1.1 Which government bodies/agencies regulate insurance (and reinsurance) companies?
The Central Bank of Ireland (the "CBI") is the body responsible for the authorisation and ongoing supervision of (re)insurance companies in Ireland.
1.2 What are the requirements/procedures for setting up a new insurance (or reinsurance) company?
In order to establish a (re)insurance company in Ireland it is necessary to (i) incorporate a company and (ii) secure an authorisation to conduct (re)insurance business from the CBI.
The majority of (re)insurance companies in Ireland are established as private limited companies, being the most common form of company in Ireland. The process for incorporating a company in Ireland is straightforward and involves making an application to the Companies Registration Office (the "CRO"). The company can be established within five days of making the application to the CRO.
To secure an authorisation for a (re)insurance company, it is necessary to submit to the CBI (a) a business plan (the "Business Plan") and (b) a checklist, which has been published by the CBI in respect of each type of insurance (life and non-life) and reinsurance applications (the "Checklist"). Prior to the submission of the Business Plan and Checklist, the CBI actively encourages applicants to organise a preliminary meeting with the CBI to discuss the proposal and to obtain the initial views of the CBI in relation to the application. Subsequent to the initial meeting with the CBI, the Checklist and Business Plan are formally submitted to the CBI.
In practice, the Checklist is generally used as a document map/index outlining what is required to be included in the Business Plan. Information required to be contained in the Business Plan includes the following:
- detailed information about the legal structure of the company;
- detailed information on the company's parent company and the ownership structure of the insurance company;
- the organisation of the company and the corporate governance structures that it will implement (including the fitness and probity of key personnel);
- details of risk oversight (audit, compliance, risk management, underwriting, financial control and internal control);
- capital and solvency projections; and
- financial information and projections (i.e., financial projections for a three-year period prepared on optimistic, realistic and pessimistic bases with detailed explanations about the assumptions supporting each).
Following submission of the Business Plan and the Checklist, the CBI will review the application and provide comments and seek additional information and/or documentation, where necessary.
The authorisation process usually takes between three and six months following the submission of a fully completed application to the CBI, depending on the scale and complexity of the proposal. Prior to the grant of formal authorisation, a successful applicant will be granted "authorisation in principle", when the application has been fully examined, reviewed and approved in principle by the CBI. At this stage, the (re)insurance company will address any outstanding regulatory matters, such as the introduction of capital, the appointment of directors and senior executives and confirming that it will be in a position to comply with its conditions of authorisation. Authorisation in principle does not permit the applicant to write (re)insurance business. (Re)insurance business may only be underwritten when formal authorisation is granted by the CBI and a Certificate of Authorisation is issued.
1.3 Are foreign insurers able to write business directly or must they write reinsurance of a domestic insurer?
Under the EU passporting regime, an insurance company authorised in an EEA Member State may write business directly in Ireland on a freedom of services and/or a freedom of establishment basis subject to completion of the necessary notification requirements to their home-state regulator. An insurance company authorised outside of the EEA may directly write marine, aviation and carrier's liability insurance in Ireland, provided that it complies with certain solvency requirements. Otherwise, a third-country insurer is prohibited from directly writing insurance in Ireland.
1.4 Are there any legal rules that restrict the parties' freedom of contract by implying extraneous terms into (all or some) contracts of insurance?
Yes, certain legislation and CBI codes imply terms into contracts between consumers and insurance companies, all of which are primarily aimed at protecting consumers when entering into insurance contracts.
Generally speaking, consumer protection legislation derives its origins from EU directives and includes legislation regarding unfair terms in contracts (e.g., Unfair Terms in Consumer Contracts Directive) and distance selling of insurance products (e.g., Distance Marketing of Financial Services Directive). By way of example, when an insurance contract is entered into by distance means (e.g., online or by telephone), the consumer is afforded a period of time during which the consumer may cancel the contract without penalty (i.e., cooling off rights).
The CBI's Consumer Protection Code (the "Code") also seeks to protect consumers in their dealings with financial services providers (including insurance companies) and was introduced to afford consumers a greater level of protection in the area of financial services. The Code requires insurance companies to "act honestly, fairly and professionally and with due skill, care and diligence in the best interests of consumers" and imposes certain obligations on an insurance company when writing business.
