Jimmy Deenihan (Kerry North-West Limerick, Fine Gael) | Oireachtas source

On behalf of the Minister for Justice and Equality, Deputy Frances Fitzgerald, I would like to thank Senators for making time available to deal with Second Stage of the Choice of Court (Hague Convention) Bill 2015. The Minister regrets that she is unable to be present here today. However, she welcomes the fact that it was possible to have this Bill initiated in the Seanad so that Senators will have the first opportunity to comment on its provisions.

The Bill is short and technical in nature but it is of significance in terms of enabling us to fulfil our EU obligations. It is also of significance because the convention to which it relates has the potential, over time, to create a more predictable legal environment for companies which do business with third countries. That predictability should, in turn, encourage companies to be more confident in terms of expanding their trading relationships with such countries.

The purpose of the Bill is to make provision for the measures which are required to ensure that the Hague Convention of 30 June 2005, on choice of court agreements, can function effectively within the Irish legal system. The convention was negotiated under the auspices of the Hague Conference on Private International Law. The Hague conference is a body which facilitates the development of multilateral legal instruments across a range of areas. In the past, conventions have been negotiated which touch upon commercial matters, family law matters and administrative cooperation. Apart from EU member states, the Hague conference includes among its membership countries such as China, the US, Japan, Australia, Canada and Russia.

The convention is geared towards the promotion of choice of court agreements in international business to business contracts. Within the EU there is already a legal framework in place which ensures that choice of court agreements are honoured. However, there is no equivalent framework at the international level and the convention will fill this gap.

Negotiations on the choice of court convention, to use a convenient shorthand, concluded in June 2005 after a negotiating period of over two years. This convention is much narrower in scope to one which had originally been contemplated. It evolved out of earlier work which had been ongoing within the Hague conference for a number of years. That work was very ambitious in aim and would have resulted in a convention which prescribed a list of approved grounds of jurisdiction as well as a list of prohibited grounds of jurisdiction. Judgments based on the former list would be entitled to recognition and enforcement in other contracting states to the convention, and would obviously have facilitated the circulation of a greater volume of judgments at global level. However, it became clear that it would not be possible to bring this work to a successful conclusion. Eventually, it was agreed to work on a convention with a reduced scope which would deal only with choice of court agreements in international commercial cases.

The European Commission presented a proposal for a Council Decision authorising signature of the convention in September 2008. One of the reasons informing the presentation of the proposal at that time was the perception that, when in force, the convention would reduce legal uncertainty for EU companies trading outside of the EU. Following the adoption of the proposal by the Council, the convention was signed in April 2009. It was also signed by the US in January of the same year.

The European Union has exclusive competence in respect of the matters governed by the convention and, therefore, Ireland will not be ratifying the convention in its own right. At the time of the signature of the convention the European Community, as it then was, made a declaration indicating that it exercised competence over all of the matters governed by the convention. Also, that member states would be bound by the convention by virtue of its conclusion by the Community. This is a routine arrangement for international instruments where the EU has exclusive competence.

Several years elapsed before the Commission came forward with a proposal for the conclusion of the convention in January 2014. The main reason for the lapse of time was the need to bring to a conclusion the revision work on the Brussels I regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. That work was brought to a conclusion in December 2012. The new regulation which resulted has applied since January of this year. It contains amendments which align the choice of court provisions that had existed at EU level with those provided for in the Hague Convention, thereby facilitating the approval of the choice of court convention by the EU.

The proposal for a decision authorising approval of the convention was adopted by the Justice and Home Affairs Council at its meeting on 4 and 5 December 2014. Under its terms the instrument of approval was to be deposited within one month of 5 June 2015 and, in fact, the deposit took place on 11 June last. Mexico had already acceded to the convention in September 2007. Under the terms of the convention, approval by the EU triggers the entry into force of the convention on I October of this year. The timetable for EU approval was influenced by the fact that, as part of the negotiation process, it was agreed that member states would be given some time to make any legislative changes which were needed at the domestic level prior to the approval of the convention which, brings us to where we are today.

