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SELECT COMMITTEE ON JUSTICE, EQUALITY AND WOMEN’S RIGHTS debate -
Thursday, 22 Jan 1998

Vol. 1 No. 2

Arbitration (International Commercial) Bill, 1997: Committee Stage.

SECTION 1.

I welcome the Minister on his first visit to this committee; I hope it will be one of many. I also welcome Ms Regina Terry and Mr. David Costello.

The amendment to amendment No. 17 and amendment No. 18 are cognate on amendment No. 1, and the amendment to amendment No. 17 is related to amendment No. 17. Amendments Nos. 1, 17 and 18 and the amendment to amendment No. 17 may be discussed together by agreement.

I move amendment No. 1:

In page 3, subsection (1), line 18, after "Commercial" to insert "Contracts".

These are drafting amendments. AmendmentNo. 1 is designed to clarify matters for those reading the heading of the Bill. That is why I propose to include the term "contracts".

I congratulate the Chairman on his appointment and wish him and the members well.

The Short Title of the Bill was suggested by the parliamentary draftsman as it facilitates this Bill and the Arbitration Acts, 1954 and 1980, being collectively cited in subsection 1(2) of the Arbitration Acts, 1954 to 1997. The reference to 1997 will now change to 1998 to reflect the year in which the legislation is passed.

With regard to the specific purpose of the Deputy's amendments, the second footnote to Article 1 of the text of UNCITRAL Model Law on International Commercial Arbitration, contained in the Schedule to the Bill, makes clear that, "The term "commercial" should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not". Amending the Short Title of the Bill, as suggested by Deputy Upton, would restrict the scope of the Bill, and this would not comply with the wide interpretation envisaged by the Model Law. The advice of my officials is that the Short Title of the Bill should not be amended for the reasons outlined, and I am, therefore, unfortunately unable to accept Deputy Upton's amendments.

Amendment No. 17 is a technical amendment whose purpose is to align completely the transition of provisions in subsection 16(5) with those of section 14 to ensure there is no distinction in the award of interests between international and domestic arbitrations. The element in the subsection not present in the Bill as published concerns the fact that parties to an arbitration commenced before the Bill is enacted but not yet concluded may wish to agree that the interest provisions contained in this section should apply to them. This may be unlikely, but the equivalent provision exists in international commercial arbitration, and there is no good reason parties to other arbitrations should not have the benefit of the same option.

I am not an expert on the English language, but am I correct to suggest that "international" and "commercial" are adjectives without any qualifying noun? It is for that reason "contracts" was suggested for inclusion in the title of the Bill.

The purpose of the words "international commercial" is to qualify the term "arbitration" to clarify what specifically is meant.

Amendment, by leave, withdrawn.
Section 1 agreed to.
SECTION 2.

I move:

"That section 2 be deleted."

The proposal is to delete section 2 which provides that the Act would come into operation three months after its passing. The Bill coincides with the welcome development by the Bar Council of a major international arbitration centre in its new Law Library building in Church Street in Dublin. It is expected the centre will open next month and that it will provide about 10,000 square feet of purpose-built facilities for international arbitrations, including larger hearing rooms, translation services, video conferencing and state of the art electronic services. That the Bar Council is marketing the centre abroad is welcome. A large potential market has been identified, which is very encouraging in the context of this legislation. The intention is that the commencement of this legislation would dovetail with the opening of the new arbitration centre in an effort to attract arbitration business to Ireland. In that context the deletion of the three months' waiting period before the Act comes into operation is considered desirable. I hope Members will see the sense in this proposal.

Did this request come from the Bar Council? I agree with the Minister; it is good to hear the centre will be up and running within a month. The staff and legislation are in place, and a major selling operation is under way. One imagines that selling Ireland as an international arbitration base could go ahead in anticipation of the centre opening. It is to open within a month, yet the Minister wants the commencement of the Bill to be deferred by three months.

No. It is the other way around.

The purpose of deleting section 2 is to have the commencement of the Bill coincide with the opening of the centre.

Question put and agreed to.
Section 3 agreed to.
SECTION 4.

Amendment No. 3 is consequential to amendment No. 2 and both are to be taken together by agreement.

I move amendment No. 2:

In page 4, subsection (1), between lines 3 and 4, to insert the following:

" 'arbitration agreement' means an arbitration agreement concerning international commercial arbitration;".

This is a drafting amendment which centres on the practice that definitions in Bills are in alphabetical order. This amendment seeks to maintain accord with long established practice and to make it easier for those reading the Bill.

These drafting amendments are appropriate and I am happy to accept them.

Amendment agreed to.

I move amendment No. 3:

In page 4, subsection (1), to delete lines 7 and 8.

Amendment agreed to.

