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SELECT COMMITTEE ON JUSTICE, EQUALITY, DEFENCE AND WOMEN'S RIGHTS debate -
Thursday, 23 Apr 2009

Arbitration Bill 2008: Committee Stage.

This meeting has been convened for the purpose of the consideration by this committee of the Arbitration Bill 2008. I welcome the Minister for Justice, Equality and Law Reform, Deputy Dermot Ahern, and his officials to the meeting. Before we begin, I seek members' agreement as to how the select committee will dispose of this Bill. I propose that we consider the Bill until 1 p.m., at which time we can adjourn and arrange to reconvene on another date if we have not concluded. We will suspend the meeting for any votes. Is that agreed? Agreed.

Before we begin, I understand the Minister wishes to make a brief introductory remark.

I do not, other than to note that Members have discussed this Bill on Second Stage. I am trying to pull together and modernise the law, which has been untouched since the original Arbitration Act 1954. I have listened to some of the Opposition's comments and to some of those who made representations regarding the Bill. I intend to propose 28 amendments, most of which are technical. In amendments Nos. 3, 24 and 27, pertaining to retrospective application of the Bill, application of the Bill to arbitrations under other Acts and arbitrations, agreements and small claims, respectively, I am responding to the concerns expressed by both practitioners and Members on Second Stage.

Amendment No. 6, while somewhat lengthy, merely provides the necessary precision if the Statute of Limitations is to operate properly in the arbitration area. A number of other amendments will clarify the position. I expect there will not be too much argument or division on the Bill.

SECTION 1.

I move amendment No. 1:

In page 5, lines 31 to 34, to delete subsection (2) and substitute the following:

"(2) This Act shall come into operation 3 months after its passing.".

This amendment provides a specific timeframe for the coming into operation of the legislation, namely, three months from the day of the Bill's passing. The specific timeframe will be in ease of practitioners, especially those based in other jurisdictions.

Amendment agreed to.
Section 1, as amended, agreed to.
SECTION 2.

I move amendment No. 2:

In page 6, subsection (1), between lines 7 and 8, to insert the following:

" "consumer" means a natural person, whether in the State or not, who is acting for purposes outside the person's trade, business or profession;".

I propose this amendment for reasons of clarity. The Bill now contains a number of references to the word "consumer". I consider it appropriate to include a definition in the general interpretation section. New references to "consumer" are proposed to be inserted in sections 20 and 30 of the Bill. The definition of "consumer" in the Bill at present, in section 33, is surplus to requirements but will be dealt with on Report Stage in the context of any changes that may be judged appropriate in respect of Part 5 of the Bill.

Amendment agreed to.
Section 2, as amended, agreed to.
NEW SECTION.

Amendment No. 3 proposes a new section. As amendment No. 4 is consequential on amendment No. 3, amendments Nos. 3 and 4 will be discussed together.

I move amendment No. 3:

In page 7, before section 3, to insert the following new section:

3.—(1) This Act shall not apply to an arbitration under an arbitration agreement concerning an international commercial arbitration or a standard arbitration which has commenced before the operative date but shall apply to an arbitration commenced on or after the operative date.

(2) In this section, "operative date" means the date on which this Act comes into operation pursuant to section 1.”.

The Bill, as drafted, would, as a general rule, have resulted in its provisions being applied only to arbitration agreements entered into on or after the date of the commencement of section 3. Following the Bill's publication, representations were made to me suggesting this would have the effect of having two systems of arbitration law applying at the same time, which would lead to some confusion. I am satisfied there is merit in this argument and consequently, I propose this amendment to provide that the new legislation will apply to all arbitrations which are commenced on or after the date on which the Act comes into operation. It will not, however, apply to an arbitration which already is inhering.

The amendment to section 4 clarifies the relationship between sections 3 and 4. As section 4 was originally drafted, it might have been open to the interpretation that the repeal of the existing Arbitration Acts would not affect future arbitral proceedings. Clearly, this was not the intention, given the fact that, by virtue of the new section 3, the Bill is intended to apply to all arbitrations commenced on or after the date of its entry into force.

This point, among others, was raised by the Chartered Institute of Arbitrators. I am referring specifically to section 3(2) as it stands in the Bill, which seems to set up a dual regime by inviting the prospect of allowing the existing system to run in parallel after the Act has been invoked. I presume that, in replacing section 3 with his amendment, the Minister is saying that there will be a single, definitive system in operation. I have no difficulty with section 4.

Amendment agreed to.
Section 3 deleted.
SECTION 4.

I move amendment No. 4:

In page 7, subsection (2), line 17, to delete "The repeal of" and substitute "Subject to section 3, the repeal of”.

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

I move amendment No. 5:

In page 7, line 32, after "to" to insert "arbitrations under".

