained in the convention of 2005. The Bill will clarify the rules surrounding the international agreements which outline within them which court shall hear a case in the event of a dispute. Acceding to the convention will promote greater legal certainty in cross-border business and create a climate more favourable to international trade and investment. The increasing codification of international dispute resolution mechanisms provides the Irish legal sector with an excellent opportunity to become a world centre for the hearing of legal dispute cases.
As a common law and stable eurozone jurisdiction with strong international relations and in which people speak English, the Government should be exploring ways to increase commercial opportunities in this sector. The Minister should examine whether it would be possible to create the legal equivalent of the Irish Financial Services Centre to deal with international legal disputes. There is a niche market that could be exploited. I hope the Government, at Cabinet level, will look seriously at the significant possibility it could provide for the country. It would be a win-win. I have absolutely no doubt that Ireland is recognised internationally, in Australia, China, South America and elsewhere, as a very effective and efficient legal services centre. The added bonus of having an international court to deal with disputes under the Hague Convention would be a major boost to the country.
I have no difficulty with the principle of the Bill. The convention contains three basic rules that give effect to the choice of court agreement. First, the court must, in principle, hear the case under Article 5; second, any court not chosen must, in principle, decline to hear the case under Article 6; and, third, any judgment rendered by the chosen court must be recognised and enforced in other contracting states, except where there are grounds for refusal.
I wish to bring one matter to the Minister of State's attention which constitutes an extraordinary departure from Oireachtas legislation. Section 4 of the Choice of Court (Hague Convention) Bill 2015 provides that a judicial note shall be taken of the convention and the explanatory report on it prepared by Mr. Trevor Hartley and Mr. Masato Dogauchi and relevant court judgments. I understand this provision is in aid of the uniform interpretation of the convention. I am not taking in any way from the fantastic work these two academics have done. However, I am concerned about this unprecedented inclusion of a reference, in essence, an academic piece, in a section of a Bill proposed to be passed by the Houses of the Oireachtas. I ask the Minister for Justice and Equality to clarify whether it is appropriate to include this specific reference in the Bill. I would also like to know if the provision is being included in primary legislation in other parliaments of states which have signed up to the convention. I would like to ask how the Judiciary will be prepared to implement the Bill. The explanatory report on section 4 is more than 100 pages long. Will the Minister clearly outline what information or training will be provided for the Judiciary on implementation of the Bill?
I must stress my unease at the inclusion of a specific reference to an explanatory report in primary legislation and look forward to hearing an explanation for it. In my 20 years of service to the Oireachtas, in both the Dáil and the Seanad, I have never seen such an unprecedented and extraordinary departure in the proposed inclusion of the names of two academics in section 4 of the Bill. It is best expressed by the Latin phrase inclusio unius est exclusio alterius. Would the Minister for Finance, Deputy Michael Noonan, insert in a Finance Bill the name of the extraordinary civil servant Mr. T.K. Whitaker who worked with different Governments? Would Mr. John Kelly or others who did outstanding work on constitutional law have their names included in a Bill? I forewarn the Minister that while the Fianna Fáil Party totally supports the concept behind the legislation which it would like to see enacted, I will table an amendment on Committee and Report Stages, if necessary, to have section 4 amended to exclude the names of the two academics concerned. I am sure they have done extraordinary work, but it represents a departure from parliamentary procedures in the Oireachtas. I have never seen enshrined in legislation the names of two European academics. I ask the Minister of State and the Minister for Justice and Equality to reflect on the logic of my contribution. I am vehemently opposed to this proposal which the Fianna Fáil Party will oppose. I do not want to muddy the waters because this is a good Bill, but naming individuals in section 4 is a departure from precedent and not something with which I could live. I will oppose it vehemently.
I welcome the Minister of State, Deputy Jimmy Deenihan, whom I commend him for the dignified way he represented Ireland in America recently. It was a very difficult time for young people and their families, particularly the families of students participating in the J1 visa programme. He represented the Government with dignity in very difficult circumstances, which I am keen to highlight.
I agree with Senator Denis O'Donovan that few people would have an issue with what is being proposed in respect of this legislation. In fact there are golden opportunities. I have said before that I believe we should have a legal hub here, the equivalent of the IFSC. As Senator Denis O'Donovan has pointed out, correctly, we are an English-speaking nation that has done extraordinary work in terms of international relations in the area of humanitarian work. We are a neutral nation respected throughout the world and that is strong currency. We should be using that currency to create jobs in this area.
The country is already internationally recognised in the area of arbitration. I believe with the recent legislation on mediation, the work done by the Oireachtas Joint Committee on Justice, Defence and Equality and the commitments in place in terms of mediation we will become an international hub in mediating international disputes. This legislation provides us with a golden opportunity to become a centre of international excellence in the area of dealing with commercial disputes. We should become the country of choice where people seek to go to resolve their disputes. This legislation is an incremental step in the right direction to ensure that we can create such a hub.
