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Choice of Court (Hague Convention) Bill 2015 [Seanad]: Second Stage (Continued)

Thursday, 8 October 2015

Dáil Éireann Debate
Vol. 892 No. 2

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  2 o’clock

(Speaker Continuing)

[Deputy Aodhán Ó Ríordáin: Information on Aodhán Ó Ríordáin Zoom on Aodhán Ó Ríordáin] None of these principles is absolute but the overall aim is to find the right balance between flexibility and certainty.

I will now deal in some detail with the key provisions of the convention and highlight certain articles which are probably the most important in terms of its overall content. Article 1 defines the scope of the convention. The relevant case must be international in nature, the choice of court agreement must be exclusive and the subject matter must fall within the range of what is normally understood by the term "civil and commercial". Article 3 sets out the formal requirements that must be satisfied if a choice of court agreement is to fall under the convention. Article 5 is a key provision in that it mandates the court designated in the agreement to hear a case unless the agreement is null and void under the law of the relevant state. Article 5 is complemented by article 6 which requires a court not designated in the agreement to suspend or dismiss proceedings even if it has jurisdiction under national law. There are a number of exceptions to this rule, including, for example, circumstances in which giving effect to the agreement would be manifestly contrary to the public policy of the state of the court seised or where the chosen court has decided not to hear the case. Article 8 sets out the principle that a judgment given by a court of a contracting state which is designated in an exclusive choice of court agreement must be recognised and enforced in another contracting state in accordance with the convention's provisions. By way of exception to this principle, Article 9 sets out the grounds upon which recognition and enforcement may be refused, for example, where there has been procedural fraud or where a party lacked the capacity to conclude the agreement under the law of the state where enforcement is sought.

Article 13 lists the documents which are to be produced when enforcement is being applied for. Article 16 deals with transitional arrangements and sets out the basic principle that the convention will only apply to exclusive choice of court agreements concluded after the convention comes into force for the state of the chosen court. Articles 19 to 22 contain provisions setting out the range of declarations which a contracting state may make. In this regard, Article 19 permits a contracting state to refuse to apply the convention to cases where, except for the choice of court clause, there is no connection between that state and the parties or the dispute. Article 20 allows a state not to enforce a judgment where all of the factors, other than the choice of court clause, are internal to it. Article 21 allows a state to exclude a specific matter from the scope of the convention and the EU has availed of this provision in relation to certain types of insurance contract. Article 22 allows for the making of reciprocal declarations to extend the scope of the convention to cover non-exclusive choice of court agreements. An example of such an agreement would be one which designated the courts of two or more contracting states to the exclusion of all others.

Article 26 deals with the relationship of the convention with other international instruments and is of interest because it deals with the situation where a regional economic integration organisation such as the EU becomes a contracting party to the convention. In essence, where a case is purely regional in terms of the residence of the parties, the convention gives way to any relevant regional instrument which might exist. Furthermore, it will not affect the rules governing the recognition or enforcement of judgments between the member states of the regional organisation. Within the EU the recognition and enforcement regime is much more liberal than that which exists under the convention.

I referred earlier to the fact that Mexico has already acceded to the convention. Both the USA and Singapore have signed it and it is hoped that EU approval will encourage other states to become parties to it. Ratification of the convention by as many states as possible should encourage commercial actors to avail of choice of court clauses when doing business in those states because they can be secure in the knowledge that they can rely upon its provisions. I am pleased to say that Ireland has a solid and deepening trade relationship with Mexico. In 2013, trade between the countries was of the order of €1.277 billion, constituting €928 million in the export from Ireland of goods and services and €349 million in the import from Mexico of goods and services. Ireland's principal merchandise exports to Mexico are soft drink concentrate, chemical materials and products. Ireland's main merchandise imports from Mexico are medical devices, miscellaneous plastics, stents and telecommunications and sound equipment. The value of Ireland's exports of goods to Mexico in 2014 increased by 76%, from €692 million to €1.216 billion.