I am introducing this technical amendment for the sake of precision. It reflects Article 1 of the Model Law, which deals with the scope of applications. Under that article, the Model Law applies to arbitration as opposed to arbitration agreements.

Amendment agreed to.
Section 6, as amended, agreed to.
NEW SECTION.

Amendment No. 14 is consequential on amendment No. 6. Amendments Nos. 6 and 14 will be discussed together.

I move amendment No. 6:

In page 7, before section 7, to insert the following new section:

7.—(1) For the purposes of this Act and for the purposes of section 496 of the Merchant Shipping Act 1894 (as amended by section 28) arbitral proceedings shall be deemed to be commenced on—

(a) the date on which the parties to an arbitration agreement so provide as being the commencement date for the purposes of the commencement of arbitral proceedings under the agreement, or

(b) where no provision has been made by the parties as to commencement of proceedings as referred to in paragraph (a), the date on which a written communication containing a request for the dispute to be referred to arbitration is received by the respondent.

(2) The Statute of Limitations 1957 is amended by substituting the following section for section 74:

"74.—(1) For the purposes of this Act and for the purposes of any other limitation enactment, arbitral proceedings shall be deemed to be commenced on—

(a) the date on which the parties to an arbitration agreement so provide as being the commencement date for the purposes of the commencement of arbitral proceedings under the agreement, or

(b) where no provision has been made by the parties as to commencement as referred to in paragraph (a), the date on which a written communication containing a request for the dispute to be referred to arbitration is received by the respondent.

(2) For the purposes of subsection (1)(b), unless the parties otherwise agree, a written communication is deemed to have been received if it is served or given to the respondent in one or more of the following ways:

(a) by delivering it to the respondent personally;

(b) by delivering it to the respondent’s place of business, habitual residence or postal address;

(c) where none of the addresses referred to in paragraph (b) can be found after making reasonable inquiry, by sending it by pre-paid registered post or by any other form of recorded delivery service addressed to the respondent at his or her last known place of business, habitual residence or postal address.

(3) Unless the parties otherwise agree, where a written communication under this section has been delivered to a respondent in accordance with subsection (2), the communication is deemed to have been received on the day it was so delivered.

(4) For the purposes of subsection (2), a company registered under the Companies Acts shall be deemed to be habitually resident at its registered office in the State and every other body corporate (wherever it is incorporated) and every unincorporated body (wherever it carries out its activities) shall be deemed to be habitually resident at its principal office or place of business.".

This amendment to section 7, while lengthy, is straightforward. It provides a mechanism for determining when arbitral decisions are deemed to be commenced. This is important in the context of the Statute of Limitations where, for the purpose of the various limitations on proceedings, the commencing of arbitral proceedings is equivalent to bringing a court action. Obviously, there needs to be a measure of certainty regarding this matter. Following further analysis, it became apparent that the section in the Bill, as published, was deficient in terms of the legal certainty that it offered. These matters are currently governed by section 3 of the Arbitration Act 1954 and section 74 of the Statute of Limitations 1957, which largely replicates the provisions of section 3.

The changes introduced by the new section are not substantive. Essentially, the parties to an arbitration agreement can agree on the commencement date for the proceedings. Where there is no such agreement, the arbitral proceedings are deemed to be commenced on the date on which a written communication containing a request for the dispute to be referred to arbitration is received by the respondent. This reflects the language in Article 21 of the Model Law, with the additional stipulation that the request be in writing.

The amendment to the Statute of Limitations aligns the text of the existing section 74 with that of this new section. The material contained in the new section 74(2) is not necessary in section 7 of the new Arbitration Bill because equivalent provisions are contained in Article 3 of the Model Law, which specifies when a written communication is deemed to have been received.

The proposed amendment to section 19, substituting the word "habitually" for "ordinarily", is designed to ensure that the same terminology is used throughout the Bill. The Model Law uses the term "habitual residence" in Article 3, which is also carried through in the new section 74 of the Statute of Limitations.

I must ask that we suspend for a vote in the Dáil.

Sitting suspended at 10.45 a.m. and resumed at 11.15 a.m.

Did the Minister include amendment No. 14 in his comments?

With the new section we are trying to marry this new Bill with the Statute of Limitations.

Amendment agreed to.
Section 7 deleted.
SECTION 8.

I move amendment No. 7:

In page 8, subsection (3), lines 10 and 11, to delete all words from and including "whether" in line 10 down to and including "otherwise" in line 11 and substitute the following:

"the existence or validity of the contract or agreement".

This is a technical amendment. By virtue of Article 16 of the Model Law, the arbitral tribunal already has the power to make rulings with respect to the existence or validity of an arbitration agreement. Section 8, as originally drafted, amplified this article by making it clear that any agreement to arbitrate a dispute also included a dispute as to the existence of the overall agreement or contract. The purpose of the amendment is to ensure the validity issue is also covered by section 8(3).

