Jurisdiction of Courts and Enforcement of Judgments (Amendment) Bill 2011 [Seanad]: Second and Subsequent Stages
Thursday, 1 March 2012
Dáil Éireann Debate
I thank Deputies for making time available to deal with the Bill today. This is a very detailed and technical Bill. In my view it is important that we have on the record of the House the full detail of what the Bill relates to. I am conscious that officially I have only 15 minutes. I am distributing a speech to Deputies which deals with the totality of the background of the Bill. I have no difficulty with the speech being included in the Dáil Official Report without my necessarily reading it through in its entirety because colleagues will be given it. Much of it is very legally technical and I am very conscious that the Bill is not controversial.
Deputy Alan Shatter: I am anxious that it is in the Official Report. I do not know if that is not the norm. As I understand it, in the past when one ran out of time it was usual to be told that. I ask the indulgence of the House——
Deputy Alan Shatter: The objective of the Bill is to implement the convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters which was signed at Lugano on 30 October 2007. This convention is commonly referred to as the 2007 Lugano convention. The Bill is technical in character and is mainly an exercise in updating and modernising existing arrangements. I feel I can safely say that it is completely devoid of controversy.
The 2007 convention supersedes an earlier convention of the same name which was concluded in 1988 and which has been in force in this jurisdiction since 1993. It involves the member states of the European Union and Iceland, Norway and Switzerland, which latter states are members of the European Free Trade Association or EFTA. The 2007 convention was concluded by the European Community in May 2009 as the Community has exclusive competence for its conclusion. It has since been ratified by all of the relevant EFTA countries. Special arrangements apply to Denmark in the area of judicial co-operation in civil matters. The convention has also been ratified by that country in its own right. A similar ratification requirement does not arise in regard to Ireland or any of the other member states.
Within the EU, matters to do with jurisdiction and the recognition and enforcement of judgments in civil and commercial matters are governed by a council regulation which is commonly referred to as Brussels I. This regulation replaced a 1968 convention which dealt with the same subject matter. There has always been a concern to foster the relationship between the EU and the EFTA countries of Iceland, Switzerland and Norway.
In the judgments area, this was reflected in the fact that the original Brussels convention was paralleled by a subsequent Lugano convention. It is no surprise, therefore, that the Brussels 1 regulation should, in turn, be paralleled by a new Lugano convention, which is the subject matter of this Bill.
Thus, the primary purpose of the new convention is to ensure that the same regime will apply for the recognition and enforcement of judgments moving between these EFTA countries and the Union as at present prevails within the Union for judgments coming from the member states. The 2007 convention replicates the Brussels 1 regulation in all essential elements and this Bill largely replicates the content of the statutory instrument which was used to give full effect to that regulation, which has been in operation since March 2002.
A key objective of the 2007 convention, and the instruments which relate to it, is to streamline the procedure for enabling judgments given in one participating state to be recognised and enforced in each of the other participating states. Linking with this objective is the establishment of jurisdictional rules which determine the courts which are competent to rule on an action. There is a very simple concept which lies at the heart of the 2007 convention, the Brussels 1 regulation and of the earlier conventions. In essence, it is the creation of a legal space among kindred countries which facilitates the provision of speedy and informal procedures which allow judgments in one participating state to be enforced in another participating state.
The recognition and enforcement regime provided by the Brussels 1 and Lugano instruments has the capacity to contribute significantly towards the growth of international trade and investment. A feature of economic development in recent years has been the globalisation of products and markets. Increased international competition and the growth in telecommunications and other technologies mean that measures providing for jurisdiction and enforcement across national boundaries have become more necessary. There is an ever-growing requirement that international contracts can be adjudicated upon easily before the courts of another country and that judgments given on foot of such adjudication can be enforced readily in other jurisdictions. In this context, a system which guarantees the virtually automatic enforcement of foreign judgments is an important and practical tool for anyone doing business across national boundaries. On the other hand, costs, delay and vexatious use of judicial proceedings do not do anything to support effective market conditions.
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. Both individuals and corporate entities need to be sure that they can readily enforce contracts and secure enforcement of judgments for what can, in some cases, be extremely large sums of money. Such measures have the twin effects of both protecting existing trade and encouraging new trade.