1.5 Are companies permitted to indemnify directors and officers under local company law?
Legislation in Ireland prohibits a company from including in its constitutional documents and contracts any provision which indemnifies its directors and officers from liability to the company in respect of negligence, breach of duty, default or breach of trust. There is one exception to this which provides that a company may indemnify a director and/or officer from any liability incurred by that director or officer in successfully defending civil or criminal proceedings taken against him/her.
A company is, however, permitted to purchase directors' and officers' ("D&O") insurance in relation to the negligence, breach of duty, default or breach of trust of a director. D&O policies generally cover damages awarded against the director, legal costs in relation to an action and in certain circumstances, the costs of the director in relation to any official investigation taken by the regulatory authorities in Ireland. However, D&O policies generally exclude cover for fraud and criminal fines imposed.
1.6 Are there any forms of compulsory insurance?
Yes, there are a number of types of compulsory insurance in Ireland. The most common forms of compulsory insurance are motor vehicle insurance and professional indemnity insurance for certain providers of professional services such as solicitors, accountants and insurance intermediaries.
2 (RE)INSURANCE CLAIMS
2.1 In general terms, is the substantive law relating to insurance more favourable to insurers or insureds?
The law in relation to insurance contracts in Ireland is primarily governed by common law principles, the origins of which can be found in case law. Save for the transposition of EU legislation, there have been very few substantive legislative amendments to the law in this area in recent years.
The substantive law relating to insurance tends to be more favourable to insurers. In practice, however, the Irish courts tend to take a pro-insured approach by strictly applying the legal principles set out in statute, for example under the Marine Insurance Act 1908, which sets out the law on avoidance of insurance policies for material non-disclosure of facts.
A number of common law principles apply to insurance contracts including the principle of "uberrimae fidei" which obliges both parties to disclose all material information in relation to the insurance contract. While the principle applies to both the insurer and the insured, it is generally invoked by the insurer in support of the insurer avoiding an insurance contract for material nondisclosure of fact by the insured.
An insurance contract can also be avoided by the insurer for breach of warranty with effect from the date of breach, whether or not the breach was material to the risk. As a result of this, insurers can avoid cover to insureds in certain circumstances, even when the breach of warranty did not result in the claim arising. This is an important provision for insurers and can allow them to avoid cover should the insured breach a warranty in the insurance contract.
When included in insurance contracts, a choice of law clause can also benefit insurers as it allows them to dictate which governing law applies to the contract should a dispute arise. This can benefit insurers as certain jurisdictions have more "insurer-friendly" laws than others. There are restrictions, however, where the risk in question is not a "large risk" (a consumer contract, by way of example, is generally not a "large risk").
In general terms, insurers retain significant freedom of contract, however, this has been tempered in recent years by legislation in the area of consumer protection including the Unfair Terms in Consumer Contracts Directive and the Distance Marketing of Financial Services Directive. The Unfair Terms in Consumer Contracts Directive, which was transposed into Irish law by secondary legislation, prohibits insurers from including a term in a contract which creates a significant imbalance between the obligations of the parties to the detriment of the consumer. The legislation imposes significant obligations on insurers to ensure that insurance contracts do not create onerous burdens for insureds.
The Distance Marketing of Financial Services Directive requires insurers, in circumstances where the insurance contract was sold to the consumer by distance means (i.e. telephone), to provide insureds with a "cooling-off period" during which they may cancel an insurance contract. This provides an insured with significant protection in circumstances where they enter into a contract before reading the complete terms and conditions of that contract.
The CBI also requires insurers to implement certain procedures when handling customer claims and complaints and the insurer must comply with the provisions outlined in the Code in this respect.
In summary, insurers are afforded significant protection in Ireland to ensure that they are informed of all material information in relation to an insurance contract and the insured complies with the terms of the contract. However, insurers are also obliged to ensure that an insurance contract does not unfairly impose significant obligations on an insured and that they have the correct procedures for communicating with customers should the need arise.