Many other things need to be done in this area. I have spoken about this issue before. The Oireachtas committee has done a good deal of work in the area of e-conveyancing. At the moment if someone buys a property in this country it can take anything between four and eight weeks to deal with conveyancing, the transferring of documents and everything that goes with it. If this was done electronically it would take between four and eight days. Let us consider the likes of a big business purchasing large corporations or properties. Even more time is involved in such cases, especially if we throw in due diligence and everything that goes with it. If we were to become a centre of excellence and embrace e-conveyancing then we would be augmenting our reputation as being an information and communications technology centre of excellence. The European head offices of six of the seven major ICT companies are based in this country. This is where the jobs are, in particular the high-end jobs. This morning in the House I was pleased to point out that 100 jobs have been created by an aircraft leasing company based in Shannon and Dublin. There will be 50 jobs in Shannon and 50 jobs in Dublin. We are considered the world's leading country when it comes to aircraft leasing. There are so many other areas where we could become leaders with the proper innovation and by incorporating positive steps, including this legislation. Certainly that is the case in terms of dispute resolution. We are getting there in the case of arbitration and we will get there in the area of mediation. The area under this legislation is an open door. We need to drive forward in job creation.
I suggest we consider basing any such hub outside of Dublin. Simply because the IFSC is in Dublin does not mean that if we were to go down a similar line and create a legal hub, it should not be based outside of Dublin. We need to be mindful that we are working on broadband and we need to ensure that within a few years we will be totally accessible in most areas of the country. I have in mind places such as Shannon or other places outside of Dublin that could be considered. I believe anything up to 30,000 or 40,000 jobs could be created if we were to make this a major initiative.
Senator O'Donovan raised a point about naming people in the legislation. I bow to his greater experience and that of the Minister of State in these Houses over mine and I take his word that it has not happened before. I am unsure of the reason for it but I imagine the Minister will clarify it on Committee Stage. When legislation is good and when it is being embraced and endorsed across the House, we should simply make a point in the House and send the message out; we should not be dividing. I strongly suggest that if there is a misunderstanding it could be clarified on Committee Stage. I have no doubt that whether it is the Minister of State, the Minister, Deputy Frances Fitzgerald, or whoever takes Committee Stage, clarity will be forthcoming.
It is great to see yet another justice Bill initiated in this House. I understand more justice Bills have been initiated in this House than from any other Department. It is good for this House. The people gave us a renewed mandate in 2013. Given the constraints within which we are operating we have delivered on that mandate as best we could. We have a unique opportunity, which the other House probably does not have, to analyse and debate legislation as well as enhance it and discuss the bigger picture. It is welcome that the Government and the Minister have opted to initiate the legislation in this House. I look forward to seeing this legislation passed through the House in time for the ratification process.
As has been outlined, the purpose of the Bill is to make provision for the measures that are required to ensure that the Hague Convention of 30 June 2005 on Choice of Court Agreements can function effectively within the Irish legal system. The convention comes into force on 1 October this year and Irish legislation will have to be updated to reflect this.
It is important to be clear. The convention we are discussing is designed to facilitate choice of court agreements between commercial parties. While there is such a framework already within the European Union, there is no corresponding agreement internationally unless we consider the likes of arbitration, which is an alternative dispute resolution mechanism. Therefore, while such court agreements are abided by within the European Union, internationally their application is far more difficult. As I understand it, the proposed convention would provide the necessary legal framework to remedy this situation.
Similar to many provisions in arbitration agreements, choice of court agreements usually stipulate that the court of a specific state has the jurisdiction to hear cases based on the contract between the parties. These types of agreement are generally seen as advantageous for commercial purposes, as outlined already by previous speakers, as they are designed to facilitate uniform trading across borders. The extent to which this arrangement works well is reliant on how assured parties are that their contract will be upheld by a court in the advent of legal proceedings. This is in reference to both the court requested being able to hear the case and in respect of other courts being obliged to acknowledge and enforce any judgment handed down by the choice of court agreement also.
However, I am compelled to wonder what the downsides might be in allowing companies to cherry-pick which jurisdictions and which courts to oversee their disputes. In such a context, I wonder about national legal mechanisms being bound by the rulings of international commercial courts, such as the newly-convened institution in Singapore. I have reservations on the effect or status of our national courts and perhaps our competitiveness, particularly from an arbitration viewpoint given that many hearings take place in this country and this area has been successful in recent years. If we can replicate the success of the international arbitration hearings held in Dublin it would be fantastic. Senator Martin Conway has alluded to the reality and the need for a legal area akin to the IFSC in this country in order that we can make the most of our competitive standing. He also referenced the facts that we have enviable legal infrastructure already in place, we are English speaking, we are from a common law jurisdiction, we are on the edge of Europe and we are a member of the European Union.