I move amendment No. 4:

In page 4, subsection (1), line 11, after "text" to insert "in the English language".

This amendment seeks to qualify the Bill in so far as it proposes that English would be the definitive language for the Model Law. If there is a dispute here about the Constitution, the Irish form takes precedence. I suggest that if there is a dispute regarding the Model Law, English should be the definitive law, as Irish is not relevant in this case.

It is true that many foreign nationals coming here would not have a clear knowledge of Irish. It is sensible to accept that English would be the language used. While the legislation is self-explanatory as it stands, Deputy Upton's proposal clarifies the situation, and I accept the amendment.

Amendment agreed to.

I move amendment No. 5:

In page 4, subsection (1), between lines 12 and 13, to insert the following:

" 'State' means the de facto state as defined in Article 3 of Bunreacht na hÉireann.”.

This amendment is for clarity of definition. The word "State" is referred to several times in the Bill and the Model Law. We should insert a definition of State for accuracy.

This is an interesting amendment. I consulted the Attorney General and am advised it is neither necessary nor desirable to amend the Bill along these lines as the term "State" appears in a number of other statutes unaccompanied by definitions. Should the need arise, I am advised a court would interpret the term in accordance with the Constitution.

The Explanatory Memorandum mentions 25 countries as adopting the Model Law. Is the United Kingdom one of those countries? How many EU States have adopted the Model Law?

The United Kingdom is not party to this. Legislation based on the Model Law has been enacted in the following countries: Australia, Bahrain, Bermuda, Bulgaria, Canada, Cyprus, Egypt, Finland, Guatemala, Hong Kong, Hungary, India, Kenya, Malta, Mexico, New Zealand, Nigeria, Peru, the Russian Federation, Scotland, Singapore, Sri Lanka, Tunisia, Ukraine and Zimbabwe. Within the United States, California, Connecticut, Oregon and Texas have done so.

Amendment, by leave, withdrawn.
Section 4, as amended, agreed to.
Section 5 agreed to.
SECTION 6.

I move amendment No. 6:

In page 4, between lines 23 and 24, to insert the following subsection:

"(3) Reference to commercial arbitration in the Model Law shall not include a case where a person deals as a consumer in the State.".

This amendment is designed to protect consumers. Under the Model Law, the consumer contract could fall within the scope of the Act, meaning the consumer would have virtually no recourse to the Irish courts. The amendment makes a necessary exception and such an exception is permitted by Article 1.5 of the Model Law. This may be relevant to a tour operator not based in this country who could perhaps resort to the Model Law as a way to provide a less than adequate service to consumers and to avoid having to face the Irish courts in the event of such a shoddy service being provided.

I appreciate the concerns which motivated Deputy Upton to table this amendment. I also appreciate and understand his desire to protect those who are dealing as consumers here. However, I am not in position to accept the amendment which is predicated on the idea that the Model Law has implications for consumer dealings. That is not the position.

The Model Law is limited in its application to international commercial arbitration. Within the Model Law Article 1, the term "international" is given a wide meaning. Central to that idea is the concept of a place of business from which it can be seen that business dealings of a commercial nature, as distinct from dealings involving consumer interests, are at issue. It is also clear from the legislative history of the Model Law, and hence the reference in section 6 to the documents of the United Nations Commission on International Trade Law and its relevant working group, that certain relationships are not included in the word "commercial". In particular, such relationships are instanced as including labour and employment disputes and ordinary consumer claims.

I am sure those who will use the Model Law will be fully conversant with the intricacies of its various provisions. I am happy the clarification the Deputy seeks to introduce by way of this amendment is not one which requires to be stated expressly in the legislation. I appreciate the objective he seeks to achieve and share the concerns expressed. I trust my explanation will be satisfactory in the circumstances and that the Deputy will withdraw the amendment.

I take it from what the Minister has said that this does not provide a loophole which would diminish the rights of Irish consumers. Is that a fair summary?

There is no question but that that is the position. I note the Deputy's concerns regarding package holiday operations, for example, but I hope he understands why I am not in a position to accept the amendment and will see why it is not necessary for him to press it.

Amendment, by leave, withdrawn.
Section 6 agreed to.
SECTION 7.

Amendment No. 7 is consequential on amendment No. 8. Amendment No. 8 and Amendment No. 1 to it are related. Amendment No. 1 to amendment No. 8 is also related to amendment No. 15. All amendments may be discussed together. Is that agreed? Agreed.

I move amendment No. 7:

In page 4, subsection (2), line 28, to delete "sections 10(6) and 13(1)" and substitute "sections 8, 10(7) and (9) and 13(1).