Amendment agreed to.
Section 8, as amended, agreed to.
Section 9 agreed to.
SECTION 10.

I move amendment No. 8:

In page 8, subsection (2), line 31, to delete "respect of" and substitute "relation to".

This is a textual amendment to align the wording of section 10(2) with section 10(1).

Amendment agreed to.
Section 10, as amended, agreed to.
SECTION 11.

I move amendment No. 9:

In page 8, paragraph (b)(i), line 41, after ”Law“ to insert ”or section 32”.

This amendment remedies an omission in the Bill as published. Section 11(b) provides that there is no appeal for a determination by the High Court of an application to set aside an award under Article 34 of the Model Law. Section 32 specifies additional grounds for the setting aside of the award in standard arbitration. The proposed amendment will ensure section 32 determinations are subject to the same restriction with regard to the right of appeal. There is no rationale for drawing any distinction in this matter as between the two sections.

The Model Law applies to international awards and will apply to standard awards as well.

Amendment agreed to.
Section 11, as amended, agreed to.
SECTION 12.
Question proposed: "That section 12 stand part of the Bill."

Section 12 states that notwithstanding Article 34(3), the period shall be 56 days unless the parties agree otherwise. Article 34(3) of the Model Law provides that an application for setting aside an award for the grounds set out may not be made after three months have elapsed from the date the party making the application had received the award. I query whether the application of 56 days in this section gives rise to difficulties vis-à-vis the article in the Model Law.

The only deviation arises on public policy grounds where special considerations arise. For the most part, the grounds on which a party must set aside an award are of a kind that should be known in sufficient time to act before the three-month deadline expires. If the award contains decisions on matters outside the scope of the submission to arbitration, that should be readily ascertainable by the party concerned. If corruption were to have played a part in obtaining an award, the matter might only come to light some time after the award had been received. In those circumstances, it would be invidious if a party was unable to seek redress because the three-month deadline had elapsed. However, it is recognised that the absence of any time limit is potentially problematic and for that reason a restriction is imposed whereby a party seeking to set aside an award on public grounds must act within 56 days from the date on which the circumstances justifying the application became known to the party. This limitation is intended to be in support of the arbitration process.

I understand the rationale of the Minister's argument. Why 56 days? In terms of uniformity and simplicity it would be symmetrical if they were both the same. Does he have any concern about the submission that the phrase "unless the parties otherwise agree" might be open to abuse? It might be open to abuse where the parties are not equal in their bargaining power.

I can examine that phrase between now and Report Stage. Deputy Rabbitte may have a point. The matter of 56 days is a case of balance between three months and a lesser period. There was some debate within the Department and with the Parliamentary Counsel as to what would be the best period but in the end the 56-day period was settled on because it was the median.

It was selected because of something more scientific than the Minister's age I take it.

No, I am not there yet.

Question put and agreed to.
Section 13 agreed to.
SECTION 14.

Amendments Nos. 10 and 11 are cognate and may be discussed together.

I move amendment No. 10:

In page 9, paragraph (a), line 22, after “oath” to insert “or on affirmation”.

I propose to take amendments Nos. 10 and 11 together. Whereas section 14 of the Bill as presented speaks in terms of the examination of witnesses under oath, it is clear that by virtue of the Interpretation Act 2005, this would also include examination following affirmation. However, I am proposing to adjust section 14 so there is full transparency on this point. I note that Deputy Rabbitte has the same idea with this amendment, as he did with the last Bill we discussed as well.

There is not much point in commenting as the Minister has taken on board the point of my amendment and I accept it.

Amendment agreed to.

I move amendment No. 11:

In page 9, paragraph (b), line 23, after “oaths” to insert “or affirmations”.

Amendment agreed to.
Section 14, as amended, agreed to.
Sections 15 and 16 agreed to.
SECTION 17.

Amendments Nos. 12 and 13 form a composite proposal and will be discussed together.

I move amendment No. 12:

In page 9, to delete line 37 and substitute the following:

"17.—(1) Subject to subsection (2), where in legal proceedings relief by way of interpleader is”.

I propose to take amendments Nos. 12 and 13 together. These amendments are technical in nature. The section as published requires the court in cases of interpleader to direct that the issue between the relevant claimants be determined in accordance with the arbitration agreement, where there is such an arbitration agreement. However, this did not take account of the fact that such a determination would be inappropriate if the agreement were null and void, inoperable or incapable of being performed. Article 8 of the Model Law is relevant here.

The new subsection (2) deals explicitly with this matter. The new subsection (3) merely clarifies that the court is not precluded from dealing with the case because the granting of an arbitration award is a contingent precedent to the bringing of legal proceedings.