The Brussels 1 and Lugano regimes extend to 30 countries. By any standards, this represents substantial coverage in terms of economic markets. However, there is clearly scope for a more global approach which will bring in additional countries including those with which we have close ties, such as the United States, Canada and Australia. Thus, it is to be welcomed that the Hague Conference on Private International Law has adopted a convention on choice of court agreements. That convention aims to ensure that such agreements, when they involve the parties to commercial transactions, can be upheld on a global basis. The likelihood is that this convention will be concluded by the European Union at some time in the future. Even more to be welcomed is the possibility that a more ambitious project will be undertaken within the framework of the Hague conference which will involve the development of a worldwide convention providing for the recognition and enforcement of judgments in civil and commercial areas. This testifies to the fact that there is great potential for expansion and development in the sphere of judicial co-operation in Europe and beyond.
Our own trading links with the EFTA states covered by the Lugano convention are solid. Switzerland is a key market for Irish merchandise exports. Such exports reached over €3.5 billion in 2010, the last year for which figures are available, and mostly consisted of medical, pharmaceutical and chemical products. Our merchandise imports from that country are worth approximately €0.85 billion annually. Services exports to Switzerland are also very significant, having reached an annual total of €1.8 billion in 2010. Services imports for the same year totalled €1.6 billion. Deputies may be surprised to realise that our trade engagements with Switzerland are running at over €7.5 billion per annum on average. It is also worth noting that Switzerland is a major source of foreign direct investment in Ireland.
Norway is a very significant supplier of oil to the Irish market, to the value of about €1 billion in the last year and Irish exports to that country reached €1.2 billion last year. The levels of trade with Iceland are, as one might expect, more modest.
The issue of international jurisdiction and of the enforcement of judgments is also of ever-increasing relevance to the lives of ordinary citizens, outside the trade context. For example, individuals may need to seek redress in an employment context. If they are injured while abroad, they may need to take a case in another jurisdiction, and if a judgment is obtained in their favour, they may need to take enforcement proceedings here. Conversely, if a civil case is brought before the courts of this State, there may be a need to seek to enforce any ensuing judgment in another jurisdiction. Inevitably, as people become more mobile, international litigation is likely to grow. Against that background, the predictability and certainty which is offered by the Brussels 1 and Lugano regimes are of considerable value.
Turning to the specific provisions of the 2007 convention, the general rule of jurisdiction in the convention is the same as it was in the 1988 Lugano convention. In essence, it requires that a defendant is to be sued in the country where he or she is domiciled. For the purposes of the convention’s operation in Ireland, domicile in this context equates with ordinary residence in so far as a natural person is concerned. This rule applies regardless of whether a person is a citizen of the relevant state.
However, in certain cases under the convention, a person can take proceedings in the courts of his or her own country even though the defendant in that action may be domiciled in another state bound by the convention. In particular, there are certain protective rules in this respect covering consumer, insurance and employment contracts. In such cases the plaintiff is considered to be in a vulnerable position vis-à-vis the other party and is, therefore, afforded a degree of latitude and protection. Thus, in the case of consumer contract provisions, for example, if an Irish person purchases goods in a state bound by the convention and those goods subsequently turn out to be faulty, or are not delivered, the 2007 convention enables those consumers to bring the action before the Irish courts, should they so wish.
Alongside, and as an alternative to the general rule of domicile, the 2007 convention keeps unchanged the existing structure that provides for special jurisdictions in a number of areas such as in matters relating to contract, maintenance and tort. These jurisdictions are set out in Articles 5 to 7 of the convention. These special rules recognise a link between the dispute itself and the court which may be called upon to hear it. They come into play only where there is a sufficient connection in terms of the proceedings between the dispute and the court before which the matter is to be brought, from the point of view of the gathering of evidence or the conduct of the proceedings, or in order to secure better protection of the interests of the parties against which the proceedings are directed.
The simplification of the procedures for the recognition and enforcement of judgments that fall within its scope is a fundamental aspect of the Lugano convention. In this regard, all decisions given by a court or tribunal, whatever they may be called, are judgments, and the term also includes orders on costs or expenses made by an officer of the court, as happens in some European systems.
Provisional and protective measures also fall within the definition of “judgments” if they are ordered by a court, provided that in the state which gave the judgment both parties were first given the opportunity to be heard. The judgments of the Court of Justice or of other European Community law courts also come within the scope of the 2007 Lugano convention, as the term “state bound by this convention” may also mean the European Community.
The changes made in the 2007 convention to the rules on the recognition and enforcement of decisions are based on the view that the intervention of the authorities of the state of enforcement can be scaled down and that the declaration of enforceability of a judgment can be reduced to little more than a formality. This position is supported by an examination of the national case-law on the earlier conventions, which shows that appeals filed against declarations of enforceability under the Brussels and Lugano conventions are very small in number.