Amendment No. 7 is a technical amendment to section 7(2) to provide that the functions of the High Court under the new section 8 dealing with court powers exercisable in support of international commercial arbitration proceedings, which is the subject of amendment No. 8, should be performed by the president of that court or such judge of the court as may be nominated by the president subject to any rules of the court which may apply. Also being included in section 7(2) are those functions contained in section 10(7) and (9) in relation to the determination of the recoverable costs of the arbitrary proceedings and the review of the costs of the arbitrators fees and expenses which are the subject of amendment No. 12.

Amendment No. 8 inserts a new section which spells out clearly the powers of the High Court which are exercisable in support of international commercial arbitration proceedings. The section points out that these powers will be the same as those available to the court in relation to any other action or matter before it. The basic thrust of the Bill and of the Model Law is based on the principle that the parties to an arbitral agreement should be allowed to resolve their difficulties by recourse to arbitral proceedings and with the need for only a limited court intervention in the arbitration process.

Nonetheless, Articles 9 and 27, of the Model Law provide for situations where it may be necessary for court assistance to be provided in support of international commercial arbitration proceedings. Article 9 deals with the grant by a court, on application by a party, of an interim measure of protection whereas Article 27 covers the provision of court assistance and taking evidence before an arbitral tribunal on the application of either a party or the tribunal itself. Article 9, for example, includes measures concerned with the conservation of the subject matter of the arbitral proceedings whereas article 27 would include the power impel the appearance of witnesses before an arbitral tribunal, the production of a document or the provision of access to goods or property for inspection. These are all matters which, depending on the circumstances, could be relevant to the arbitral proceedings and which might usefully be exercised in connection with such proceedings.

While it could perhaps be left to the High Court to determine the scope of its powers of assistance by reference under section 6(2) to the documents of the United Nations Commission on International Trade Law and its working group relating to the preparation of the Model Law, it is considered that for the purpose of clarity and certainty, it would be more appropriate to spell out clearly in the Bill the powers exercisable by the court in support of the arbitral process. Such an approach has also been adopted in other jurisdictions and is allowed for in the Model Law. The section in general is modelled on similar provisions in the Arbitration Act, 1954, and the New Zealand Arbitration Act, 1996.

As regards the provision on security for costs, the rules of the superior courts, as they stand, encompass a fairly wide-ranging jurisdiction to order security for costs against foreign plaintiffs. This section, both in subsections (1)(c) and (2), seeks to ensure that parties in the context of international commercial arbitration proceedings are not disadvantaged because they are individuals who are ordinarily resident outside the state or corporations or associations incorporated under a law other than the law of the state or whose central management and control is exercised outside the state.

Given that the primary purpose of the Bill is to encourage individuals from other countries to arbitrate their differences here, Deputies will readily understand the reason for this proposal without any further explanation. Perhaps Deputy Upton may wish to refer to amendment No. 1 to amendment No. 8.

I welcome the provision for limited court intervention. The procedure and mechanism which has been set up should work as independently, autonomously and satisfactorily as possible. I agree with the Minister that intervention should be as limited as possible. In this instance, we are talking about intervention by the High Court which we have chosen as the appropriate court for final determination.

I draw particular attention to Article 11.5 which states: "A decision on a matter entrusted in paragraphs (3) and (4) of that article to the court or other authority specified in article 6 shall be subject to no appeal." It would seem on the basis of what we are saying here that the High Court is to be the court of final appeal. Supposing there is to be arbitration between two contesting parties from within this jurisdiction. Is confining the right of appeal to the High Court in conflict with Article 34.4.3 of the Constitution, which enshrines the right to appeal to a higher court in respect of dissatisfaction with the decision of a lower court? While we are adopting a Model Law from other jurisdictions which has been adopted in 25 countries, are we not at the same time excluding the right of two citizens or parties from within this jurisdiction to have recourse to Article 34 of the Constitution, that is, the right to appeal further to the Supreme Court?

The purpose of my amendment to the amendment is to broaden the scope of the court, to extend its power to grant interlocutory injunctions as well as interim injunctions. As I understand the position, interim injunctions are quite a limited and restricted function, and the capacity to provide for an interlocutory injunction would simply increase the scope of the court to deal with the problems and difficulties as they arise.

Deputy Higgins's point with regard to the constitutional implications of legislation to adopt the Model Law, which will obviously curb the supervisory powers of the courts, was considered by the Constitution review group. Its report published in 1996, addressed the possibility of the Model Law being adopted into domestic legislation and its view was that there was no basis for believing there would be constitutional difficulties with the approach as presented now in this legislation. In September 1996 the then Attorney General, Mr. Gleeson, endorsed this view so there is obviously a considerable body of legal authority to the effect that there is no need to be worried about constitutional difficulties. The answer to Deputy Higgins's question is, in so far as there is advice and authority on this subject, there is no need to be concerned.