As a matter of clarity, interpleader arises in circumstances where a person has property in his or her possession in which he or she has no interest. In anticipation of being sued with regard to that property, such people can compel the rival claimants to the property to interplead, that is, to take proceedings between themselves in order to determine entitlement.

Amendment agreed to.

I move amendment No. 13:

In page 9, after line 42, to insert the following subsections:

"(2) A court shall not direct that the issue between the claimants referred to in subsection (1) be determined in accordance with the arbitration agreement concerned where the court finds that the arbitration agreement is null and void, inoperative or incapable of being performed.

(3) Where subsection (1) applies but the court does not direct that the issue be determined in accordance with the arbitration agreement, any provision that an award is a condition precedent to the bringing of legal proceedings in respect of any matter shall not affect the determination of that issue by the court.”.

Amendment agreed to.
Section 17, as amended, agreed to.
SECTION 18.
Question proposed: "That section 18 stand part of the Bill."

I have a question on this section relating to the point about the inequality of bargaining power, and whether as a result the section is open to abuse. For example, the institute has argued that the stronger party may deprive the arbitrator of the power to award interest to the detriment of a weaker party. It instances the possibility that at the time of executing an arbitration agreement, the weaker party may be unaware of the fact that the arbitrator has been deprived of the power to award interest or to be unaware of the significance of it. It recommends the deletion of the phrase "Unless otherwise agreed by the parties".

This is a similar point to the one I raised previously and where there is an imbalance of power, is it an issue in the Minister's consideration?

This is somewhat different from the point in regard to the previous section, where the Deputy also raised the phrase "Unless otherwise agreed by the parties". This section is in vogue since 1998 and as far as we are concerned, there has been no evidence that it has been used in any way other than in a fair and reasonable way.

I will propose amendment No. 19 later, which deals with consumer protection, and that would add to what is here. We are happy that this has worked well and we do not see any reason it would fail to do so in future.

Consumer protection would clearly be in one's mind. There could be a very serious imbalance with regard to the consumer vis-à-vis somebody with very considerable might and power.

Amendment No. 19 states:

Without prejudice to the generality of the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 and 2000, an arbitration agreement—

(a) to which one of the parties to the agreement is a consumer, and

(b) a term of which provides that each party shall bear his or her own costs,

shall be deemed to be an unfair term for the purposes of those Regulations.

Question put and agreed to.
SECTION 19.

I move amendment No. 14:

In page 10, subsection (2)(a), line 30, to delete “ordinarily” and substitute “habitually”.

Amendment agreed to.
Section 19, as amended, agreed to.
NEW SECTION.

I move amendment No. 15:

In page 10, before section 20, to insert the following new section:

20.—Without prejudice to the generality of the Model Law, an arbitral tribunal shall, unless otherwise agreed by the parties, have the power to make an award requiring specific performance of a contract (other than a contract for the sale of land).".

This is a new section which is a direct equivalent of that to be found in section 26 of the 1954 Arbitration Act. I have been advised that its inclusion is desirable in order to avoid any doubts as to the powers of an arbitral tribunal in this area.

Amendment agreed to.
SECTION 20.

Amendments Nos. 16 and 19 are related and will be discussed together.

I move amendment No. 16:

In page 10, subsection (3), line 41, after "subsection (1)” to insert the following:

"or where a consumer is not bound by an agreement as to costs pursuant to subsection (6)”.

I propose to take amendments Nos. 16 and 19 together. There are a number of elements to the amendments which I am proposing, none of which is especially controversial. In the amendments, subsections (3) and (6) are in ease of the consumer. Their primary purpose is to ensure that any arbitration agreement to which a consumer is a party and which purports to provide that each party shall bear their own costs is deemed to be an unfair term for the purpose of the unfair terms in the consumer contracts regulations. In consequence, such a term would not be binding on the consumer.

The purpose of the amendment which inserts a new subsection (7) is to restore a provision to this Bill which is already a feature of our arbitration law in section 32 of the 1954 Act. In broad terms, it makes arbitral proceedings equivalent to court proceedings when it comes to the power of the court to change property recovered in court proceedings with a payment of solicitors' costs. The amendment which inserts a new subsection (8) into the Bill provides the necessary clarification that the fees and expenses of the arbitral tribunal include the fees and expenses of any expert appointed by that tribunal.

I accept that these are in ease of the consumer and I am happy to agree with them.

Amendment agreed to.

I move amendment No. 17:

In page 10, subsection (3), line 41, to delete "may" and substitute "shall".

The purpose of this amendment is to ensure that the issue of costs will never be left unresolved. If the parties, for whatever reason, do not make provision for dealing with the costs of the arbitration, the arbitral tribunal will be obliged to deal with the matter.

Amendment agreed to.

