Richard Bruton (Dublin North Central, Fine Gael) | Oireachtas source

Irish statute law and EU law recognise simple retention of title clauses of the kind set out in the amendment. The courts have also upheld such clauses. It is one thing for the law to uphold certain forms of retention of title clause freely agreed by contracting parties but quite another for it to insert a mandatory title retention clause into commercial contracts.

To the best of my knowledge, no other jurisdiction has introduced a legislative provision of the kind. The aim of the Bill’s provisions on grocery goods is to achieve a proper balance in the commercial relations between supplier and retailer but that should not be done by introducing a potential imbalance into the relationship between the supplier, retailer and other parties. The proposed amendment would affect the interests of third parties, including the Revenue Commissioners, employees and unpaid service providers who have no equivalent option to take back services that have been provided by reducing the pool of assets available for distribution to other creditors of an insolvent buyer and, effectively, permitting an unpaid seller to jump the queue of creditors.

The potential for a retention of title clause to lead to inequity between creditors has in fact led a number of jurisdictions, including the United States, Australia and New Zealand to treat such clauses as a form of security interest against third parties that must be registered by the seller. The Law Reform Commission proposed a similar system of registration and other conditions regulating retention of title clauses, although its recommendations were not implemented.

In its comprehensive report from 2011 on the legislation governing the sale of goods, the sales law review group also concluded that because of their impact on third parties who had no say in the contract, any reform of retention of title clauses had to be considered in the context of a broader reform of the law relating to personal property security interests. Although I have some sympathy with the aim behind the amendment I am not in a position to accept it.