With regard to amendment No. 1 to amendment No. 8, I do not consider there is a need to amend the new section 8(1)(d) to provide a court with specific powers to grant interlocutory injunctions in support of international arbitration proceedings. Section 8(1)(d) provides for the court to grant an interim injunction in support of such proceedings. That provision, in turn, is modelled on section 22 of the Arbitration Act, 1954, and there is a similar provision in the 1996 UK arbitration Act.

The omission of reference to interlocutory injunctions in the 1954 legislation has not given rise to any difficulties and the power of granting an interim injunctions, which stands, is an adequate mechanism for holding the line or preserving the status quo pending the outcome of an arbitration.

If there was to be an expansion of the provision along the lines proposed by the Deputy, that could well cast doubts on orders which have already been made under the 1954 legislation. In those circumstances, I trust Deputy Upton will understand why I am not in a position to accept amendment No. 1 to amendment No. 8.

Amendment agreed to.
Section 7, as amended, agreed to.
NEW SECTIONS.

I move amendment No. 8:

In page 4, before section 8, to insert the following new section:

8.-(1) For the purposes of giving effect to Article 9 or 27, the High Court may, on application under section 7(3), make, in relation to an international commercial arbitration, any order in respect of-

(a) the preservation, interim custody or sale of any goods which are the subject matter of the arbitral proceedings,

(b) securing the amount at issue in the arbitral proceedings,

(c) security for costs,

(d) interim injunctions,

(e) the appointment of a receiver,

(f) the detention, preservation or inspection of any property or thing which is the subject of the arbitral proceedings and authorising-

(i) for any of those purposes any person to enter any land or building in the possession of a party, or

(ii) any sample to be taken, any observation to be made or any experiment to be tried which may be necessary or expedient for obtaining full information or evidence,

(g) securing the attendance of witnesses before the arbitral tribunal in order that evidence be given or documents be produced,

(h) the examination on oath or affirmation of any witness before an officer of the Court or other person,

(i) the issue of a commission or request for the examination of a witness outside the State, or

(j) the discovery and inspection of documents and interrogatories, that it has power to make for the purpose of and in relation to an action or other matter before the High Court.

(2) A party shall not be ordered under this section to provide security for costs solely on the ground that the party is-

(a) an individual who is ordinarily resident outside the State, or

(b) a corporation or association incorporated or formed under a law other than the law of the State or whose central management and control is exercised outside the State.

(3) Nothing in this section shall be taken to prejudice-

(a) the generality of Articles 9 and 27, or

(b) any power of an arbitral tribunal to make orders in respect of any of the matters mentioned in subsection (1).".

I move amendment No. 1 to amendment No. 8:

In subsection (1)(d), after "interim" to insert "or interlocutory".

Amendment No. 1 to amendment No. 8 by leave, withdrawn.
Amendment No. 8 agreed to.

Amendment No. 9 in the name of the Minister is a new section. Amendment No. 10 is related. Therefore, amendments Nos. 9 and 10 may be discussed together by agreement. Is that agreed? Agreed.

NEW SECTION.

I move amendment No. 9:

In page 4, before section 8, to insert the following new section:

9.-Unless otherwise agreed by the parties, the arbitral tribunal may-

(a) direct that a party to an arbitration agreement or a witness who gives evidence in proceedings before the arbitral tribunal be examined on oath or affirmation, and

(b) administer any oaths or take any affirmations necessary for the purposes of the examination.".

The purpose of this amendment is to enable an arbitral tribunal to direct that a party to an arbitration agreement or a witness who gives evidence in arbitration proceedings be examined on oath or affirmation. It also enables the tribunal to administer such oaths and affirmations. It is considered that such a provision would be of assistance to an arbitral tribunal and could help it carry out its functions in a more efficient and effective manner.

Because of its nature international commercial arbitration is based on the principle of consensus and co-operation. Accordingly, the provision is made subject to the agreement of the parties. If one does not have agreement, that ends the matters - that is obviously of fundamental importance.

The section is modelled in a similar provision in the 1996 English arbitration Act. The power is not new to Irish legislation as it is contained and available under the Arbitration Act, 1954. The new section just ensures that arbitral tribunals involved in international commercial arbitration would have the discretion under the Bill to make use of this kind of power as long as it is not excluded by the agreement of the parties.

Amendment No. 10 is designed to create an offence of perjury, if somebody gives false information to the arbitrator. As I understand the position, the arbitrator is not a judge and, accordingly, lies told to the arbitrator would not amount to perjury.

I also am aware there is a similar provision to the one which I propose in the Arbitration Act, 1954, that if somebody knowingly makes a false declaration to an arbitrator covered in that Act, it would amount to perjury. Effectively what I propose is that, if a person commits perjury or the equivalent of perjury before the arbitrator, it be treated as such.