I move amendment No. 18:

In page 10, lines 43 to 46 and in page 11, lines 1 to 6, to delete subsection (4) and substitute the following:

"(4) In the case of an arbitration (other than an international commercial arbitration) the arbitral tribunal shall, on the request of any of the parties to the proceedings made not later than 21 working days after the determination by the tribunal in relation to costs, make an order for the taxation of costs of the arbitration by a Taxing Master of the High Court, or as the case may be, the County Registrar; and the Taxing Master, or as the case may be, the County Registrar, shall in relation to any such taxation, have (with any necessary modifications) all the functions for the time being conferred on him or her under any enactment or in any rules of court in relation to the taxation of costs to be paid by one party to another in proceedings before a court.".

The only substantive change proposed for subsection (4) is that any order by the arbitral tribunal concerning the taxation of costs must be on the request of any of the parties to the proceedings. Furthermore, such a request must be made not later than 21 working days after the tribunal's determination of the matter in dispute.

The subsection as published had the unintended consequence that even if the parties were happy with the way in which the tribunal had dealt with the cost issues, the matter would still have gone for taxation unless they had agreed otherwise in the arbitration agreement itself or prior to the conclusion of the arbitral hearing.

Amendment agreed to.

I move amendment No. 19:

In page 11, lines 13 and 14, to delete subsection (6) and substitute the following:

"(6) Without prejudice to the generality of the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 and 2000, an arbitration agreement—

(a) to which one of the parties to the agreement is a consumer, and

(b) a term of which provides that each party shall bear his or her own costs,

shall be deemed to be an unfair term for the purposes of those Regulations.

(7) Section 3 of the Legal Practitioners (Ireland) Act 1876 shall apply as if an arbitration were a proceeding in the High Court and the Court may make declarations and orders accordingly.

(8) In this section references to--

"costs" include costs as between the parties and the fees and expenses of the arbitral tribunal;

"fees and expenses of the arbitral tribunal" include the fees and expenses of any expert appointed by the tribunal.

Amendment agreed to.
Section 20, as amended, agreed to.
SECTION 21.

I move amendment No. 20:

In page 11, lines 15 to 32, to delete subsections (1) to (5) and substitute the following:

"(1) An arbitral or other institution or person designated or requested by the parties to appoint or nominate an arbitrator is not liable for anything done or omitted in the discharge or purported discharge of that function unless the act or omission is shown to have been in bad faith.

(2) An arbitral or other institution or person by whom an arbitrator is appointed or nominated is not liable, by reason of having appointed or nominated him, for anything done or omitted by the arbitrator (or his employees or agents) in the discharge or purported discharge of his functions as arbitrator.

(3) The above provisions apply to an employee or agent of an arbitral or other institution or person as they apply to the institution or person himself.".

This amendment would supplant the first five subsections of section 21, allowing more clearly for liability for the arbitrator should he or she had act in bad faith. My understanding is that there is a similar provision in UK law and that is something we should follow here.

There has been some debate in this regard. One of the difficulties with the amendment as presented is that is does not appear to deal with the position of the arbitrator as far as the liability issue is concerned, focusing rather on the position of nominating bodies and employees thereof. It is critical in terms of attracting international arbitration business to this jurisdiction that we have a clear statutory statement as to the position of the arbitrator. It is also my view that the position of the arbitrator and that of nominating bodies should be the same. In view of this I do not propose to accept the amendment.

In international arbitration, there is a growing trend towards ring-fencing the position of the arbitrator and related bodies. One of the most reputable arbitration bodies in the world is the International Court of Arbitration, which is the arbitration body attached to the International Chamber of Commerce, ICC. Its rules of arbitration provide for a general exclusion of liability whereby neither the arbitrators, the court, its members nor the ICC and its employees shall be liable to any person for any act or omission in connection with the arbitration. There are benefits to be gained from aligning our statutory regime with that of bodies such as the ICC and it would be a wasted opportunity if the Bill did not make progress in this regard.

There is a practical question which needs to be considered. What is the likelihood in practice of an action being brought directly against an arbitrator or related bodies? The answer is that the possibility is extremely remote. If after the event a party is dissatisfied with the award that has been made, the usual remedy is to seek to have it set aside. If problems arise during the course of the arbitration proceedings it is also open to a party to challenge the arbitrator. This is relevant if circumstances obtain which give rise to justifiable doubts as to the impartiality or independence of the arbitrator. A challenge could also be made if the arbitrator does not possess the qualifications agreed to by the parties.

It should also be noted that immunity from suit and actions for negligence is a common feature of arbitration law in many jurisdictions. There are two key reasons for providing statutory immunity for arbitrators. First, immunity is required if the arbitration process is to function properly and if arbitrators are not to be intimidated by threats of personal liability. Second, arbitration is intended to provide a final decision on disputes, and claims against arbitrators should not be used as a pretext for the rehearing of a dispute.