While I appreciate that time, a competent legal infrastructure - something we already have in Ireland - and flexibility are significant issues that companies always consider, it is likely that these are among the factors that have attracted many companies to locate in Ireland in the first place. We need to ensure that situations do not arise whereby big businesses shirk their legal responsibilities to the State and the people by sidestepping any laws in favour of another jurisdiction. I call on the House to consider this on the next Stage.
I welcome the Minister of State and the opportunity to speak about this Bill. It is a common sense Bill and one that Sinn Féin supports. It is not very often I agree with a Bill relating to EU and global justice issues because some of these EU initiatives overtly impact on Irish sovereignty and deal with issues that are not entirely in keeping with democratic or human rights principles. It recalls the old saying that if the European Union applied to join itself, it would not have much hope of being accepted given its clear lack of democracy at times. We have seen how that has played out in recent times.
That said, we have to consider the Bill on its merits and the provisions of the convention make sense. Christophe Bernasconi writes in the International Financial Law Review: “A global agreement on the recognition and enforcement of private rulings makes so much sense it’s difficult to understand why it isn’t in place already.” I commend the Minister of State for moving the Bill forward and bringing to an end the delay in the ratification of this convention.
The Hague Convention of 30 June 2005 on Choice of Court Agreements aims at ensuring the effectiveness of choice of court agreements between parties to international commercial transactions. The convention and this Bill are not part of a globalisation of criminal jurisdiction nor do they have any possible human rights implications. The convention was focused in its approach and is aimed purely at promoting greater legal certainty for cross-border business and creating a climate that is favourable to international investment and trade. This is something that Ireland as an island nation must be part of and for that reason Sinn Féin will support this Bill in its efforts to ensure this is the case.
I have outlined previously Sinn Féin’s concerns about a super-state EU or global legal architecture. We have had many debates in this House on the institutions of the European Union. I have also spoken of the need to be mindful of human rights law in respect of Bills that seek to create such architecture. This Bill, however, is different. It is specifically intended to address cross-border co-operation among courts in commercial contractual situations, which has been a problem for some time. Judges in different countries have tended to disagree about issues of jurisdiction and the enforcement of foreign rulings. This convention has the potential to address such disagreements to provide certainty and conformity, both of which are essential in the modern day international practice of private law. It ensures courts respect and give effect to selection clauses which are so common in modern business to business contracts.
The conformity benefits Ireland’s attraction for foreign direct investment. Although such direct investment is important, we would caution against an over-reliance on foreign direct investment. It must not adversely impact on the growth of indigenous industry. We also recognise the importance of trade and investment. This Bill would support those concepts. It is a short but important Bill to ratify the convention. It is long overdue and I welcome it. We do not oppose it and I doubt we will submit any amendments to it on Committee or Report Stages. I hope it will be of benefit to the State and the possibility of job creation arising from it remains to be seen.
I welcome the Minister of State and the Bill. As one who has been involved in court procedures, I recall dealing with a company in the Minister of State’s constituency. Its first contract was made in Ireland, the matter went to arbitration and we spent 11 days arguing about whether there were one or five contracts. If there were five, another two were made in another jurisdiction. It took 11 days before the arbitrator decided. I had a very difficult experience with that matter.
At European level there is already a very structured system in respect of a ruling on contracts, whether service contracts or contracts for the purchase of goods. This one involves dealing at an international level. Article 3 of the convention sets out quite clearly how the matter is to proceed:
“exclusive choice of court agreement” means an agreement concluded by two or more parties that meets the requirements of paragraph c) and designates, for the purpose of deciding disputes which have arisen or may arise in connection with a particular legal relationship, the courts of one Contracting State or one or more specific courts of one Contracting State to the exclusion of the jurisdiction of any other courts; ...
[and] ...
an exclusive choice of court agreement must be concluded or documented –
i) in writing; or
ii) by any other means of communication which renders information accessible so as to be usable for subsequent reference;
It is quite clear what the convention sets out and it is important that we now have such a huge volume of international trade in Ireland. Before now we mainly exported and provided services to the United Kingdom. Now we play in a global market and it is important that we have proper procedures in place to deal with the sale of goods or the supply of services.
