David Stanton (Cork East, Fine Gael) | Oireachtas source

I thank the committee for its willingness to deal with this matter today. I appreciate that the issues before us do not, at first glance, seem to be the most interesting or significant by contrast with those the committee normally deals with. As members know, the scrutiny of these proposals by the committee is a necessary step in facilitating the moving of the motions in both Houses of the Oireachtas, which will enable the opt-in to both measures to be exercised.

Members are familiar with the legal basis of the proposals before us. That legal basis is to be found in Title V of Part Three of the Treaty on the Functioning of the European Union, otherwise known as the Lisbon treaty. The application of Title V to Ireland is subject to the provisions of Protocol 21, which provides that Ireland shall not take part in the adoption and application by the Council of proposed measures under Title V unless it notifies its wish to do so in accordance with Article 3 of the protocol within three months after the proposal is presented to the Council. Under the same protocol, Ireland may, at any time after the adoption of a measure by the Council under Title V, notify the Council and the Commission, in accordance with Article 4 of the protocol, that it wishes to accept that measure.

Article 4a of the same protocol provides that the opt-in provisions of the protocol also apply to any measure, proposed or adopted under Title V, which amends an Act into which Ireland has already opted. In this regard, Article 4a applies to both measures we are examining today. Thus, while on the face of it, the matters before the committee are purely technical in nature, the examination which it is undertaking is an important element in maintaining the integrity of Protocol 21 to the Lisbon treaty. That protocol is, of course, one which we share with the United Kingdom.

Turning to the measures themselves, I propose to deal with the proposal for a regulation adapting a number of legal acts in the area of justice providing for the use of the regulatory procedure with scrutiny to Article 290 of the Lisbon treaty. For the sake of brevity, I will henceforth refer to this as the adaptation regulation.

Article 3 of the protocol applies to this proposal and the relevant three-month period will expire on 13 June. The proposed adaptation regulation relates to three legislative acts in the justice area. The justice instruments affected by the proposal concern the taking of evidence in civil or commercial matters, the European enforcement order for uncontested claims and the service of judicial and extra-judicial documents in civil and commercial matters. These are the only justice instruments in the civil area currently in force where an adaptation is required.

The adaptation regulation parallels a large omnibus proposal that seeks to adapt approximately 170 legislative acts across a broad range of sectors. Separate proposals have been made for legislative acts in the justice sector because, by virtue of the special rules that apply in the justice area, the instruments in question do not bind all member states. Denmark, for example, is only bound by the regulation concerning the service of judicial and extra-judicial documents in civil or commercial matters. The background to the adaptation regulation is the need to give effect to the new system set out in Article 290 of the Lisbon treaty, which substantially modifies the framework for powers to be conferred on the Commission by the Council and the European Parliament.

Prior to the entry into force of the Lisbon treaty, there was a committee procedure in place whereby acts of the Commission which were of general application and which sought to amend or supplement certain non-essential elements of legal instruments were subject to what was known as "the regulatory procedure with scrutiny". What this meant in practice was there was a mechanism available to deal with necessary adjustments of a technical nature without having to go through the ordinary legislative procedure in every case. Representatives of the member states had the task of acting as a committee and scrutinising any proposals which the Commission might bring forward and adopting a formal opinion on them. The kind of proposal allowed for included amendments to various forms where corrections or additions of a minor nature might be required, for example, where a member state adopted the euro as its currency or if some basic information such as a requirement for a postcode had inadvertently been omitted from the original form. This committee procedure has been superseded by Article 290 of the Lisbon treaty, which provides for a system of delegated acts. However, the scope of that article is almost identical in terms of the Commission acts which it covers to the acts covered by the old system. Following protracted negotiations between the EU institutions, agreement was eventually reached in 2016 as to how the system of delegated acts would work in practice. This is reflected both in the Interinstitutional Agreement on Better Law-Making, dated 13 April 2016, and in the Common Understanding on Delegated Acts, which is annexed to that agreement.

