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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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(Speaker Continuing)

[Deputy Niall Collins: Information on Niall Collins Zoom on Niall Collins] The choice of court convention seeks to rectify this situation, thereby promoting greater legal certainty for cross-border business and creating a climate that is more favourable to international trade and investment, as underscored by the International Chamber of Commerce.

The convention contains three basic rules that give effect to choice of court agreements: the chosen court must in principle hear the case under Article 5; any court not chosen must in principle decline to hear the case under Article 6; and any judgment rendered by the chosen court must be recognised and enforced in other contracting states except where a ground for refusal applies under Articles 8 and 9.

The convention applies to choice of court agreements "concluded in civil or commercial matters". It excludes consumer and employment contracts and certain specified matters. The reason for these exclusions is, in most cases, the existence of more specific international instruments and national, regional or international rules that claim exclusive jurisdiction over some of these matters. The convention applies to "exclusive" choice of court agreements. An agreement designating one or more specific courts in a contracting state is deemed to be exclusive unless the parties have expressly provided otherwise. In addition, a contracting state may declare that it will recognise and enforce judgments given by courts designated in a non-exclusive choice of court agreement.

Fianna Fáil supports the Bill. Any measure that helps international parties to resolve disputes and assists trade, commerce and investment is to be welcomed.

Deputy Pádraig Mac Lochlainn: Information on Pádraig MacLochlainn Zoom on Pádraig MacLochlainn Sinn Féin welcomes the Bill. It should ensure that the Hague Convention on choice of court functions smoothly in this jurisdiction. It should increase legal certainty in commercial relationships involving EU and non-EU parties. Party autonomy in a choice of forum promotes business-to-business efficiency by providing certainty and predictability in international transactions. When each party to a private transaction has the same framework within which the agreement will be understood, jurisdictional disputes should be absent, thus providing associated time and efficiency savings.

  The fact that enforcement of foreign rulings should follow the adoption of this legislation should increase the confidence of parties that undertake international transactions in a commercial setting, at least with states that are party to the convention. Currently, arbitration has a monopoly in international transactions, given the worldwide enforceability of arbitral awards. The potential viability of the court system route provides competition. While large companies may prefer the arbitration route, there is some indication that small to medium-sized enterprises, SMEs, prefer the traditional judicial route. As such, this Bill is a welcome one for SMEs that trade with partners outside the EU and may encourage those that do not to explore the possibility of doing so.

  Unfortunately, our country is separated into two jurisdictions. There are a number of actions that this Government could undertake to promote transactions across borders beyond the inter partes legal certainty provided by the convention, which I will address presently. However, I wish to highlight some concerns that centre on the convention itself first.

  The convention mirrors that of the New York convention on arbitration in seeking a stable and predictable environment in which parties might have some predictability as to forum in the event of dispute. Since that convention has been ratified or acceded to by 158 countries, this convention has some way to go. It is important to note that enterprises must become aware of whether their trading partners have acceded to the treaty. The current legal framework is not as extensive as the New York convention. For example, although the US has signed the convention, there may be clashes between state and federal level that impede progress towards ratification. There remains the possibility of parallel proceedings or inconsistent judgments if a non-chosen court determines a choice of court agreement is invalid and a chosen court determines otherwise. The public policy ground for exception under Article 9 of the convention may be open to abuse if the grounds on which a court refuses to recognise a judgment are based on an uncharacteristically wide interpretation of public policy.

  There are two further problems that I wish to address that touch on the principles underlying the Bill, the first of which is the ongoing reputational damage caused by this and the previous Governments' inaction in implementing the recommendations made by the Committee on Judicial Conduct and Ethics almost 15 years ago. On Monday, our Chief Justice, Ms Justice Susan Denham, observed that the failure to set up a judicial council was affecting the international reputation of the administration of justice in this State. While a judicial council Bill is expected to be published within the current Dáil session, I am worried that it will not take full account of Ms Justice Denham's concerns.

  The adoption of the Arbitration Act 2010 was specifically geared towards attracting arbitration business to Ireland, particularly Dublin. There is an opportunity to attract legal business to the State via this Bill, but the inaction and glacial response to setting out a judicial code of conduct hampers this. Speaking on the Bill in the Seanad, the Minister of State, Deputy Deenihan, argued that a "company may be reluctant to do business with a particular state because it either mistrusts or is unfamiliar with its legal system". Conversely, a company that trusts a particular court system may be "emboldened to proceed". Why would parties seeking legal certainty and confidence in a legal system agree that the Irish courts should be the forum in which a dispute is heard when they cannot be confident in the training that Irish judges receive? They would not. The rational actor will avoid such fora and seek one with a better reputation.

  Last week, I mentioned that it was the direct decisions of this Government that negatively influenced certain crime figures. Those decisions are damaging the reputation of the legal system and preventing innovative business activity around legal services from taking advantage of the certainty provided by the Hague Convention. Given the reputational damage the Government continues to cause, it is unlikely we can compete with other more advanced and trustworthy states in attracting legal business.

  My next point is based upon the principles that underlie party autonomy in choice of court. Fundamentally, this is based on the idea that business opportunities can arise on the ground that the players involved in a market are best placed to take advantage of it. As such, they may privately order their relations to mutual advantage while taking account of mandatory law. As long as mandatory law is respected, hurdles should be removed, especially in respect of the neglected SME sector.

  One of the greatest hurdles confronting Irish SMEs is the continuing operation of partition. The Government should follow the logic of the Hague Convention on choice of court and encourage commercial trade by following the advice in my party's 2014 document on encouraging SMEs. Such advice includes a Border development zone to harmonise trade and maximise returns for Border businesses and the island economy, and a trade forum to bring together SMEs to address common challenges, including finance, logistics and business support, that would make use of local and external expertise. This should include information on the credit appeals process in both jurisdictions, using InterTradeIreland as a facilitator. We must upgrade island-wide infrastructure. This means completing the A5 and the Narrow Water bridge and developing an island-wide rail network. We must ensure the Oireachtas and the Assembly agree a strategy to get credit card and mobile telephone companies to remove the Border from their roaming charge systems and cross-Border administration costs and treat the island as one entity for cost purposes. We must re-examine the regulatory barriers to doing business on the Border. InterTradeIreland has conducted studies on this suggestion and made a number of recommendations, which can be reviewed and implemented. We should remove impediments to businesses when transferring staff North and South by organising direct co-ordination between the relevant Departments, for example, the Revenue Commissioners, to make it easier for employees to work on either side of the Border.

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