The difficulty with the contracts I mentioned applies to any company going abroad. The initial contract might be in writing but an issue may arise about further work to be done and it is important to set it out in writing. I also had experience of dealing with a German building company that came into Ireland which entered into a contract to do work and did more than €1 million worth of work without setting out anything in writing. I recall having to collect a cheque for it on Christmas Eve for €1 million and send it back to Germany. After Christmas I asked how it had done work on a site without having anything in writing and the response was, “We were told when we came to Ireland you took everyone at their word.” That to an extent explains our banking crisis. Maybe everyone took us at our word when in many cases issues should have been set out in writing.
Article 3 sets out that it must be:
i) in writing; or
ii) by any other means of communication which renders information accessible so as to be usable for subsequent reference;
It is extremely important that people recognise, if they are in another jurisdiction, the importance of making sure for the court that is to adjudicate in any dispute that it is set out in black and white in writing. It seems that business moves so fast and can change in a very short time and agreements are reached without any formal documents being exchanged. That is the importance of this convention, making sure we have recognition of what court is to deal with a dispute. This is welcome.
We are putting this into legislation, which gives jurisdiction to the Master of the High Court. I know it is presumed there is a right of appeal but there is no reference in the Bill to a right of appeal to the High Court if there is a dispute on the Master’s decision. Can that be clarified? I take it there is a right of appeal if for some reason the Master decided not to give recognition to the judgment of another jurisdiction but I am surprised there is no reference to it in this Bill. Will the Minister of State clarify that issue?
There is an automatic right of appeal but it would be useful to clarify the matter. I thank the Minister of State and his Department for their work on this matter since it first arose in 2005. As it was only signed off at European level in December 2014, it is welcome that it is being brought forward in a timely manner rather than rushing it through in October.
I thank the Senators who contributed to the debate, namely, Senators Denis O'Donovan, Martin Conway, Lorraine Higgins, David Cullinane and Colm Burke, and for their useful observations. This is a somewhat technical Bill but I appreciate the welcoming and open atmosphere in which our discussion took place, which reflects the fact it is not controversial legislation. Notwithstanding its technical nature, the Bill will play a part in supporting and promoting Ireland as a successful trading nation. The development and maintenance of trade relations are important at any time but they are particularly important to Ireland and the European Union at a time as we emerge from past economic difficulties. By reflecting a whole of government approach, the Bill demonstrates how various Departments can contribute to the promotion of exports.
Senators will appreciate that Ireland is a trading nation. As I noted in my opening statement, legal certainty and predictability can contribute to the progressive elimination of barriers to trade and enable business and commercial relationships to flourish both within the European Union and externally. Commercial bodies need to be certain that they can readily enforce contracts and judgments on what in some cases can be significant amounts. In a small way, this Bill and the convention it implements can protect and promote Irish business interests abroad by establishing a framework for upholding choice of court agreements in cases which end up before the courts of countries bound by the convention. The guarantees offered by this framework will allow parties to trade with greater confidence than heretofore.
While the legislation is mandated by our membership of the European Union, it is in our interest to legislate in a progressive fashion in this area. The convention fills a void in the current international legal framework, as virtual no treaty relationship exists in this area between individual member states and the European Union's main trading partners. In this context, an impact assessment prepared by the Commission suggests tuncertainty regarding the appropriate court to resolve a dispute was a factor taken into account in making significant business decisions and was potentially a barrier to trade. The assessment also noted that the majority of commercial contracts contained provisions dealing with dispute resolutions and a significant percentage included an exclusive choice of court clause. The Bill is largely an exercise in the promotion of legal certainty. There will be an opportunity to explore these matters further on Committee Stage.
Senator Denis O'Donovan referred to section 4. The reference to the explanatory report is not without precedent. A similar reference was contained in legislation relating to the Lugano Convention and the Brussels I Convention. Our Judiciary is comfortable with such references but judges are not required to consider the reports. Senator Conway raised a number of issues, including the possibility of promoting Ireland as a legal hub. Legislation is being developed to promote us as a venue for alternative dispute resolution and further opportunities may arise for more traditional court-based litigation. Given their legal backgrounds, Senators Lorraine Higgins and Denis O'Donovan will agree there are significant opportunities in this area. Perhaps we have not promoted ourselves sufficiently as a country in regard to dispute resolution.
The convention complements the existing arbitration regime. Many larger companies would prefer to resolve their disputes through arbitration but SMEs may prefer a resolution in open court. In the absence of the conventions, companies have freedom of choice on the way in which they resolve their disputes, but the convention grants a degree of certainty regarding the ability of parties to ensure their choices are honoured.
Senator Colm Burke referred to decisions of the Master of the High Court. Decisions of the Master can be appealed to the High Court under the Courts and Court Officers Act 1995.
Question put and agreed to.
When is it proposed to take Committee Stage?
Next Monday.
Committee Stage ordered for Monday, 13 July 2015.
Sitting suspended at 1.55 p.m. and resumed at 3 p.m.