There is no change to the convention’s basic provisions on legal aid. Thus, an applicant who in the state of origin of the judgment, has benefited from complete or partial legal aid, or exemption from costs or expenses, is entitled to the most favourable legal aid, or the most extensive exemption from costs or expenses, provided for by the law of the state addressed. However, the application of this provision has a wider scope than obtained previously, as it covers the entire enforcement procedure, including any appeal proceedings. In this context, the grounds for legal aid or exemption from costs or expenses are irrelevant. They are determined by the law of the state of origin of the judgment, and are not subject to review. In this regard, a certificate issued by the authority that gave the judgment for which recognition and enforcement are sought must indicate whether the applicant has benefited from legal aid, and this is sufficient to allow the applicant to qualify in the state addressed.
The Bill is entirely technical in nature and I will now deal briefly with its contents. Section 1 inserts a new Part IIIA into the Jurisdiction of Courts and Enforcement of Judgments Act 1998, which deals with the Brussels 1 convention and the original Lugano convention. The new Part deals exclusively with the 2007 Lugano convention. It also inserts the 2007 Lugano convention as a Schedule to the 1998 Act.
Section 20C provides that judicial notice shall be taken of the convention and of the explanatory report on it prepared by Professor Fausto Pocar. The effect of this section is that the courts are taken to know of the provisions of these texts without the requirement to have them proven in evidence. Judicial notice is also to be taken of relevant court decisions which, in this context, include decisions relating to the old Lugano convention and to the Brussels 1 regulation.
Section 20D authorises the Minister for Foreign Affairs and Trade to make certain orders relating to convention matters, most notably that a specified state is a state bound by the convention, or that particular declarations or communications have been made. While such orders are in force, they are of evidential value.
Section 20E provides that an application under the convention for the recognition and enforcement in the State of a judgment shall be made to the master of the High Court for determination under the convention. As a general principle, convention judgments are entitled to recognition without any special procedure being required. In terms of enforcement, once the prescribed formalities have been completed the judgment is declared enforceable immediately without any review under Articles 34 and 35 of the convention, which set out the grounds for non-recognition.
The main grounds for denying recognition, which will only come into play if the initial decision by the master is appealed to the High Court, relate to public policy and to an absence of fair procedures. The latter arises mainly in default cases where the defendant was not served with the document instituting the proceedings, or with an equivalent document, in sufficient time and in such a way as to enable them to arrange for their defence, unless they failed to commence proceedings to challenge the judgment when it was possible for them to do so.
Section 20F is concerned with the enforcement of convention judgments. In broad terms it provides that a judgment, other than a maintenance order, in respect of which an enforcement order has been made, shall be of the same force and effect as a judgment of the High Court, and that proceedings for its enforcement may be taken accordingly.
On maintenance orders, provision is made in section 20G for the enforcement of such orders by the District Court. An exception is made for cases where substantial arrears are involved as, in such a case, the enforcement machinery of the High Court might be more appropriate. This section was amended on Seanad Committee Stage to take account of the change to section 8 of the Enforcement of Court Orders Act 1940 which was introduced by the Civil Law (Miscellaneous Provisions) Act 2011.
Section 20H deals with provisions in enforcement orders for the payment of interest on judgments and for the payment of costs. While the convention is silent on the question of interest, clearly the spirit of the convention requires that foreign judgments should carry interest as provided for by the law of the state in which the judgments were made. When a foreign court makes a judgment, it will either make specific provision for the payment of interest in the judgment itself or it will have made the judgment on the basis that its national provisions on interest will apply. This section also contains provisions dealing with the payment of costs in applications for enforcement orders and with the payment of interest on those costs.
Section 20I provides for fixing the currency and rate of exchange which should apply in the case of enforceable maintenance orders. Sums required to be paid in respect of such orders are to be paid in the currency of the State. If the amount stated in the maintenance order is other than in the currency of the State, it will be converted into the currency of the State on the basis of the exchange rate prevailing on the date of the making of the enforcement order. A certificate signed by an officer of an “authorised institution”, as defined in subsection (4), stating the prevailing exchange rate on a specified date, will be evidence of the facts contained in that certificate.
Section 20J deals with the proof and admissibility of documents which must be produced when applying for the recognition or enforcement of a judgment given in another state bound by the convention. This is a technical provision to avoid the need to take up court time in formally proving validity of the documents concerned.
Section 20K deals with the granting by the High Court of provisional measures, which include protective measures. Most commonly, such measures would be in the form of an injunction to restrain a defendant from transferring assets out of the jurisdiction in order to ensure that they would be available to satisfy any resulting judgment of the court seised of the substantive proceedings. Subsection (1) of this section provides that the High Court will have the power to grant the provisional measures normally available to it, even if the substantive matter of the case falls to be heard by the courts of another state bound by the convention.