The Bill contains safeguards designed to provide remedies for parties where serious irregularity is attached to the arbitration process. However, it does not impose personal liability on an arbitrator such that he or she would be liable for damages. This reflects the fact that there is a certain parallel to be drawn between an arbitrator and a judge.

I am broadly sympathetic to the Minister's argument. However, my amendment specifies a situation that would only obtain where the arbitrator had been acting in bad faith. If I understand him correctly, the Minister criticises the amendment because it focuses on the nominating bodies rather than on the arbitrator. As it stands, subsection (1) states: "An arbitrator shall not be liable in any proceedings for anything done or omitted in the discharge or purported discharge of his or her functions." The only qualification I am seeking to insert is with regard to circumstances in which somebody deliberately acts in bad faith. The Minister is invoking the broad commercial argument that this may be an area of possible growth in the economy in the future, and I agree with him. It seems we have a number of natural advantages that might be helpful to us in developing this area and improving our reputation in this regard. I have one question for the Minister. What is the mechanism for resort to court where an arbitrator has been acting in bad faith?

The award could be set aside and ultimately there is resort to court. I accept the Deputy's argument to a certain extent. However, because the arbitrator, being the final arbitrator, is effectively in the position of a judge, personal liability would constrain him or her somewhat and this may make people reluctant to become arbitrators. In addition, the outside business we are trying to gain may be reluctant to come here if it could be exposed to liability. The main example in this regard is the International Court of Arbitration, in which there is general exclusion from liability for arbitrators and the people represented on the body.

Deputy Rabbitte's point is that where a person acts in bad faith there must be some form of penalty. A person who is paid to arbitrate is in a certain position of trust. The Minister says he is sympathetic to a degree but he is not prepared to consider this issue. Deputy Rabbitte makes a good point in his amendment. We are talking about the possibility of arbitration becoming an internationally traded service, as mentioned in the debate on Second Stage. If we make this amendment, it will show, contrary to the Minister's view, to anybody coming here that the arbitrator will act in good faith. If he or she does not, the penalty is that he or she can be prosecuted or taken to court in a civil action. I assume that is the intention.

Anyone who felt the arbitrator had acted in bad faith could subsequently have the judgment set aside. That is one of the grounds upon which a party may have a judgment set aside.

That could be years down the line.

It is exactly the same. One would have determinations in court about whether an arbitrator had acted in bad faith. It would still end up in court as someone would have to decide on the issue. I would guess that the setting aside of the arbitration would be much easier to prosecute.

Amendment put and declared lost.
Section 21 agreed to.
SECTION 22.

I move amendment No. 21:

In page 11, subsection (2), line 42, to delete "enforceable under" and substitute "referred to in".

This is a technical amendment which removes an unintended link that was created between the enforceability of the award and its binding nature. The reality is that when the award is published, it is final and binding, unless otherwise agreed by the parties. As an issue, enforceability would arise only in the event that the award was not complied with.

Amendment agreed to.

I move amendment No. 22:

In page 12, between lines 3 and 4, to insert the following subsection:

"(4) Articles 35 and 36 shall not apply in respect of an award in arbitral proceedings which took place in the State.".

Articles 35 and 36 deal with the recognition and enforcement of arbitral awards. At present, by virtue of the 1954 Act, domestic arbitration awards are not subject to separate recognition and a separate enforcement regime. Instead, by leave of the High Court, they can be enforced in the same manner as a judgment or order of that court. The purpose of this amendment is to disapply Articles 35 and 36 in respect of arbitral awards made in this jurisdiction to ensure all such awards will benefit from this regime. Essentially, this provision streamlines the rules of all awards made in this jurisdiction and avoids needless duplication between those rules and those relevant from setting aside an award under Article 34 of the Model Law.

Amendment agreed to.
Section 22, as amended, agreed to.
Section 23 agreed to.
SECTION 24.

I move amendment No. 23:

In page 12, subsection (1)(a), line 21, to delete “15 and 16” and substitute “14 and 15”.

The purpose of this amendment is to correct an error in the cross-referencing of sections. The correct reference is to section 14, which deals with the examination of witnesses, as opposed to section 16, which deals with consolidation.

Amendment agreed to.
Section 24, as amended, agreed to.
Sections 25 to 27, inclusive, agreed to.
NEW SECTION.

Amendments Nos. 24 and 33 are related and will be discussed together.

I move amendment No. 24:

In page 14, before section 28, to insert the following new section:

28.—(1) This Act, other than the excluded provisions, shall apply to every arbitration under any other Act as if the arbitration were pursuant to an arbitration agreement and as if that other Act were an arbitration agreement, except in so far as this Act is inconsistent with that other Act or with any rules or procedure authorised or recognised under that other Act.

(2) The enactments specified in column (2) of Schedule 6 are amended to the extent specified in that Schedule.