The new section proposed by Deputy Upton equates with that in section 7 of the Arbitration Act, 1954. In effect, it represents a sanction which can be applied if false evidence is given in the course of international commercial arbitration proceedings. In many ways it is obviously a logical extension to the powers proposed to be given to the arbitral tribunal in the new section 9, which is the subject matter of amendment No. 9.

Taking evidence on oath or affirmation is not especially common in arbitrations generally. Nevertheless, I considered that it would be useful to supplement the powers of the arbitral tribunal by expressly authorising the taking of evidence on oath or affirmation, unless the parties to the arbitration determine that this is a discretionary power which they do not want the tribunal to exercise.

There may of course be cases where the parties take the view that an extra ingredient will be present by virtue of the fact that the evidence has this additional element of solemnity attached to it. However, I have misgivings as to whether, in the context of attracting international commercial arbitration business to this country, it is appropriate to introduce an amendment which actually speaks in terms of offences and penalties. The reality is that the taking of evidence on oath or affirmation is subject to the agreement of both parties. A provision of this kind is likely to mean that the oaths or affirmation provision would simply not be utilised at all. That would be a pity because it might deprive the arbitral tribunal of a mechanism, tool or instrument which should have a moral force but which did not necessarily carry with it the possible sanction of a prison sentence.

It is a matter for the arbitral tribunal to assess the weight of the evidence which is given before it and to make whatever determination it considers to be necessary. If false evidence is found to have been given, that would weigh heavily with the tribunal in making its final decision or award. It might also, and in all probability would, influence the tribunal in awarding costs.

If the giving of false evidence were to be discovered after an award had been made by the tribunal it could be a valid ground for seeking to have the award set aside on the basis that the award itself, having been given on foot of false evidence, is against public policy. It would be acknowledged that this would be the position. Having given due weight to those considerations, it is generally true to say that parties giving evidence on oath or affirmation, knowing the consequences of that, will not become involved in abusing the trust which is fairly placed upon them.

I understand the logic of Deputy Upton's train of thought but for the reasons I have outlined I have decided not to accept the amendment. The entire arbitration process is one of agreement and I do not believe that introducing the amendment which Deputy Upton suggests would assist the process. The consequences of giving false evidence would be apparent to each party to the arbitration who, after all, would have to agree to that process in the first instance. In all the circumstances it would be downright foolhardy for them to abuse a trust which they actually brought upon themselves by virtue of the fact that they agreed to engage in this process.

If there is a dispute with regard to any result of an arbitration and if it is felt that examination under oath was untruthful, the person can bring it to the High Court under the new section introduced by amendment No. 8. Under the rules of the High Court, evidence given under oath or affirmation would be subject to penalties.

From what the Minister has said, it is apparent we are working on the assumption that these people will behave as honourable gentlemen of the old school. Far be it from me to press an amendment which might give rise to a lower view of human nature. For that reason I withdraw the amendment.

Spoken like a true socialist.

The Minister mentioned there is a right to set aside an award. Deputy Ardagh mentioned that one has recourse to the High Court where the normal rules in relation to evidence given falsely under oath would apply. Is there a mechanism within the Bill for setting aside an award if it is discovered that a false statement was made to an arbitral hearing without having recourse to the High Court by way of appeal?

I have already dealt with that. I said that if the award were to conflict with public policy it would be possible for the award to be set aside. It would be open to a party because an award made on foot of false evidence would conflict with public policy. The circumstances would then arise whereby the award itself could be set aside.

The commission's report on the law makes it clear that public policy covers fundamental principles of law and justice in substantive as well as procedural aspects. Thus, corruption, bribery, fraud and similar serious cases would be grounds for setting aside the tribunal's award. If there is a conflict with public policy it is possible for the award to be set aside. That would cover the concerns expressed in this context by Deputy Higgins.

Apart from something being in conflict with public policy, if it is discovered that one of the parties to an arbitration award has made a false declaration in relation to some details of the particular case in submission, is there a right to set an award aside? It might be discovered 90 days or six months after the award and determination were made. Is there a mechanism whereby the arbitral court can rescind the original award?

I have already said that the arbitration process involves agreement between the parties to the process. In those circumstances it is difficult to envisage a situation where either party that has agreed to a certain process would try to undermine the very process it agreed to resolve the dispute in the first instance. It would not make much sense. We have to deal with the reality, that there are some people who, however much in a minority they may be, always refuse to see sense. There may well be some people on the fringes, although they must be very few, who might decide to embark on the road that Deputy Higgins suggested. In that event, because of the fact that the event would have led to a position whereby the award was based upon false evidence or a false declaration, that of itself would conflict with public policy. Therefore, the opportunity would arise for an offended party to have the award set aside. At that point the arbitration process would have expired and the tribunal would have made its decision. Six months after the date of delivery of the award, the arbitrator would no longer have a role in the matter. Clearly the power to set aside an award is vested exclusively in the court. There would be an opportunity for an individual or company to go before the court and ask that the award be set aside on the basis outlined and the court would make a decision. The contingencies raised by Deputies Upton and Higgins are covered fairly comprehensively.

