SECTION 185.

Question proposed: "That section 185 stand part of the Bill."

This is an interesting section. Could the Minister explain a little about this? This involves the enforcement of these provisions outside the State. What instruments exist in international law for the enforcement of these orders? Obviously, there are going to be cases where some of the creditors or some of the members of a company will be resident outside the State, or a company may own subsidiaries which are domiciled outside the State, while the company themselves are domiciled within the State. It would appear that there is going to be quite a requirement for mutual enforcement of orders of this kind and for having similar provisions in regard to the reconstruction of companies to those applicable in other countries. To the best of my knowledge there are no Council of Europe Conventions dealing with this subject. In fact, I do not think EC legislation in itself would be sufficient because the EC is small, comparatively speaking, whereas there are other bodies whose conventions are adhered to not only by the Council of Europe members but also frequently by Canada, the United States and other countries. It is important also that we use the same criteria. It would not do, for instance, to have enforced a reconstruction on the principal company in a fashion that would be contrary to the law that would be accepted in another member state in respect of a subsidiary of that company which was located in another state. How is that going to be overcome?

I want to elaborate on section 185 for the benefit of the Committee. The inclusion of this section reflects the growing tendency of national courts to recognise each other's orders. This has increasingly become the case nowadays arising from international conventions on bankruptcy, mutual assistance on enforcement of judgments and so on. An example of the practical effect of this new provision would be where the court makes an order in one of the recognised countries, under subsection (3), for the reorganisation or reconstruction of a company in that country. If some of the parties involved in the proposed reorganisation had moved to this country to avoid the effects of the court order, then on application to the High Court in Ireland, the court here would be able to assist the court in putting the order into effect. It will be noted that the powers in this section are permissive only. Thus, if situations arise where the courts do not deem it desirable to enforce foreign court orders, there will be no obligation on them to do so. In any event, it is highly unlikely that, in considering any application under this section, the Irish courts would have regard to the effect the making of such an order would have on any Irish interests involved in dealings with the party concerned.

The degree of mutual co-operation that now exists between courts has increased enormously since the 1963 Act was passed. However, even in the 1963 Act, a provision along the lines of section 185 was included in relation to company liquidations. Section 250 of the 1963 Act allows the High Court to enforce a winding up order made in a country recognised for the purpose of that section by the Minister. In fact an order was made in 1964 which provided that the countries to be deemed as recognised for the purpose of the section were Great Britain and Northern Ireland. Section 426 of the UK Insolvency Act, 1986, contains a similar reciprocal recognition provision. As well as generally enabling the courts to act on an order made by a court in another recognised country the section includes some technical provisions to deal with an application and, with the recognition of other countries, by an order made by the Minister.

Is the Minister saying that so far the only countries that have been recognised for the purposes of mutual enforcement in regard to winding up are Great Britain and Northern Ireland and that no other State has been recognised for that purpose?

Under that particular provision they are the only jurisdictions that have been recognised.

Surely the Minister will agree that in the context of 1992, with transboundary takeovers applying right across the European Community, it is not sufficient to have mutual recognition with Britain. That is responsible for only about 30 per cent of our total trade and the remaining 70 per cent is elsewhere. Surely if this section and this Part is to have any effect we would want to have much more mutual recognition than that.

Generally, it is a reciprocal arrangement between countries. I presume that, when it arises, such an order could be made at a particular time. Those are the facts of the situation under the 1963 Act.

Have the Minister's Department made any proposals, either in the European Community to the Commission, or in the Council of Europe at the Committee of Ministers, to look for conventions to be adopted concerning the mutual recognition of winding up orders in regard to companies or in regard to reconstructions of companies within legislation which we are putting though here? Is it the Government's policy to seek such a system or convention governing mutual recognition?

I am not aware of any such application being made, but, as you know, there is a major amount of work going on in company law in the EC in relation to harmonisation. Issues like these will probably arise in that context. I am not aware of any initiative taken so far in relation to this particular area by our representatives.

In view of the fact that the Government do hold the Chair of the Community, and that we are not very far away from 1992, the year which is supposed to herald an era in which there will be more transboundary takeovers of companies, would the Minister agree to raise, at the next appropriate meeting of the Council of Ministers, the possibility that there would be European-wide action on mutual recognition of orders of this kind?

I think if the Bill were passed we would be in a stronger position to start putting forward such initiatives at the appropriate time, but we are in a very weak position since this legislation is not enacted. We have provisions under this section to take such action. As you know, there are quite a number of officials at the company law level, and our own official, Declan Purcell, is attending a meeting in Brussels today or tomorrow. I will request the appropriate officials to have a look at the points raised by Deputy Bruton. I agree with the Deputy that it would be an important initiative.

On this section we discussed at some length what jurisdictions are recognised in the courts and that is specifically what the section is about. If we are going to get into a discussion about the mutual recognition of foreign judgments we are outside the ambit of the Companies Bill. Even, specifically, on winding up orders, what is being stated here is that if a subsequent convention were to be passed and agreed on it would be covered by the section. As of now the position is clear as regards Britain and Northern Ireland, but what you are saying is that with European integration coming onstream, all those matters are going to have to be ironed out. But, specifically on the section, I think we have debated exhaustively the meaning of the provision and the scope of its application. At the moment it is not wide but, more than likely, it will be a lot wider when directives on company law which are presently under discussion are enforced. I do not think we can bring it any further than that.

The Minister has given an assurance that he will ask his officials to raise this issue at European level, with a view to seeing whether or not the Commission might consider it worthwhile bringing forward proposals. That is satisfactory. I will, for my part, raise this matter in the Council of Europe.

Deputy Bruton may have gone slightly beyond what I said, that I would request officials to examine the request he has made with a view to putting forward proposals. There is an enormous amount of discussion and debate going on at technical level at the moment, in relation to company law. I would have to find out first of all the exact extent, if this has been considered, and I will bring Deputy Bruton's views to the attention of the officials.

Question —"That section 185 stand part of the Bill"— put and agreed to.