by Matthew Austin April-04-2017 in Litigation & Dispute Resolution, Commercial & Business, Regulatory & Administrative Law, Brexit
Trying to make sense of the United Kingdom’s decision to leave the European Union is a fool’s errand. Most of the gallons of ink that have been used in guessing what Brexit will look like or mean for Ireland is exactly that – guesswork. The “ifs”, “buts” and “maybes” are too many to arrive at any sustainable conclusions at this remove. The reality is that we will have to await the outcome of the upcoming Article 50 negotiations. Even then, it will take many years for the true impact of the UK’s decision to leave to be felt in Ireland.
That being said, the fog of uncertainty pending the Article 50 negotiations, which has muddled us all since last June, has created impacts and consequences of its own. Arguably, it has also created some opportunities for those practitioners who are willing to adapt and move with flexibility in accordance with their clients’ requirements Lawyers are being asked to grapple with the impacts of the Brexit-induced interregnum so that commercial life can continue without undue disruption in the interim.
For those of us involved in the negotiation and drafting of commercial contracts, the “Brexit clause” has emerged, in varying guises, as an attempt to deal with an anticipated event, the nature and effect of which is unknown. A common use for a “Brexit clause” over the last number of months is to deal with issues surrounding the management of personal data, processed in the UK, in the aftermath of Brexit.
Equally, choice of law and jurisdiction clauses have been forensically examined and debated to an extent not previously experienced. Some seasoned legal commentators have commented upon the fact that Brexit may well have the result that contracting parties will no longer choose the United Kingdom as the appropriate forum for resolution of disputes concerning their contractual arrangements in light of the potential impact on recognition and enforceability of UK judgments and orders. It has been surmised that Ireland is well placed to step into the breach and that parties can and should give active consideration to choosing Ireland as an appropriate jurisdiction for the resolution of international commercial disputes. That may be so. However, we must recognise that Ireland still has a distance to travel in achieving efficiencies in the dispute resolution mechanisms available to commercial entities.
Whilst we can say with some degree of certainty that the Commercial Court division of the High Court, established in 2004, has been a success in terms of the management and disposal of high value commercial disputes, we must also recognise that other elements of our Court system have not yet reached the levels of sophistication and efficiency achieved by their UK equivalents. Whilst clearly equipped with some of our finest Judges, as well as rules and procedures designed to stream-line the appeal process, the Court of Appeal continues to struggle with the back-log of appeals inherited from the Supreme Court, coupled with the increased number of appeals coming from the High Court.
The recent changes to the Superior Court rules applying to the case management of High Court litigation are currently in abeyance for reasons beyond the control of the President of the High Court. The effect is that a number of the new case management facilities, such as the use of pre-trial conferences, the requirement for witness statements and the issuance of certificates of readiness by the High Court, will not take effect for some time. Clients continue to be amazed, and rightly so, at the length of time it takes to dispose of litigation in the High Court. The rules are ready and waiting to deal with this but they cannot currently be utilised.
Furthermore, we lag behind in the use and promotion of alternative dispute mechanisms. It is truly amazing that 2017 has arrived, Spring has sprung, the daffodils are up and yet the Mediation Bill remains a bill. Whilst the latest iteration of the Bill, published earlier this year, seems to have a genuine chance of becoming law, it is disappointing, from a practitioner’s perspective that it has taken this long.
If Ireland wants to be seen as a real, viable alternative to the United Kingdome for the efficient resolution of international commercial disputes then steps need to be taken to remedy the shortcomings highlight above. Truly commercial international entities will not tolerate a jurisdiction for the resolution of disputes that does not actively promote and encourage early and cost efficient dispute resolution. A lawyer who doesn’t recognise his or her client’s requirements in this regard won’t be that client’s lawyer for very much longer. Those who think that alternative dispute resolution, and in particular mediation, is a poor relation of traditional litigation must modernise their thinking or will likely find themselves consigned to the lawyers’ scrapheap!
Another reason to cast doubt on the idea that Ireland is ready to take over from the UK as the centre of international commercial dispute resolution is the lack of a third party contract rights regime. Ireland continues to confer primacy on privity of contract. In the UK, the ability for non-parties to enforce certain contractual rights has been in place for many years through the Contracts (Rights of Third Parties) Act, 1999. This mechanism is designed to reflect the reality of modern contractual arrangements including the interaction of third parties in less traditional business arrangements. In 2008, the Irish Law Reform Commission recommended that, subject to certain limitations, the privity of contract rule should be changed so that a third party who the contracting parties clearly intended to benefit from their agreement would be able to rely on and enforce the agreement if it is not carried out properly. Suffice it to say, over nine years later, no such changes to Irish law have been made.
One of the most frequently discussed impacts of Brexit is the impact on financial services regulation, particularly in circumstances where UK based financial services organisations will no longer be automatically authorised in their activities outside the UK, within the EU. Similar questions arise across the spectrum of regulatory law. If Ireland is to benefit from the potential migration of professional services from the UK then Irish regulatory law must be seen as fit for purpose. Most Irish regulatory law is a modern construct. However, it is important that those tasked with policing the regulatory environment are perceived by the International business and legal communities to be at the forefront of international thinking and practice. Practitioners have a part to play in their dealings with both regulators and their clients. Regulation should, as often as not, be collaborative as opposed to adversarial. Again, clients who feel they will get stuck in a mire of unnavigable regulation are unlikely to be enthused by the prospect of placing further emphasis on a presence in the Irish marketplace.
Former US Defence Secretary, Donald Rumsfeld would have a field day in describing Brexit. We just don’t know what will happen. Far too many factors are outside our control to make predictions with any certainty. However, there are steps that could be taken to place Ireland on a better footing, from a lawyers’ perspective, to avail of the opportunities that Brexit may bring. As to whether a general election this side of the water may lay waste to plans for the Mediation Bill 2017 and other necessary developments, Donald might classify that one as a known unknown!
For further information, please contact Matthew Austin at Hayes solicitors maustin@hayes-solicitors.ie.
This article first appeared in the Spring Edition of the Parchment on 4 April 2017
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About the Author
Matthew Austin
Matthew is a partner in the Commercial & Business team and has considerable expertise in a range of practice areas, having acted for Irish and International clients in domestic and multi-jurisdictional issues. Matthew has advised in civil and administrative law disputes and in regulatory and advisory matters including insolvency/restructuring, IP, defamation and media law, competition and consumer protection and data protection.