This relates to Article 31 of the convention under which application may be made to the courts of a state bound by the convention for any provisional, including protective, measures as may be available in its law, even where jurisdiction as to the substance of the matter lies with the courts of another state bound by the convention. The purpose of this article is to allow, for example, a foreign plaintiff who is proceeding against a defendant in Switzerland under the terms of the convention, to freeze any assets which that defendant may have in another state bound by the convention. Thus, when judgment is given, that plaintiff can succeed in enforcing the judgment in that other state in circumstances where the defendant has no assets, or has insufficient assets, in Switzerland to meet the claim.
The provisional measure most likely to be availed of is the Mareva injunction, which is used to restrain the disposal by the defendant of his or her goods or their removal from Irish jurisdiction so as to defeat any future judgment that may be given against him or her by the court seised of the substantive proceedings.
Subsection (2) gives the High Court discretion to refuse to grant provisional measures pursuant to subsection (1), if it thinks that the grant of such measures would be inexpedient. The purpose of the subsection is to make it clear that the High Court is not compelled by subsection (1) to grant provisional measures. Subsection (3) provides that an application to the Master of the High Court to grant an enforcement order may include an application for any protective measures which the High Court has power to grant in proceedings that, apart from this Act, are within its jurisdiction. This subsection is subject to Article 47(3) of the convention, which safeguards the rights of the defendant pending the elapse of the time during which an appeal can be made.
Under subsection (4), when an enforcement order is made, the Master of the High Court does not have discretion to refuse an application for protective measures, provided the measures sought are measures which the High Court would have power to grant in other proceedings which fall within its jurisdiction. This follows on from Article 47 of the convention, which specifies that a person is automatically entitled to obtain protective measures on the granting of an enforcement order.
The distinction between provisional and protective measures can be summarised as follows. Provisional measures can be applied for at any time and, under Irish law, one can apply for an injunction provided one has issued or is about to issue an originating summons. On the other hand, the protective measures referred to in Article 47 can only be applied for and obtained in the context of the granting of an enforcement order, the judgment itself having already been given in the state of origin.
Section 20L deals with domicile for the purposes of the convention. As already mentioned, domicile is the connecting factor used in the convention to link a person with a state for the purposes of grounding jurisdiction. The convention does not define “domicile” but provides, in Article 59, that it is to be determined in accordance with the law of each state bound by the convention. In Ireland, domicile would normally be understood in the common law sense which, in broad terms, means that an individual is considered to be domiciled in the country in which he or she intends to reside permanently or for an indefinite period. However, for the purposes of this convention and of equivalent instruments, domicile is assigned a particular meaning which assimilates it more closely with ordinary residence. The convention itself contains autonomous rules on the domicile of companies or other legal persons. The legislation itself does not affect the general concept of domicile under Irish law as applied in other circumstances.
Section 20M sets out the venue at which certain convention proceedings may be brought in so far as the Circuit and District Courts are concerned. This is necessary because certain articles of the convention give a general jurisdiction to the courts of the state where the defendant is domiciled. However, they do not establish venues for the lower courts and that matter falls to be determined by national law.
Section 20N makes it clear that Part III of the 1998 Act, which relates to the 1988 Lugano convention — the repeal of which is provided for in section 3 — only retains a relevance as set out in Article 65. Article 65 provides that the convention shall supersede conventions on the same subject matter concluded between states bound by the convention, but it is subject to some transitional provisions set out in Article 63(2), and to Articles 66 and 67 which cover the relationship between the convention and other international agreements, as well as Community instruments such as the Brussels 1 regulation.
As I said at the outset, this Bill is wholly uncontroversial. However, this does not mean that it is devoid of importance or significance, nor does it mean that it is not complex. It is both a product of and a contributor to the ever-increasing international ties which bind us to other countries, particularly in the commercial sphere. I look forward to the comments of Deputies and I commend the Bill to the House. I thank Opposition Deputies for the additional time required to enable me to place on the record of the House the relevant background information concerning this piece of legislation and the substance within it.
Deputy Dara Calleary: The last paragraph of the Minister’s speech is probably the most important one. The Bill is complex and boring but it is important, particularly for a small open economy like ours, in order to bring a level of confidence to credit and the flow of trade that depends on such credit. As the Minister said, maybe its significance for civil matters can also be lost when one looks at trade agreements. We will be supporting all Stages of the Bill. When one considers the complexity of legal systems across Europe, including EFTA, and what this Bill is trying to achieve, those in the Department and others involved in drafting this legislation deserve our compliments. There was probably not a queue of officials wanting to get involved in this Bill. It is important legislation which Fianna Fáil is happy to support and see all Stages through the House today.