Of the states which have signed the convention, the USA is Ireland's biggest goods export market, with the value of goods exported in 2014 standing at almost €20 billion. As a trading bloc, the 28 member states of the European Union traded goods worth €515 billion with the USA in the same year. The €54 billion trade between Ireland and the USA in the preceding year, 2013, can be broken down evenly between imports and exports of both goods and services. Ireland's most significant exports to the US are organic chemicals which are mainly used in the pharmaceutical industry, and medical and pharmaceutical products. Ireland's main imports from the USA are royalties and licences, and research and development services. Trade with Singapore is understandably more modest. Trade between Ireland and Singapore in 2013 was valued at a little over €2 billion, which breaks down as €1.359 billion in the export of goods and services, and €717 million in imports. The trade relationship is mainly focused on computers, computer parts and storage devices. The EU trade bloc has a healthy trade relationship with Singapore expressed in trade in goods to the value of some €47 billion in 2013.

As already stated, EU accession to the convention should have a beneficial effect in terms of encouraging other states which are members of the Hague Conference on Private International Law to become parties to it. In addition, the convention is also open to states which are not members of the conference. Even in markets where the EU is already very active, widespread adherence to the convention could have the potential to lead to further growth in trade. To take two examples where Ireland has a specific interest, Ireland's trade relationship with Australia in goods was valued at €802 million in 2013, while trade in goods between the EU as a whole and Australia in that year was valued at €33 billion. Of the EU's €59 billion trade in goods with Canada in 2013, €2.5 billion came from the exchange of goods between Ireland and Canada. Ireland's relationships with both Canada and Australia are not, of course, focused solely on trade but rather are grounded in the deeper ties of family, cultural affinities and shared democratic political traditions.

The details I have just outlined highlight the importance to all our economies of international trade. The progressive elimination of barriers to trade means that now, more than ever, predictability and certainty are vital in the area of business and commercial relationships within Europe and beyond. Business people need to be sure that they can readily enforce contracts and secure judgments for what can, in some cases, be large sums of money. Measures aimed at promoting such security have the twin effects of both protecting existing trade and encouraging new trade. In recent years, much emphasis has been placed at EU level on initiative, Justice for Growth. The Bill and the convention to which it relates are a small but practical example of the way in which justice policy can contribute towards improving the conditions for EU businesses which are active in trading with partners outside the EU.

The EU has exclusive competence in respect of the matters governed by the choice of court convention and Ireland will not be ratifying it in its own right. Nevertheless, the implementing measures which are set out in this Bill are required to ensure that the convention can be applied within our legal system. I look forward to hearing the views of Deputies on the Bill, which I hope can be enacted speedily given that the convention came into force on 1 October last. I commend the Bill to the House.

Deputy Niall Collins: Information on Niall Collins Zoom on Niall Collins Fianna Fáil supports the Bill, which implements a Government decision to agree to the proposals contained in the convention in 2005. The Bill will clarify the rules surrounding international agreements which outline within them which court shall hear a case in the instance of a dispute. Acceding to this convention will promote greater legal certainty for cross-border business and create a climate more favourable to international trade and investment. The increasing codification of international dispute resolution provides the Irish legal sector with an excellent opportunity to become a world centre for the hearing of legal disputes. Given that Ireland is an English-speaking, common law and stable eurozone jurisdiction with strong international relations, the Government should be exploring ways of increasing the commercial opportunities in this sector. The Minister should examine whether it would be possible to create the legal equivalent of the IFSC in Ireland for international legal disputes.

The Hague Convention on Choice of Court Agreements of 30 June 2005, also knowns as the choice of court convention, aims to ensure the effectiveness of choice of court agreements, also known as forum selection clauses or jurisdiction clauses, between parties to international commercial transactions. In order to manage risk, parties often seek to agree in advance on how disputes arising out of transactions between them will be resolved. In some cases, the parties will refer the dispute to arbitration. In others, they will agree to litigate before a designated court. While arbitration agreements in international cases are almost universally recognised pursuant to the rules established by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, choice of court agreements are not always respected under divergent national rules, particularly when cases are brought before a court other than the one designated by the parties.

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