Amendment agreed to.
Amendment No. 10 not moved.
Section 8 agreed to.
SECTION 9.

I move amendment No. 11:

In page 5, between lines 24 and 25, to insert the following subsection:

"(5) This section shall not affect any other power of the arbitral tribunal to award interest.".

This is a technical amendment. In international commercial arbitration proceedings, an arbitrator's power to award interest will be derived either from the agreement of the parties or the statutory authority provided in section 9. However, it is also possible that a power to award interest could arise where a substantive contract between the parties includes terms as to interest. In such a case the tribunal could be bound to give effect to those terms and thus award interest pursuant to contract. The amendment covers such an eventuality, namely, the award of interest arising from the contractual agreement between the parties to an arbitration. This amendment is a minor adjustment to the section dealing with interest and should not give rise to any great controversy.

Amendment agreed to.
Section 9, as amended, agreed to.
NEW SECTION.

I move amendment No. 12:

In page 5, before section 10, to insert the following new section:

10.-(1) The parties to an arbitration agreement are free to agree on how the costs of the international commercial arbitration are to be allocated and on the costs that are recoverable.

(2) An agreement of the parties to arbitrate subject to the rules of an arbitral institution shall be deemed to be an agreement to abide by the rules of that institution as to how costs are to be allocated and as to the costs that are recoverable.

(3) References in subsections (1) and (2) to 'costs' include the costs as between the parties and the fees and expenses of the arbitral tribunal.

(4) Where there is no agreement of the parties as to the recoverable costs of the international commercial arbitration as between the parties, the arbitral tribunal may, with the consent of the parties to the arbitral proceedings, determine by award those costs on the basis it thinks fit.

(5) Where there is no agreement of the parties as to the recoverable fees and expenses of the arbitral tribunal, the tribunal may determine by award those fees and expenses on the basis it thinks fit.

(6) Where the tribunal makes a determination under subsection (4) or (5), it shall specify-

(a) the basis on which it acted,

(b) the items of recoverable costs, fees or expenses, as appropriate, and the amount referable to each, and

(c) by and to whom they shall be paid.

(7) Where a party does not consent to the arbitral tribunal making a determination under subsection (4) or where for any other reason the arbitral tribunal does not make that determination-

(a) any party to the arbitral proceedings may apply to the High Court within 30 days after receipt of the award, or such further time as the Court may direct, for a determination of the recoverable costs as between the parties, and

(b) the Court may determine those costs on the basis it thinks fit or may order that they be determined by the means and on the terms it specifies.

(8) Notice of an application to the High Court under subsection (7) or subsection (9) shall be given to the arbitral tribunal and to the other parties to the arbitral proceedings.

(9) Where the arbitral tribunal makes a determination under subsection (5)-

(a) any party to the arbitral proceedings may apply to the High Court within 30 days after receipt of the determination, and

(b) the Court may order that the amount of the arbitral tribunal's fees and expenses be reviewed and adjusted by the means and on the terms the Court specifies.

(10) Subject to an order under subsection (9)(b), nothing in this section affects any right of the arbitral tribunal to payment of its fees and expenses.

(11) References in this section to the fees and expenses of the arbitral tribunal include the fees and expenses of any expert appointed by the tribunal.".

This amendment substitutes a new section for the existing section 10 which deals with the costs of the arbitral proceedings. The new provision entitled "Recoverable costs of arbitration and recoverable fees and expenses of arbitral tribunal" seeks to provide greater clarity by distinguishing between the various costs associated with the arbitral process, namely, the recoverable costs to the parties to the arbitral proceedings and the recoverable fees and expenses of the arbitral tribunal. It also sets out more clearly the scope of court intervention where a party disputes the fees and expenses of the arbitral tribunal.

Subsections (1) and (2) of the new section are the same in the Bill as initiated. Subsection (3) clarifies that the costs referred to in subsections (1) and (2) include the costs of the parties and the fees and expenses of the arbitral tribunal. This subsection is similar to section 10(8) of the Bill as initiated in so far as the arbitrator's fees and expenses are concerned.

Subsections (4) and (6) are similar to subsection (3) of the Bill as initiated. Subsection (4) provides that where the parties cannot agree as to the recoverable costs of the arbitration as between themselves, the arbitral tribunal may, with the consent of the parties, determine those costs on the basis it thinks fit.