Deputy Jonathan O’Brien: I will be just as brief. As the Minister for Justice and Equality and Deputy Calleary said, this is a complex and technical Bill but has the full agreement of all Members. Listening to the Minister’s contribution, one got a sense of the Bill’s importance. While it is not controversial, it is important legislation. Sinn Féin will also be supporting all Stages to be taken today and has not tabled any amendments.
Deputy Mattie McGrath: The Technical Group supports this Bill. I welcome it as necessary and technical legislation in our ever-changing society and trading markets, especially in this time of deep recession across the world and certainly in Europe. One could say Ireland is a small and isolated country. For years, however, we thought Europe regarded us as having punched above our weight. Now we have newer trading partners as seen with the recent visit of the Chinese Vice President. Accordingly, it is important safeguards are in place for any persons or companies doing international business and trade or international companies trading here to ensure they can legally pursue payments they are owed that may not have been paid.
I am concerned with section 20H on the payment of court costs and the interest on settlements, particularly in Revenue cases. From reading newspapers, one sees many instances where up to 60% of a settlement made by an individual or business with the Revenue was interest and penalties. We need to be careful with this because in some cases it may not be that those involved did not want to pay. Some people may have problems with paying for goods or may be in a difficult trading position. It should not be a gravy train for anyone either. There should be some cap on these charges because, if they applied over several years, they could be very punitive and this concerns me.
Section 20J deals with avoiding the need to take up court time. Everyone who has had to go to the Circuit Court or High Court knows it takes for ever and a day. If one has a complex case, one has little chance of getting it dealt with in the Circuit Court in the regions because the court only sits for a certain number of days — four I think — which means cases can go on for years.
I welcome the section on the prevention of the removal of assets. Whether it is a case of paying maintenance or trying to oblige, or not to oblige in some cases, under a maintenance order, it is vital some measures are in place to ensure assets are not transferred. We saw what went on in the financial industry in the past. It is an important provision because some people can have clever and ingenious ways of moving goods and assets resulting in no recourse to justice for reparation or the payment of goods.
Minister for Justice and Equality (Deputy Alan Shatter): I thank the Deputies opposite for their support for what is very important and technical legislation which will ensure mutual enforcement of judgments with the countries to which the Lugano convention applies. The Bill itself, as I said, is not controversial.
In the context of the matter raised by Deputy Mattie McGrath, it is important that where someone is successful in litigation, they can recover costs against the unsuccessful party. That applies to domestic and international litigation. It is the great benefit, if one is talking in the area of commercial judgments, if an individual based in this country or an Irish company is successful in litigation with a foreign company or individual, that they should be able to cover any legal costs they incurred in circumstances they were proved right in the court action they took, in circumstances in which their rights had been violated or injuries had been done to them, or in circumstances in which there had been a breach of a commercial arrangement.
We have mechanisms, as do other countries, for adjudicating on legal costs. As Deputy Mattie McGrath knows, the Legal Services Bill, of which he was critical, has been brought before the House and contains substantive provisions to provide greater transparency in the area of legal costs and to provide an updated method for legal costs adjudication. It is important to remember when legal costs are ordered, the person who got the benefit of that order was successful in litigation and may have been forced to go to the courts to protect their circumstances because they had been violated by the unsuccessful party to that litigation. They have to have the means in justice to recover their legal costs.
It is also important an interest penalty is in place. Where orders for costs are made, if they are disobeyed by the litigant against whom the order was made, or if they fail to pay the sum agreed by way of legal costs for the successful litigant, or if they defy and ignore a legal costs adjudication by, currently, the Taxing Master, by an appeal in the courts or, in future, by the legal costs adjudicator, there must be some pressure they can be put under to ensure they fulfil their legal obligations, do not defy the courts and that innocent litigants who have been forced to resort to the courts to protect their position can recover the costs they have already paid for the litigation in which they have been forced to engage. The interest penalty that is imposed is designed to provide an incentive to those against whom orders for costs have been made to meet their obligations and where they fail to do so on time to compensate the successful litigant by way of an interest payment where appropriate for any failure to comply with court orders.
I thank Deputies for giving me some additional time to put the background to the Bill on the record of the House. I agree with Deputies opposite. I thank my officials for the work done on what is complex legislation, the detailed manner in which they assisted its explanation in my Second Stage speech and in the explanatory memorandum, the latter which is helpful in working through the mysteries of what this is all about.
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