In general terms, a typical choice of court agreement will specify that the courts of a particular State should have jurisdiction to hear proceedings under the contract which exists between the parties. Such agreements are widely viewed as being beneficial in terms of creating a stable trading environment for international commerce. Their value is critically dependent upon the extent to which the parties can be confident that their agreement will be upheld by a court if litigation ensues. This arises both in regard to the court chosen being willing to take jurisdiction and also in regard to other courts being willing to recognise and enforce the judgment given on foot of the choice of court agreement. To take a concrete example, a company may be reluctant to do business with a particular State because it either mistrusts or is unfamiliar with its legal system. If a supplier of goods is confident that in the event of any issues arising in regard to the payment of the goods which have been delivered, a court in which it trusts will have jurisdiction to rule on the dispute, he or she may be emboldened to proceed with the deal.The other party, who wishes to receive the goods, may be equally happy to agree to a court in which they, too, have confidence. In the alternative, the fact that the state, with which the supplier wishes to do business, is a contracting party to the choice of court convention may encourage a feeling of security in terms of being willing to accept a choice of court agreement in favour of that country. In this regard, it is noteworthy that research exists which indicates, particularly in the case of large businesses, that significant business decisions can be influenced by uncertainty regarding the courts that would resolve disputes or the law that would apply to the contract. In effect, lack of legal certainty may function as a barrier to trade.

The convention aims to ensure the effectiveness of choice of court agreements by providing guarantees that the chosen court will hear the case when proceedings are brought before it. Linked with this is a requirement that any other court before which proceedings are pending must refuse to entertain them. Finally, provision is made to ensure judgments given under the convention will be entitled to recognition and enforcement in those states which are contracting parties to it. None of these principles is absolute but the overall aim is to find the right balance between flexibility and certainty.

I will now deal in some detail with the key provisions of the convention and highlight the articles which are probably the most important in terms of the overall content of the convention.

Article 1 defines the scope of the convention. The case must be international in nature, the choice of court agreement must be exclusive and the subject matter must fall within the range of what is normally understood by the term civil and commercial. Article 3 sets out the formal requirements that must be satisfied if a choice of court agreement is to fall under the convention.

Article 5 is a key provision in that it mandates the court designated in the agreement to hear the case unless the agreement is null and void under the law of that state. Article 5 is complemented by Article 6 which requires a court not designated in the agreement to suspend or dismiss the proceedings even if it has jurisdiction under its national law. There are a number of exceptions to this rule, for example, where giving effect to the agreement would be manifestly contrary to the public policy of the state of the court seised or where the chosen court has decided not to hear the case.

Article 8 sets out the principle that a judgment given by a court of a contracting state which is designated in an exclusive choice of court agreement must be recognised and enforced in another contracting state in accordance with the convention's provisions. By way of exception to this principle, Article 9 sets out the grounds upon which recognition and enforcement may be refused, for example, where there has been procedural fraud or where a party lacked the capacity to conclude the agreement under the law of the state where enforcement is sought.

Article 13 lists the documents to be produced when enforcement is being applied for. Article 16 deals with transitional arrangements and sets out the basic principle that the convention will only apply to exclusive choice of court agreements concluded after the convention comes into force for the state of the chosen court. Articles 19 to 22, inclusive, contain provisions setting out the range of declarations which a contracting state may make. In this regard Article 19 permits a contracting state to refuse to apply the convention to cases where, except for the choice of court clause, there is no connection between that state and the parties or the dispute.

Article 20 allows a state not to enforce a judgment where all the factors, other than the choice of court clause, are internal to it. Article 21 allows a state to exclude a specific matter from the scope of the convention and the EU has availed of this provision for certain types of insurance contract. Article 22 allows for the making of reciprocal declarations to extend the scope of the convention to cover non-exclusive choice of court agreements. An example of such an agreement would be one which designated the courts of two or more contracting states to the exclusion of all others.

Article 26 deals with the relationship of the convention with other international instruments and is of interest because it deals with the situation where a regional economic integration organisation such as the EU becomes a contracting party to the convention. In essence, where a case is purely regional in terms of the residence of the parties, the convention gives way to any relevant regional instrument which might exist. Furthermore, it will not affect the rules governing the recognition or enforcement of judgments between the member states of the regional organisation. Within the EU the recognition and enforcement regime is much more liberal than that which exists under the convention.

Earlier in my speech I mentioned that Mexico has already acceded to the convention. Both the US and Singapore have signed it and it is hoped that EU approval will encourage other states to become parties to it. Ratification of the convention by as many states as possible should encourage commercial actors to avail of choice of court clauses when doing business in those states because they can be secure in the knowledge that they can rely upon its provisions.

