Pat Rabbitte (Dublin South West, Labour)

I welcome the taking of Second Stage of the Arbitration Bill 2008.

Alternative disputes resolution has been with us for a long time and is essentially based on the prior agreement of the parties to resolve their differences in a manner that conforms to the fundamental principles of justice. Alternative dispute resolution processes have emerged in the context of delays in the courts system. After a fashion, the Small Claims Court is a mediation process for certain consumer disputes, while the Family Mediation Service provides an important alternative resolution facility in the context of family conflicts.

Up to now, model law has applied only in regard to international commercial arbitration. The Bill will apply the United Nations Commission on International Trade Law, UNICTRAL, model law on international commercial arbitration to all arbitrations that take place within the State. The Law Reform Commission in its report makes plain that "alternative" in "alternative dispute resolution" should not be seen as preventing the court process "from continuing to play a positive role in resolving disputes by agreement". The commission's view is that an integrated civil process should include a combination of alternative dispute resolution processes such as mediation and conciliation and the court-based litigation process. On the other hand, many practitioners seem to favour minimal involvement by the courts.

Whether the objective that Dublin might one day rival Geneva, London and Paris as a venue for arbitration excellence will be realised, I cannot say. However, there is no reason we should not aim high. There is no doubt that Ireland has certain advantages and no reason we should not market them to optimum effect. Deputy D'Arcy focused on this important dimension. It is my understanding that the Irish branch of the Chartered Institute of Arbitration, founded in 1982, has approximately 800 members drawn from diverse backgrounds and a wide range of professional qualifications.

The extent to which alternative dispute resolution is available to resolve disputes in many walks of life and its legal authority to do so may surprise many outside those sectors where they are in regular use such as in the construction industry. Consumer arbitration schemes offer a great many a means of resolving disputes which arise from the purchase of goods, holidays or the supply of services to consumers. Examples include contracts for the supply of holidays under the Package Holiday and Travel Trade Act 1995 and the sale of motor vehicles by members of the Society of Irish Motor Industry. These arbitration schemes offer the consumer a speedy, inexpensive, final, legally enforceable resolution of their dispute and, in addition, help to develop an awareness of, and encourage acceptance of, arbitration as a dispute resolution process. In July this year the Law Reform Commission produced a broad ranging consultation paper on alternative dispute resolution. The paper covers all aspects and techniques of dispute resolution outside the courts.

The Arbitration Bill 2008, the first comprehensive review of arbitral legislation in this country since the original Act in 1954, will affect dispute resolution in a decisive way. I am aware that the Irish branch of the Chartered Institute of Arbitrators has welcomed the Bill in general and supported the proposal to modernise the legislation by means of a consolidated Act to replace the existing three Acts and to extend the UNCITRAL model law to govern not alone international arbitrations but also domestic ones. However, improvements could be made in some areas and a more detailed examination of some of the sections of the Bill is warranted. The Bill contains 36 sections, a number of which appear to have been taken word for word from the 1954 Act. I ask whether some sections require updating or, in some cases, could perhaps be omitted from the Bill. For example, section 29 simply repeats section 5 of the 1954 Act and relates to industrial relations matters which are excluded from the operation of the Act. I can see why this might have been considered desirable in 1954 which was shortly after the establishment of many of the State agencies governing this area such as the Labour Court, but I would like to hear from the Minister why he considers the same considerations apply today. Given the long delays in arranging hearings at the Employment Appeals Tribunal and the fact that ACAS in the United Kingdom has introduced the option of private arbitration, this exclusion should be examined. I say this against a background in which lawyers have become commonplace in situations where industrial relations executives and trade union officials originally did the business and an expanded workforce in which many employments are not trade union organised.

As regards court ordered arbitrations, section 31 is a literal transposition of sections 49 to 53 of the 1954 Act. My advice is that this power is seldom, if ever, used and, therefore, I ask the Minister to explain why it ought to be reinserted in the new legislation.

I have referred to the sections of the Bill which deal with consumer arbitrations. These are schemes for the resolution of disputes which arise from the purchase of goods or the supply of services to consumers. These provisions potentially cover a great many people. The arbitration schemes offer consumers a speedy and relatively inexpensive final resolution of their disputes, in addition to developing an awareness and encouraging acceptance of arbitration as a dispute resolution process. However, the effect of section 30(1) which is not directed solely at consumer arbitrations will be to limit the number of arbitrations which take place and retard the acceptance and development of arbitration. I would like to learn from the Minister the reason arbitration should not be permitted, unless the amount in dispute is higher than the jurisdiction of the Small Claims Court. If a taxi driver who is not a consumer for the purposes under discussion is in dispute for an amount less than €2,000, the only remedy available to him or her is litigation. Perhaps the purpose of the section is to avoid duplication but it is not readily apparent why disputes that come within the remit of the Small Claims Court should be excluded. I ask the Minister to outline why this subsection should be retained.

