The convention provides panels of conciliators and arbitrators whose services may be called upon by investors and states. The basic principle is that investment disputes should be settled by conciliation and arbitration but ratification of the convention by a state does not mean that that state is thereby obliged to submit any dispute with a foreign investor to arbitration. Resort to arbitration in relation to any particular matter is wholly voluntary. However, once consent to arbitration has been given it cannot be withdrawn and a subsequent refusal by one party to co-operate will not prevent the other party from proceeding with the arbitration.
Most of the provisions of the convention deal with the organisation of the International Centre and the regulation of the conciliation and arbitration proceedings, and do not need implementing legislation. There are, however, important provisions relating to the effect of an award and the enforcement of monetary obligations imposed by an award which have to be covered in the Bill. Article 54 provides that each contracting state shall recognise an award as binding and enforce the pecuniary obligations imposed by an award as if the award were final judgment of a court in that state. Section 16 of the Bill gives effect to this article by providing that the pecuniary obligations imposed by an award shall, by leave of the High Court, be enforced in the same manner as a judgment or order of the High Court to the same effect. Where leave is so given, judgment may be entered in for the amount due or outstanding under the award.
In accordance with Article 55 the obligation to enforce an award will not derogate from the law in force in any contracting states relating to immunity of that state or of any foreign state from execution. In theory, therefore, a state against whom an award has been given could invoke immunity from execution of an award in a country which provided such immunity and the convention provisions have been criticised because of that. It is, of course, impossible to ensure fully that sovereign states will live up to their obligations and the convention goes as far as is practicably possible to ensure that awards are enforced. Any refusal by a contracting state to honour an award given against it would, of course, be a breach of its obligation under the convention to treat the award as binding and this could give rise to action on the international plane by the investor's home state on behalf of the investor.
While Part III of the Bill contains grounds on which enforcement of a New York Convention award can be refused, there is no provision in Part IV for refusing to enforce a Washington Convention award. The reason for this is that the New York Convention deals with awards that can arise in any area of dispute and from different arbitration systems—some of which might have features unacceptable to others. It is necessary, therefore, to interpose at the enforcing stage a means of ensuring that the basic requirements of justice have been complied with. The Washington Convention, on the other hand, deals with awards of a strictly limited class. Moreover, they can arise only from an arbitration process regulated by the convention itself which contains adequate safeguards to ensure compliance with these basic requirements. It is because of this that the convention can provide that an award is to be enforced as if it were an order of a domestic court.
If any dispute arises as to the validity of an award, that matter must be taken up with the International Centre in accordance with the provisions of the convention. To cover any such case, section 17 of the Bill provides for the adjournment of an application for enforcement pending the settlement of any claim for the revision, interpretation or annulment of an award.
Article 17 of the convention provides that any deficit incurred in the operations of the international centre shall be borne by the contracting states. In fact, no such deficit has so far arisen. The purpose of section 14 is to give authority for the payment of any contribution under Article 17 or for payment of any administrative expenses that might be incurred by the Minister for Finance. Such administrative expenses, for example, could arise from participation in the activities of the Administrative Council of the international centre, which is representative of all contracting states, or of committees appointed by that council.
The possibility of a direct charge on public funds under Article 17 of the convention makes section 13 of the Bill necessary. The Constitution provides in Article 29.5.2º that the State shall not be bound by any international agreement involving a charge upon public funds unless the terms of the agreement have been approved by Dáil Éireann. Since a charge to public funds will not arise under the New York Convention, a provision similar to section 13 is not required in relation to that convention.
Section 15 provides, in subsection (2), that the 1954 Arbitration Act shall not apply to proceedings under the Washington Convention. However, subsection (1) (a) allows certain provisions of that Act to be applied by order of the Minister for Justice to proceedings under the convention. An order of this nature might be made if arbitration proceedings under the convention were to take place here. The convention provides in Chapter VII that conciliation and arbitration proceedings may be held at the seat of the International Centre, which is at Washington, or elsewhere. Subsection (1) (b) permits the provisions of the Foreign Tribunals Evidence Act, 1856, to be applied by ministerial order to proceedings under the convention. Such an order would be made if it became necessary to take evidence in this country for the purpose of an arbitration hearing in another country.
The Washington Convention has been generally regarded internationally as a worthwhile development. It has been signed by 80 and ratified by 75 states and provision for the use of its facilities has been inserted in an increasing number of bilateral treaties dealing with investment.
Part II of the Bill deals with the power of a court to stay proceedings in a dispute which was the subject of an arbitration agreement. Paragraph 3 of Article II of the New York Convention requires a court, at the request of one of the parties, to stay the proceedings and refer the matter to arbitration unless the agreement is null and void, inoperative or incapable of being performed. There is a somewhat similar requirement in the 1923 Geneva Protocol on Arbitration Clauses to which effect was given by section 12 (2) of the Arbitration Act 1954. Articles 26 of the Washington Convention provides that consent to arbitration shall exclude any other remedy unless otherwise stated. Part II gives effect to the provisions of both conventions in this regard by requiring a court to stay the proceedings except in the circumstances set out in section 5.
The scope of Part II is not, however, confined to foreign arbitration agreements. It applies to domestic agreements as well. At present a court has a discretion under section 12 (1) of the 1954 Act on whether to stay proceedings in a dispute covered by a domestic arbitration agreement whereas in the case of a foreign agreement section 12 (2) of the same Act obliges the court, except in certain circumstances, to stay the proceedings. Domestic arbitration agreements are therefore being assimilated to foreign agreements in this regard. I think it is desirable in principle that parties should be held to their agreement. Of course any party to arbitration proceedings here is entitled to require the arbitrator to state a case on a question of law for the decision of the High Court. This right is not affected by section 5.
This is, I think, a non-controversial Bill which will, I hope, commend itself to Deputies on all sides of the House. Because of its technical nature it is, perhaps, more a Committee Stage Bill but if there are any particular aspects on which Deputies would like clarification, I shall endeavour to deal with those aspects in the course of my reply.