Taken together, these documents specify the extent to which the Commission is required to consult experts from the member states - this had been a particularly contentious matter - and the timescales within which various actions are to be taken. A right of objection to a delegated act is also vested in both the European Parliament and the Council, and certain standard clauses for inclusion in delegated acts have also been agreed. Negotiations on both the omnibus proposal and the adaptation regulation commenced recently. Although it is too soon to say how long the negotiating process will take, the justice proposal is due to be discussed some time in June. The delegation of power to the Commission envisaged by that proposal relates solely to modifying the forms annexed to the three relevant instruments. In the circumstances, it is desirable that Ireland exercises its right to opt in to this proposal at the outset to ensure we can engage actively in the negotiating process. As I stated, the three-month period in which we can do so expires on 13 June. At this time, it is not anticipated that the negotiations relating to the justice proposal will present any particular difficulties for Ireland.

I will turn now to the other measure before us, which is Regulation (EU) 2017/353, replacing annexes A and B to Regulation (EU) 2015/848 on insolvency proceedings. Again, in shorthand terms, we might refer to this for convenience as the insolvency annexes regulation. Article 4 of the protocol applies to the insolvency annexes regulation, that is, this regulation has already been adopted by the Council on 15 February this year. It was not possible, for reasons of timing, for Ireland to opt in to this proposal under Article 3 of the protocol, prior to its adoption, and we therefore wish to accept it post adoption, in accordance with the Article 4 of the protocol. It would be highly desirable that we opt in to the annexes regulation before 26 June 2017 for reasons I will now explain.

The insolvency annexes regulation is a technical update. It amends the recast insolvency regulation, formally known as Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast), whose scope and effect I will set out shortly. Ireland already opted in to the adoption and application of the recast insolvency regulation, in accordance with Article 3 of Protocol 21, following approval by the Dáil and Seanad on 28 March 2013. The recast regulation duly entered into force on 26 June 2015 and will apply in member states, including Ireland, from 26 June 2017, except for some provisions relating to national insolvency registers, which will apply in member states on later dates.

Looking first at the scope of the recast regulation, as its name suggests, this measure consolidated earlier EU law going back to 2000. It is limited to providing an agreed legal framework between EU member states for mutual recognition and enforcement of national insolvency procedures in insolvency cases with a cross-border dimension, such as where an insolvent company or individual has branches or assets in more than one member state. It sets out agreed common EU rules on which member states' courts will have jurisdiction to deal with the insolvency, which member states' national law will apply, and ensuring court judgments made under the above rules, including appointment of a liquidator, will be recognised in all other member states.

The recast regulation also updates EU law in this area to strengthen recognition of pre-insolvency procedures and debt restructuring. It sets out new strengthened rules on insolvency proceedings that involve groups of companies based in different member states. Furthermore, it clarifies and extends the rules on so-called secondary proceedings, where the main insolvency proceedings are before a court in one member state but the company or individual also has a base, with assets or obligations, in a different member state. The recast regulation is regarded as highly compatible with existing law and practice in Ireland. Annexes A and B to the recast regulation set out definitive lists for each member state of, respectively, the different types of insolvency proceedings and the different types of insolvency practitioner, such as liquidators, that are accepted by the European Commission and recognised by other member states for recognition under the recast regulation.

As regards the scope of the annexes regulation, it is limited to updating the lists of Polish insolvency procedures and practitioners contained in those annexes to the recast regulation, following a substantial change to Polish insolvency law. In December 2015, Poland notified the Commission that these changes would take effect at national level on 1 January 2016 and requested that the lists in Annexes A and B to the recast regulation be updated accordingly. The changes are straightforward and simply reflect the reform of Polish national law. The annexes regulation was duly presented by the Commission to the Council on 1 June 2016 and was adopted on 15 February 2017. As I have already said, for reasons of timing it did not prove possible for Ireland to opt in to the adoption of the annexes regulation within three months of 1 June 2016, as required by Article 3. Recital 4 of the annexes regulation indicates that Ireland is not taking part in its adoption. This was not inserted due to any difficulties with the content of the measure but simply to reflect the procedural situation that existed. Accordingly, it is desirable that Ireland should exercise its right to opt in to the annexes regulation post adoption in accordance with Article 4 of the protocol. It is also important we should do so, if possible, in a timeframe that allows the annexes regulation to take effect in Ireland on 26 June 2017. That would enable the recast insolvency regulation to enter into force in Ireland this summer in a way that reflects the up-to-date national law in all member states, including Poland.

I thank the committee for making the time available to deal with these matters today. I look forward to comments and I will be happy to address any questions which the committee may have.