Subsection (6) provides for the matters to be specified by the tribunal in the event of it making a determination under subsection (4). Subsection (5) provides for the arbitral tribunal to determine by award its recoverable fees and expenses on the basis it thinks fit where there is no agreement of the parties to those fees and expenses. Subsection (6) also provides for the matters to be specified by the tribunal in the event of it making a determination under subsection (5).

Subsection (7) deals with a situation where a party does not consent to the arbitral tribunal making a determination under subsection (4) or where, for any other reason, the arbitral tribunal does not make that determination. It provides that in such circumstances any party to the arbitral proceedings may apply to the High Court within 30 days after the receipt of an award or such further time as the court may direct for the determination of the recoverable costs as between the parties and that the court may determine those costs on the basis it thinks fit or may order that they be determined by the means and on the terms it specifies. This subsection expands upon the provisions of section 10(4) of the Bill as initiated.

Under subsection (8) notice of an application to the High Court under subsection (7) or (9) shall be given to the arbitral tribunal and the other parties to the arbitral proceedings. Subsection (9) provides for the review and adjustment of the arbitral tribunal's fees and expenses by the High Court by the means and on the terms it specifies following an application by any party to the arbitral proceedings within 30 days after receipt of the tribunal's determination under subsection (5).

Subsection (10) is a general statement of intent about the right of a tribunal to its fees and expenses, including those of any expert it may appoint to report on specific issues it may have to determine. The appointment of such an expert is provided for in article 26 of the Model Law. Subsection (11) clarifies that references in section 10 to the fees and expenses of the arbitral tribunal include those of any expert appointed by the tribunal.

Amendment agreed to.
Section 10 deleted.
SECTION 11.

I move amendment No. 13:

In page 6, lines 37 to 40, to delete subsection (7) and substitute the following:

"(7) A person who-

(a) is a barrister or solicitor or holds qualifications that have been obtained in another jurisdiction and are equivalent to those of a barrister or solicitor, and

(b) appears in proceedings before an arbitral tribunal,

shall have the same privileges and immunities as barristers and solicitors have in proceedings before the High Court.".

I move amendment No. 1 to amendment No. 13:

In subsection (7)(b), after "arbitral tribunal," to insert "or acts in a professional capacity in connection with those proceedings,".

Under subsection 11(7) it is provided that a barrister or solicitor or a person holding an equivalent qualification who appears before an arbitral tribunal would have the same privileges and immunities as barristers and solicitors in High Court proceedings. The section recognises that because the scope of the Bill concerns international commercial arbitration there may be circumstances where lawyers from other jurisdictions may wish to act for parties in arbitral proceedings conducted in the State. The intention of the section was to ensure that such lawyers would have the same privileges and immunities as are granted to Irish barristers and solicitors appearing before an arbitral tribunal.

It was brought to my attention that the subsection could be more precise in its formulation. Therefore, I am bringing forward this amendment which seeks to improve the language of the provision. The amendment should not involve any great controversy. It does not involve any point of substance.

The purpose of my amendment is to provide an element of protection for lawyers who carry out background preliminary work but do not appear in court. They may be open to being sued for negligence in a manner which would not apply in relation to practices and procedures with which they were not familiar in the past.

Deputy Upton's amendment is interesting. It has considerable merit in those circumstances and I would like to give further consideration to it. It may be that it should be inserted in legislation. I would ask the Deputy to give us an opportunity to consider this further. We will come back on Report Stage and see if his amendment can be accepted.

Amendment No. 1 to amendment No. 13, by leave, withdrawn.
Amendment No. 13 agreed to.
Section 11, as amended, agreed to.
Sections 12 to 15, inclusive, agreed to.
NEW SECTIONS.

I move amendment No. 14:

In page 7, before section 16, but in Part III, to insert the following new section:

16.-the Arbitration Act, 1954 is hereby amended by the insertion of the following section after section 18.

18A.-(1) Article 16 of the UNCITRAL Model Law on International Commercial Arbitration shall apply with any necessary modifications to arbitration under this Act.

(2) Section 34(5) and (6) of this Act shall apply to this section.'.".

This amendment proposes that the arbitrator should be able to deal with any objections to his jurisdiction and with challenges to his competence. Obviously there would be provision for appeal to the High Court as a protection mechanism.

The purpose of the Bill is to deal with international commercial arbitrations. Consequently, the intention is to interfere as little as possible with the current statutory framework under which arbitrations operate - the Arbitration Acts, 1954 and 1980. These Acts function efficiently and provide the necessary supportive framework for the different types of arbitration which already regularly take place in the State.

A single Bill dealing solely with international arbitrations and which is not burdened with provisions that already exist in domestic arbitration is the best way to proceed at this time with a view to attracting international arbitrations to this country. It is in the interests of this country that the legislation be geared exclusively towards international concerns and that it would be accepted as such in the international business community. This will make Ireland a more attractive place for hearing international arbitrations.

