9 December 2011

I would like to thank the Senators for making the necessary time available to introduce the Jurisdiction of Courts and Enforcement of Judgments (Amendment) Bill in the House.  

The objective of the Bill is to implement the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters signed at Lugano on 30 October 2007.   This Convention is commonly referred to as the 2007 Lugano Convention. 

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 EU and the European Free Trade Association, or EFTA, countries of Iceland, Norway and Switzerland.   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 RFTA countries.   As special arrangements pertain to Denmark in the area of judicial cooperation in civil matters, the Convention has also been ratified by that country in its own right.    A similar ratification requirement does not arise in relation to the other Member States, including Ireland.

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 EU as at present prevails within the EU for judgments coming from the Member States.  The governing instrument within the EU is Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, which is commonly known as the Brussels I Regulation.  The 2007 Convention replicates that instrument in all essential elements and will ensure coherence of arrangements among the states bound by the Convention insofar as jurisdiction and the recognition and enforcement of judgments are concerned. 

I am pleased to say that Ireland has a solid and deepening trade relationship with the EFTA States, and particularly with Switzerland.  Switzerland is a key market for Irish merchandise exports.  Such exports reached over €3.5bn last year and mostly consisted of medical, pharmaceutical and chemical products.  Our merchandise imports from that country are approximately €0.85bn annually.  Services exports to Switzerland are also very significant, having reached an annual total of €1.8bn in 2010.  Services imports totalled €1.6bn last year. Switzerland is also a significant source of Foreign Direct Investment to Ireland.

Norway is a very significant supplier of oil to the Irish market, to the value of about €1bn in the last year.  It is notable that overall trade with that country is very definitely two-way, with total Irish exports to Norway also having reached €1.2bn last year.  In relation to Iceland, as one would expect, the levels of trade with that country are more modest.

The enforcement of judgments has an ever-increasing relevance to the lives of people in the State.   Inevitably, from time to time, people will find the need to bring legal proceedings outside the State or, if they bring them in our own courts, they may need to seek to enforce judgments granted by those courts in other States.  That relevance will continue to grow and develop as there is greater mobility of people and greater commercial interaction between this State and other states which are bound by the Convention. 

The origins of the 2007 Convention can be traced to the seminal instrument in this area which is the 1968 Convention on the Recognition and Enforcement of Judgments in civil and commercial matters which has now been replaced by the Brussels I Regulation.  That 1968 Convention was of far reaching importance, providing and setting up procedures for the recognition and enforcement of civil and commercial judgments of the various Member States of what was then the European Community.    A key objective of the 2007 Convention, and the instruments which relate to it, is the provision of speedy and informal procedures 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.  I should like to emphasise that at the heart of the 2007 Convention, of the Brussels I Regulation and of the earlier Conventions lies a very simple concept.  It is the provision of speedy and informal procedures to allow judgments in one participating state to be enforced in another participating state.

A significant development in economic terms in recent years is 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 in recent years.   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.

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 large sums of money.  Such measures have the twin effects of both protecting existing trade and encouraging new trade.  

In a related field, I understand 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 EU sometime in the future.   There is also 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 emphasises the fact that there is a great deal of potential for expansion and development in the sphere of judicial co-operation in Europe and beyond.

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 insofar as a natural person is concerned.    This rule applies regardless of whether a person is, or is not, 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 consumers, insurance and employment contracts.   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, to maintenance and to 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.  Lastly, it should be pointed out that 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 so small in number as to be almost negligible.

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 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 is sought has to indicate whether or not the applicant has benefited from legal aid, and this is sufficient to allow the applicant to qualify in the state addressed.

Turning now to the Bill itself, it will be seen that it is wholly technical in nature.   Indeed, it largely replicates the content of the Statutory Instrument which was used to give full effect to the Brussels I Regulation which has been in operation since March 2002.  

Section 1 of the Bill provides that the Jurisdiction of Courts and Enforcement of Judgments Act 1998, which deals with the Brussels I Convention and the original Lugano Convention, is amended in two ways.  Firstly, a new part, Part IIIA dealing exclusively with the 2007 Lugano Convention, is inserted.  Secondly, the 2007 Lugano Convention is inserted as a Schedule to the 1998 Act.  The new Part IIIA contains a number of sections which I shall briefly outline in order to provide some additional background for Senators as to the content of the Bill.

Section 20A contains standard interpretation provisions while Section 20B states that the Convention has the force of law in the State.

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 I Regulation.
 
Section 20D authorises the Minister for Foreign Affairs 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 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.  This means that the recognition and enforcement machinery in the Convention automatically comes into play whenever a Convention application is made.  As a general principle, Convention judgments are entitled to recognition without any special procedure being required.   In relation to 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.    In relation to 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.    I can tell the House that I will be proposing an amendment to Section 20G at 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 relation to applications for enforcement orders and with the payment of interest in relation to 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, including 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.  Under Article 31 of the Convention, 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 the 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 the indefinite future.   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 in relation to the domicile of companies or other legal persons.

Section 20M sets out the venue at which certain Convention proceedings may be brought insofar 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 venue for the lower courts and that matter falls to be determined by national law.

Section 20N specifies that Part III of the 1998 Act, which relates to the 1998 Lugano Convention, shall, except as provided in Article 65, cease to apply between the State and a state bound by the Convention.   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 I Regulation. 

 Section 2 of the Bill provides for various textual amendments to the Maintenance Act 1994 which are required in consequence of the implementation of the 2007 Lugano Convention. 

 Section 3 sets out the short title of the Bill and the relevant collective citation for the purposes of the Courts (Supplemental Provisions) Acts

As I said earlier, this Bill is very technical in nature.  However, despite its technical character, it bears witness to the ever-increasing international ties which bind us to other countries, particularly in the commercial sphere.   I look forward to the comments of Senators and I commend the Bill to the House.