2.2 Can a third party bring a direct action against an insurer?
Under Irish law, in accordance with the common law doctrine of privity of contract, a contract is not generally enforceable in favour of, or against, a person who is not a party to the contract. There is no Irish equivalent of the UK Contracts (Rights of Third Parties) Act 1999.
There are, however, certain statutory exceptions; for example, section 76(1) of the Road Traffic Act 1961 and section 62 of the Civil Liability Act 1961. A claimant in a road traffic accident can claim against the insurance company of the owner or user of the vehicle involved in the accident (section 76(1) of the Road Traffic Act 1961).
Where an insured under a policy of liability insurance becomes bankrupt or dies (individual), is wound up (company), or dissolved (partnership or other incorporated association), a third party may have direct right of action against the insurer under section 62 of the Civil Liability Act 1961. However, the scope and operation of section 62 appears to be relatively limited following recent clarification by the High Court. Liability must be determined in the underlying claim before the insurer is joined to the proceedings at hand. In addition, the Courts will recognise a valid repudiation by an insurer and a claimant cannot remedy a breach by an insured of a condition in its insurance policy.
2.3 Can an insured bring a direct action against a reinsurer?
As a result of the doctrine of privity, a primary policyholder cannot make a direct claim against a reinsurer because the primary policyholder is not a party to the reinsurance contract, only to the policy of insurance that is subsequently reinsured (see section 1).
The general view is that "cut through" clauses (under which the reinsurer agrees to pay the claim to the original policyholder if the reinsured becomes insolvent) are not effective under Irish law because of the doctrine of privity and under insolvency law. In circumstances where an insolvent Irish non-life insurer is unable to meet policyholder liabilities, the liquidator can obtain funds from the Insurance Compensation Fund (the "Fund") to meet those liabilities.
The Insurance Act 1964 (as amended) established the Fund, which is funded by grants and advances made by the Central Bank and contributions by non-life insurers. The Insurance (Amendment) Act 2011 amends the Insurance Act 1964 by introducing a levy of up to 2 per cent on all non-life insurance policies that relate to risks located in the State, in order to contribute to the shortfall of the fund.
2.4 What remedies does an insurer have in cases of either misrepresentation or non-disclosure by the insured?
Pursuant to the Marine Insurance Act 1908, avoidance of the policy is the remedy for non-disclosure (section 18) or material misrepresentation (section 20) by the insured. The policy is voidable by the insurer from inception. However, the Irish courts have not permitted insurers to avoid a policy for material misrepresentation where an incorrect answer is given by an honest proposer. An insurer is not entitled to opt to decline cover of the claim in lieu of avoidance, unless the policy in question contains an innocent non-disclosure clause with this effect.
The Law Reform Commission has recommended that avoidance of an insurance policy should no longer be the main remedy and that in cases of non-disclosure and misrepresentation, the principal remedy should be one of damages in proportion to the failure by the insured.
2.5 Is there a positive duty on an insured to disclose to insurers all matters material to a risk, irrespective of whether the insurer has specifically asked about them?
Parties to contracts of insurance are subject to the duty of utmost good faith: both parties have an overriding duty to disclose all material facts to the other before the contract is made. This goes beyond the usual common law rules on misrepresentation, as the duty of utmost good faith imposes a positive obligation on the parties to make disclosure. It is possible to breach the duty by omission or silence in relation to a material fact.
The remedy for breach of duty is to declare the contract void. In practice, therefore, the duty owed by the insured to the insurer (or cedant to the reinsurer) is the most significant.
A material fact is one which would influence the judgment of a prudent underwriter in deciding:
- Whether to underwrite the contract.
- The terms (such as the premium) on which it might do so.
If a breach of the utmost good faith is alleged, the insurer must show (on a balance of probabilities) that the breach influenced it to make the contract on the particular terms.
2.6 Is there an automatic right of subrogation upon payment of an indemnity by the insurer or does an insurer need a separate clause entitling subrogation?
An insurer has an automatic right of subrogation once the insurer discharges its indemnity on foot of a valid contract of indemnity. It is preferable, however, for an insurance contract to include express subrogation clauses extending and asserting this right.