That is not to say there is no relevant provision in domestic law; there is one. However, this Bill deals almost exclusively with international concerns and is geared to attracting international arbitrations. Its provisions deal almost exclusively with the legal situation which will obtain in the event of an international arbitration taking place in this country.

I am reluctant to interfere in a substantial way with existing legislation without first subjecting our domestic legislation or arbitration code to a thorough review in order to ensure it meets the concerns of the professional bodies of society. The fact that this process will take time is one of the reasons for the decision to advance speedily with this Bill. That is why I am unable to accept the amendment.

Amendment, by leave, withdrawn.
Amendment No. 15 not moved.

I move amendment No. 16:

In page 7, before section 16, but in Part III, to insert the following new section:

16.-The Arbitration Act, 1954 is hereby amended by the insertion of the following section after section 28.

28.A.-(1) The award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms.

(2) Section 34(5) and (6) of this Act shall apply to this section.'.".

The purpose of this amendment is to provide that arbitrators state the reasons upon which their decisions are based, unless both parties request that they do not do so. The amendment is designed to provide background information on why decisions are made. As a result it should, to some extent, reduce the need for arbitration, although that might be in conflict with the purpose of the Bill. It would help people to learn as the process progresses and to understand the basis for judgments. Accordingly, it might help them to avoid repeating mistakes.

Given my response to amendments Nos. 14 and 15, it will not surprise the Deputy that I cannot accept this amendment. I will not labour the point.

I tabled the amendment on the basis that it was a reasonable proposition. I accept the Minister's point but this amendment is similar to what is included in domestic legislation. In view of his earlier comments on how well domestic legislation has worked, it might be a good idea to copy it.

Reasoned arbitration is not quite the norm in Irish practice at present, although I understand Deputy Upton's objective behind the amendment. It is more common in other jurisdictions. It is also true that Article 31 of the Model Law permits reasons to be given in the context of international commercial arbitrations and in the future it will be a feature of such arbitrations which will take place in this country. The provision that currently exists in common law for reasoned arbitrations must be viewed in a context where the right of recourse to a court with regard to an award is extremely limited. The interaction between the provisions governing intervention by the courts in the arbitration process under the 1954 Act and a provision whereby a reasoned award would be usual would require careful consideration.

It is a matter which is too important to be dealt with in isolation. It would have to be considered in the context of an overall review of the arbitration code and it would have to be inquired into in great depth. This legislation is geared almost exclusively towards international arbitrations and attracting them to this country. The purpose of the amendment can and should be considered in the context of future consideration of the arbitration code. It would be a grave mistake to deal with it now in isolation. That is why I am not disposed to accept the amendment.

I am a little surprisedby the Minister's reply. There does not appear to be a need for Deputy Upton's amendment because the Minister referred to Article 31 of the Model Law which states that the award shall state the reasons upon which it is based unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under Article 30. The provision is quite specific that the award will state the reasons upon which it is based. That is a good principle. Not only does it give a person the right to know the reason for a decision, it also avoids encumbering the courts unnecessarily. Furthermore, it is useful in generating greater understanding of the reasoning behind the determination of an award.

Article 31 and this Bill deal almost exclusively, with one exception, with international arbitrations. Deputy Upton is seeking to amend the 1954 Arbitration Act which deals with domestic arbitration and insert a provision referring to domestic arbitrations into a Bill which deals almost exclusively with international arbitrations. We are trying to put in place the best legislation possible to deal with international arbitrations.

Deputy Upton's amendment should not be considered in isolation from the domestic arbitration code, which is why I suggested to him the matter would require in-depth consideration in a fundamental review of that code. Such a review has merit and the whole question of reasoned arbitrations in domestic law would have to be considered as part of a comprehensive review. However, this legislation is geared towards international business and not the domestic situation, which is covered by the domestic arbitration Act. I trust that explains the position.

I thank the Minister for that explanation. I accept the general point he made. All I can do is urge him to review the domestic situation.

Amendment, by leave, withdrawn.
SECTION 16.

I move amendment No. 17:

In page 8, between lines 28 and 29, to insert the following subsection:

"(5) This section shall not apply to an arbitration commenced before the day on which the Arbitration (International Commercial) Act, 1998, comes into operation unless-

(a) the arbitration is concluded after that day, and

(b) the parties agree that this section shall apply.".

Amendment agreed to.
Amendment No. 1 to amendment No. 17 not moved.
Amendment No. 18 not moved.
Section 16, as amended, agreed to.
SCHEDULE.

Amendments Nos. 19 and 20 are out of order.

Amendments Nos. 19 and 20 not moved.
Schedule agreed to.
Title agreed to.
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