The Arbitration Bill 2008 (the 2010 legislation) has been passed by both houses of the Oireachtas and is awaiting the President's signature at the end of this week or early next week. Following the President's signature it will be referred to as The Arbitration Act 2010. The enactment of the 2010 legislation reflects the Irish Government's consistent support for arbitration processes – support also shown by the Irish judiciary.
The impetus for the 2010 legislation came from an analysis of the Arbitration legislation in Ireland in the lead up to the International Council for Commercial Arbitration Conference, which was held in Dublin in June 2008, to celebrate the 50th anniversary of the signing of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
The 2010 legislation includes the entire text of the United Nations Convention on International Trade Law Model Law on International Commercial Arbitration (Model Law) and will be instantly recognisable to lawyers from other jurisdictions. It repeals and replaces the Arbitration Act 1954, the Arbitration Act 1980 and the Arbitration (International Commercial) Act 1998. Historically there was a separate legislative framework for domestic and international commercial arbitrations. The 2010 legislation will apply the Model Law to all arbitrations in Ireland.
Previously, Irish law allowed for applications to the High Court by way of a case stated procedure, but these provisions have been repealed. The opportunities for parties to seek judicial intervention in arbitration proceedings will be severely curtailed under the 2010 legislation, in keeping with the Model Law.
The 2010 legislation will apply to all arbitrations which commence after the legislation comes into operation. The 2010 legislation comes into operation in June 2010, 3 months from the enactment date.
The Model Law has been adopted by more than 50 countries and covers all stages of the arbitral process. Although originally primarily designed for international commercial arbitration in mind, other countries such as Germany, New Zealand and Kenya have extended it to domestic arbitrations. Ireland originally adopted the Model Law in the Arbitration (International Commercial) Act 1998, but only for international commercial arbitrations.
Significant Changes to Irish Arbitration Law
There will be no difference between the legislative provisions relating to domestic arbitrations and international arbitrations. Irish practitioners will need to be familiar with the Model Law and this will be particularly useful when advising on contractual arbitration clauses, particularly those which have an international dimension.
The 'case stated' procedure has been abolished by the 2010 legislation. Arbitrators will no longer be able to refer to the Courts a question of law arising in the course of the arbitration. The change reflects a perception that the case stated procedure might be used by parties to slow down an arbitration. The change is intended to strengthen the integrity of the arbitration process. In appropriate circumstances, it remains open to an arbitrator to seek independent advice if necessary in relation to a point of law arising in the arbitration.
The removal of the case stated procedure and significant reduction of the scope for judicial intervention is likely to lead to an increased focus on the choice of arbitrators and appointment mechanisms and requirements.
The only method of challenging an arbitral award will be under Article 34 of the Model Law. The grounds are extremely limited and the 2010 legislation will make it far more difficult to challenge an arbitral award than was the case under the previous legislation. The Model Law grounds of challenge have been interpreted narrowly in other jurisdictions, and the Irish Courts are likely to adopt a similar approach, in keeping with their approach to arbitration generally*.
The application of the Model Law for all Irish arbitrations will mean that Irish arbitration practitioners can avail of the wealth of international jurisprudence concerning the Model Law.
The arbitrator will be required to give reasons for his award unless the parties have agreed otherwise (Article 31(2) of the Model Law). This is a change to the default position under the previous legislation. The requirement for a reasoned award imposes an additional rigor on the arbitrator.
The 2010 legislation allows the parties to agree on the allocation of costs either before or after the dispute has arisen (Section 21). The previous legislation provided that any such agreement on costs was only binding if it was reached after the dispute had arisen.
Consumer claims under €5,000 will not be covered by arbitration agreements unless the consumer agrees to go to arbitration after the dispute has arisen or the agreement has been individually negotiated (Section 31).
8.Single Arbitration Judge
The 2010 legislation introduces the concept of a single arbitration judge (Section 9) to deal with any applications. One judge will develop a particular expertise in issues involving arbitration. This should ensure a consistent judicial approach, and will also reduce the risk that parties might inappropriately seek judicial intervention in an attempt to delay or obstruct arbitration processes. Furthermore, and exceptionally, there is no right of appeal to the Supreme Court from the High Court in respect of applications under the new legislation – the High Court is the court of final jurisdiction in that regard.