While other measures provide protection for consumers, the practical application of the provisions of sections 34 and 35 may be open to abuse. The protection which the Government wishes to provide for consumers could be arranged in a more straightforward manner, thereby allowing for more streamlined legislation. In addition, there is considerable support for modifying or even omitting section 32 which deals with the additional powers of the court to set aside or remit awards.

The UNCITRAL model law on international commercial arbitration already governs domestic arbitration in a number of countries, including Germany, Kenya and New Zealand, and much of the model law restates contemporary Irish law on domestic arbitration. I welcome, in particular, the decision to introduce into Irish arbitration law the powers of arbitrators to determine their own jurisdictions, amend and interpret their own awards and terminate cases for want of prosecution or on grounds of delay, as well the default requirement that all awards should be reasoned. However, the Bill will require further revision in specific areas to avoid anomalies caused by the fact that the model law is tailored specifically to international arbitration. The most obvious example of this arises in respect of Article 34 of the model law which allows the courts to set aside an award on stated grounds and Article 36 which allows the courts on almost identical grounds to refuse to enforce an award. This, in effect, gives a party resisting an award two opportunities to mount a challenge. That may be necessary in international arbitration where the enforcing court and the set-aside court may be in different jurisdictions but it is not required in domestic arbitration. In contemporary Irish domestic arbitration law a party with a grievance about the fairness of the arbitration or the process leading to the award must bring a challenge to the award within the time limits specified in the rules of court. The party cannot thereafter resist enforcement of the award, unless the court extends the time for challenge, except where the award was made without jurisdiction or where it has already been performed. The model law will, therefore, make it much easier to resist an arbitrator's award in domestic arbitration. This might be redressed by a provision in the Bill which would stop a party from resisting enforcement under Article 36 on grounds already rejected in a challenge under Article 34 or by a provision limiting the grounds for refusal of enforcement under Article 34 in domestic arbitrations.

Some practitioners question the necessity of applying to a court to enforce a domestic arbitration award. I note the very definite view taken on this issue by the Law Reform Commission. Under the law, if one wishes to enforce a domestic arbitration award, it is necessary to apply to the Master of the High Court on affidavit, even if the award is not being challenged. The other party to the arbitration is entitled to resist the application and this can lead to delay and expense. A simple procedure should be put in place, whereby a domestic arbitration award which has not been challenged under the provisions of the legislation providing for a challenge could be converted into a court judgment through the central office and without formal application to the court. If a defendant does not defend summary proceedings for recovery of a debt, the plaintiff is entitled to obtain judgment through the central office. Why should the recipient of an award in a domestic arbitration be in a weaker position? Similarly, it is the view of practitioners that the new evidence ground for remission under the special oversight provision in section 34 should have a time limit.

The possibility of abuse also arises in situations where parties to arbitration have unequal bargaining powers. This arises in sections 12, 18 and 20. If there is an unequal balance between a consumer and, for example, a multiple store, the latter ought not be facilitated in causing the consumer to jump through a number of hurdles, not least where expenses are involved. In that context, it must be borne in mind that arbitration provisions are often included in the standard forms of contract or terms and conditions prepared by one of the parties. It is important that such a party should not be in a position to protect itself against its own wrongdoing by providing for the non-payment of interest or costs to a successful claimant.

In many conflicts speed can be of the essence. Alternative dispute resolution facilitates early settlement of disputes. As the Law Reform Commission consultation paper notes, "early settlement can be both financially and emotionally advantageous to the disputant". It also notes that "an important relationship can be repaired and maintained, something which may be at risk in adversarial litigation". A settlement on the steps of the court "often depends on the strength of the legal rights-based arguments" and, as we know, may follow on from an already very expensive process, including the cost of discovery. The Law Reform Commission paper argues that alternative dispute resolution "must be seen as an integral part of any modern justice system" and records the view of the British Master of the Rolls, Sir Anthony Clarke, who said in May 2008, "It must become such a well established part of it that when considering the proper management of litigation it forms as intrinsic and as instinctive a part of our lexicon and of our thought processes, as standard considerations like what, if any, expert evidence is required." While we may yet have some distance to go before these are the instinctual responses, the Bill should bring us closer to that objective.

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