(3) In subsection (3) of section 496 of the Merchant Shipping Act 1894, the reference to legal proceedings shall be construed as including a reference to arbitration.

(4) In this section, "excluded provisions" means subsections (2) and (3), subsection (3) of section 8, sections 17, 25, 26, 29 and 30 and Articles 12 and 13.”.

The primary purpose of the proposed amendment is to align its wording more closely with the wording of section 48 of the 1954 Act. Although substantive change was intended by the change of language proposed in the Bill, it has become clear that the new language is a source of confusion and has given rise to doubts as to the precise impact the section will have on arbitrations which arise under other enactments. This amendment will dispel those doubts.

Section 48 of the 1954 Act also deals with certain provisions referred to as the exclusion provisions which were deemed to be inappropriate in the case of arbitrations arising under statute. As published, the Bill contains no provision in respect of these matters and this is now being rectified.

For the most part, the need to update references to the existing Arbitration Act which are contained in other Acts will be dealt with by virtue of the relevant provisions in the Interpretation Act 2005. Textual amendments are required in a small number of cases, however, and this is addressed in the proposed new Schedule to the Bill.

Amendment agreed to.
Section 28 deleted.
SECTION 29.

I move amendment No. 25:

In page 14, subsection (1)(a), lines 15 and 16, to delete “who are or were hired or engaged within the State”.

The provision being amended largely replicates section 5a of the Arbitration Act 1954. The purpose of this amendment is to remove a qualification which was introduced into that provision in the Bill, as published. I am advised it could lead to uncertainty and ambiguity in respect of certain employment contracts, especially those of a transnational character.

Amendment agreed to.

I move amendment No. 26:

In page 14, lines 21 to 24, to delete subsection (2) and substitute the

following:

"(2) Section 18 shall not apply to an arbitration conducted by a property arbitrator appointed under section 2 of the Property Values (Arbitration and Appeals) Act 1960.”.

The purpose of this amendment is to restore a provision which was originally contained in section 17 of the Arbitration (International Commercial) Act 1998. Its effect is to retain the status quo whereby, properly, arbitrations are excluded from the scope of the interests provisions contained within section 18 of the Bill.

Amendment agreed to.
Section 29, as amended, agreed to.
NEW SECTION.

Amendments Nos. 27 to 29, inclusive, are related and will be discussed together.

I move amendment No. 27:

In page 14, before section 30, to insert the following new section:

30.—(1) A party to an arbitration agreement who is a consumer shall not be bound (unless he or she otherwise agrees at any time after the dispute has arisen) by an arbitration agreement where the agreement—

(a) contains a term concerning the requirement to submit to arbitration in the event of a dispute which has not been individually negotiated, and

(b) involves a claim for an amount that does not exceed the monetary limit for the time being specified under rules of court for commencing and dealing with a civil proceeding in respect of a small claim (within the meaning of Order 53A of the District Court Rules 1997 (S.I. No. 93 of 1997)).”.

As published, the original section 30 has given rise to a widespread view that its effect was to exclude from the ambit of the Bill all arbitrations up to the value of €2,000, namely, the present limit in the small claims procedure of the District Court. This was not intended and I propose this amendment to clarify the position. Essentially, a consumer will not be bound by an arbitration agreement where the amount at issue does not exceed €2,000 and where the arbitration clause has not been individually negotiated. This means consumers can avail of the small claims procedure or can pursue the claim by way of ordinary civil proceedings. However, if they are so minded they can also agree to be bound by the arbitration agreement with the added safeguard that such agreement is possible only when dispute has actually arisen.

That is an improvement. The consumer should decide. As I read the existing Bill, it excludes claims which come within the jurisdiction of the Small Claims Court. I do not know very much about the workload of that court nor whether it was in the mind of the drafters that the Small Claims Court can deal comfortably with cases below the jurisdiction. I know of constituents who have used the Small Claims Court very satisfactorily. Apparently they got reasonably speedy access and all that kind of treatment.

If the Minister is giving the option, that is right. If the amount in question is lower than €2,000, to which court does the appeal go in the case of a party who is dissatisfied? If, for example, I opt for arbitration in a claim that is for less than €2,000 as distinct from going to the Small Claims Court, and if I am dissatisfied or if I believe the finding against me was unfair, to which court do I have recourse in that instance?

The person cannot appeal the amount of the award because the arbitration is the final decision. It is only in respect of matters such as setting aside and other issues than one would appeal to a higher court.

In those circumstances it is right that the consumer should be able to choose whether he or she goes to the Small Claims Court or to arbitration.

Amendment agreed to.
Amendments Nos. 28 and 29 not moved.
Section 30 deleted.
SECTION 31.

Amendments Nos. 30 and 31 are related and will be discussed together.

I move amendment No. 30:

In page 14, subsection (1), line 41, after "any" where it firstly occurs to insert "civil".