I am pleased to say that Ireland has a solid and deepening trade relationship with Mexico. In 2013, trade between the countries was of the order of €1.277 million, comprising €928 million in the export from Ireland of goods and services and €349 million in the import from Mexico of goods and services. Ireland's principal merchandise exports to Mexico are soft drink concentrate and chemical materials and products. Ireland's main merchandise imports from Mexico are medical devices, miscellaneous plastics, stents, and telecommunications and sound equipment. The value of Ireland's exports of goods to Mexico in 2014 increased by 76%, from €692 million to €1.216 billion.

Of the states that have signed the convention, the US is Ireland's biggest goods export market, with the value of goods exported in 2014 standing at almost €20 billion. As a trading bloc, the 28 member states of the European Union traded goods worth €515 billion with the US in the same year. The €54 billion trade between Ireland and the USA in the preceding year, 2013, can be broken down evenly between imports and exports of both goods and services. Ireland's most significant exports to the US are organic chemicals, which are mainly used in the pharmaceutical industry, and medical and pharmaceutical products. Ireland's main imports from the US are royalties and licences and research and development services.

Trade with Singapore is understandably more modest. Trade between Ireland and Singapore in 2013 was valued at a little over €2 billion, broken down as €1.359 billion in the export of goods and services, and €717 million in imports. The trade relationship is mainly focused on computers, computer parts and storage devices. The EU trade bloc has a healthy trade relationship with Singapore, expressed in trade in goods to the value of €47 billion in 2013.

I mentioned earlier that EU accession to the convention should have a beneficial effect in terms of encouraging other states which are members of the Hague Conference on Private International Law to become parties to it. I should add that the convention is also open to states which are not members of the conference. Even in markets where the EU is already very active, widespread adherence to the convention could have the potential to lead to further growth in trade. To take two examples where Ireland would have a specific interest, Ireland's trade relationship with Australia in goods was valued at €802 million in 2013, while trade in goods between the EU as a whole and Australia in that year was valued at €33 billion. Of the EU's €59 billion trade in goods with Canada in 2013, €2.5 billion came from the exchange of goods between Ireland and Canada.

The details I have just outlined highlight the importance to all our economies of international trade. 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. Business people need to be sure they can readily enforce contracts and secure judgments for what can, in some cases, be large sums of money. Measures aimed at promoting such security have the twin effects of protecting existing trade and encouraging new trade.In recent years a lot of emphasis has been placed at EU level on "justice for growth". The Bill and the convention to which it relates are a small but practical example of the way in which justice policy can contribute towards improving the conditions for EU businesses which are active in trading with partners outside the European Union.

The Bill contains ten sections, all of which are technical in nature. The key provisions are contained in sections 5 and 6. Section 5 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 who may make an order for the recognition or enforcement of only part of a judgment. Section 6 provides that if an enforcement order has been made in respect of a judgment, the judgment shall, to the extent authorised by the order, be of the same force and effect as a judgment of the High Court and that proceedings for its enforcement may be taken accordingly.

Other provisions are ancillary to these sections. Section 1 contains relevant definitions which are self-explanatory.

Section 2 authorises the Minister for Justice and Equality to make certain orders in relation 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 will be of evidential value.

Section 3 states the convention has force of law in the State, while section 4 provides that judicial notice shall be taken of the convention, the explanatory report prepared in relation to it and relevant court judgments. This provision is in aid of the uniform interpretation of the convention which is important in an international agreement of this nature.

Section 7 deals with provisions in enforcement orders for the payment of interest on judgments and the payment of costs. Section 8 deals with the proof and admissibility of certain judgments and related documents and translations. Section 9 contains a technical provision to bring section 20A of the Jurisdiction of Courts and Enforcement of Judgments Act, 1998 into line with the provisions of section 7 of the Bill. Section 10 contains standard citation and commencement provisions.

As I indicated, the European Union has exclusive competence in the matters governed by the convention and Ireland will not be ratifying it in its own right. Nonetheless, implementing measures are required to ensure the convention can be applied within our legal system and the purpose of the Bill is to make provision for these measures. I look forward to hearing the views of Senators on the Bill which the Minister hopes can be enacted before the convention comes into force on 1 October. I commend the Bill to the House.