I am advised that my amendment is necessary to ensure the section is constitutional. Article 37 of the Constitution allows only the determination of matters in criminal proceedings to be made by judicial bodies. I argue, therefore, that it would not be open to the court to allow for arbitration in any criminal matter and for that reason I seek to insert the word "civil".

Obviously I agree with Deputy Rabbitte's point and I shall bring forward amendments on Report Stage.

If the Minister introduces something on Report Stage, I will be pleased.

Amendment, by leave, withdrawn.

I move amendment No. 31:

In page 15, subsection (1), line 4, after "time" to insert "with the consent of the parties".

Will the Minister address this point?

It is the same point but I will also consider it before Report Stage.

In the context of the overall position.

Amendment, by leave, withdrawn.
Question proposed: "That section 31 stand part of the Bill."

The Minister will be familiar from submissions made to him with why it is argued that the Bill may be a better one without this section. If he is considering refurbishing the section, perhaps there will be a different response from those who argue that it may be superfluous.

We are dealing with the Deputy's two amendments in the context of refurbishing the entire section or removing it, if necessary.

Question put and agreed to.
Sections 32 and 33 agreed to.
NEW SECTION.

I move amendment No. 32:

In page 16, before section 34, to insert the following new section:

34.—A consumer arbitration agreement shall not exclude the right of the consumer to have recourse to the District Court.".

I wanted to raise a point about section 32. I give notice that I might examine the issue on Report Stage.

On amendment No. 32, I propose the insertion of a new clause between lines 24 and 25. The purpose is to ensure that in a consumer contract no arbitration clause may prevent a consumer from bringing legal proceedings to the District Court. I wish to hear from the Minister on this point.

I understand the motivation which inspires the amendment and have some sympathy with its thrust. However, a fine balance must be retained between providing appropriate protection for consumers and preserving the integrity of the arbitration process. The amendment I proposed previously to section 30 preserves consumer choice. Some claims do not exceed the jurisdiction fixed for small claims procedures. This is an appropriate limitation and I do not propose to accept the Deputy's amendment. A review is under way to consider a possible increase in the threshold set for the Small Claims Court. I cannot indicate what the current limit is but consideration is being given to increasing it significantly. To some extent, that could take care of some of the Deputy's fears. Only relatively small claims can be dealt with under that procedure.

As the Minister stated, we have discussed the matter in the context of another section and settled for the preservation of consumer choice but I have some reservations about circumstances which might arise where the consumer not having recourse to the District Court might well be punitive from his or her point of view. I have some concerns about this matter on which I will reflect before Report Stage.

I will re-examine the matter between now and Report Stage. Perhaps we could include a cap up to a figure of what we anticipate the Small Claims Court will deal with. A limit of €5,000 has been mentioned. We will examine the matter before Report Stage and may perhaps include such a cap.

That would be acceptable.

Amendment, by leave, withdrawn.
Section 34 agreed to.
Sections 35 and 36 agreed to.
Schedules 1 to 5, inclusive, agreed to.
NEW SCHEDULE.

I move amendment No. 33:

In page 61, after line 16, to insert the following:

"SCHEDULE 6

ENACTMENTS AMENDED

Section 28.

Number and Year (1)

Short Title (2)

Provision Affected (3)

Amendment (4)

No. 3 of 1967

Landlord and Tenant (Ground Rents) Act 1967

Section 17

In subsection (5) substitute“ Sections 20, 22 and 36 of the Arbitration Act 2009 (and Articles 13 and 14 of the Model Law (within the meaning of the Arbitration Act 2009) as given the force of law in the State by that Act) for “Sections 29, 35, 36, 37 and 41 of the Arbitration Act, 1954”.

No. 1 of 1992

Patents Act 1992

Section 74

In subsection (3) substitute “ section 36 of the Arbitration Act 2009” for “section 35 of the Arbitration Act, 1954 (which relates to the statement of cases by arbitrators for the decision of the Court)”.

No. 28 of 2000

Copyright and Related Rights Act 2000

Section 367

In subsection (8) substitute“request the court under section 9 of the Arbitration Act 2009 to decide on the termination of the mandate of that arbitrator” for “apply to the court for the removal of that arbitrator under section 24 of the Arbitration Act, 1954,”.

".

Amendment agreed to.
TITLE.

I move amendment No. 34:

In page 5, line 13, to delete "IN PART".

The amendment is to correct an error in the Bill, as published.

Amendment agreed to.
Title, as amended, agreed to.
Bill reported with amendments.

I inform members that we are losing the services of the clerk, Mr. Ronan Lenihan, for six or seven months. He is being seconded to another job but will be available to help us if we need his assistance during that period. I thank him for all his help and assistance to me and the other members of the committee. We look forward to his return in the not too distant future.

I agree with those sentiments.

I thank the Minister and his officials for attending.

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