The insurer is entitled to obtain the benefit of any rights and remedies available to the insured against third parties. Subrogated proceedings are brought in the name of the insured.
3 LITIGATION - OVERVIEW
3.1 Which courts are appropriate for commercial insurance disputes? Does this depend on the value of the dispute? Is there any right to a hearing before a jury?
In Ireland, the jurisdiction in which proceedings are brought depends on the value of the claim. As of 3 February 2014, the monetary jurisdiction of the District and Circuit Court has been increased. The Act increases the monetary jurisdiction of:
- The District Court from €6,384 to €15,000
- The Circuit Court from €38,092 to €75,000, (except in personal injuries cases where the monetary jurisdiction is of €60,000)
Claims with a value in excess of the Circuit Court jurisdiction are heard by the High Court, which has an unlimited monetary jurisdiction. Typically, commercial insurance disputes are heard by the High Court or the Commercial division of the Court, which is a fast-tracked specialised division of the High Court. Insurance and reinsurance disputes can be heard in the Commercial Court if they meet certain criteria, namely that: (i) the value of the claim or counterclaim exceeds EUR1 million; or (ii) the court considers that the dispute is inherently commercial in nature. Cases are admitted into this list following a hearing before the head judge in the Commercial division of the High Court.
Proceedings in the Commercial Court are case-managed and tend to move at a much quicker pace than other High Court cases. However, entry into the list is at the discretion of the judge and may be refused if there is any delay in either bringing the proceedings or seeking entry to the list.
The Commercial Court judges place a strong emphasis on mediation and the Commercial Court Rules provide for up to a four-week stay of proceedings to allow the parties to consider mediation.
There is no right to a hearing before a jury for insurance or reinsurance disputes; such disputes are heard by a judge sitting alone.
3.2 How long does a commercial case commonly take to bring to court once it has been initiated?
The average length of a case heard by the Commercial Court from entry into the Commercial List to conclusion is 20 weeks. However, complex cases will take significantly longer.
4 LITIGATION - PROCEDURE
4.1 What powers do the courts have to order the disclosure/discovery and inspection of documents in respect of (a) parties to the action and (b) non-parties to the action?
A party to proceedings can seek discovery of certain categories of documents which are considered relevant to matters in the dispute and the disclosure of which is necessary to dispose fairly of the case or to save costs.
Discovery is made either as a result of an agreement to make voluntary discovery or, where no agreement is reached, pursuant to a court order. A party to the proceedings must request voluntary discovery of documents and where voluntary discovery is not forthcoming, a party can apply to the Court for an order compelling the same. In addition to relevance and necessity, the Court will consider the proportionality of the request.
Parties involved in the discovery process must disclose all documents that fall within the specific categories agreed or ordered. All documents which are responsive to categories must be disclosed and not just those which are favourable to the party's position in the case.
The High Court can make an order for discovery against a non-party where it appears that the non-party is likely to have or have had documents in their possession which are relevant to the issues in dispute in the proceedings. The party seeking the non-party discovery must establish that the non-party is likely to have or have had documents in his possession, custody or power and that they are documents relevant to an issue arising or likely to arise. The party seeking non-party discovery must also indemnify the non-party against the costs of discovery. In deciding whether to grant an order for non-party discovery, the Court must also take into account the potential prejudice/oppression that the non-party may have to endure as a result of complying with the Court order. An order will only be made if the documents in question cannot be obtained by other means.
The normal time for obtaining discovery is after the defendant has delivered its defence. However, in limited circumstances it is possible to obtain discovery by court order prior to the commencement of proceedings. However, the courts will exercise their power to make such an order sparingly and only in cases where a very clear proof of wrongdoing exists and where the information sought are the names and identities of wrongdoers rather than factual information concerning the commission of a wrong.
4.2 Can a party withhold from disclosure documents (a) relating to advice given by lawyers or (b) prepared in contemplation of litigation or (c) produced in the course of settlement negotiations/attempts?
The concept of legal professional privilege protects from disclosure certain communications between a client and his solicitor. When legal privilege has been established neither the client nor the solicitor can, for any reason, be compelled to disclose details of this communication. There are two types of legal professional privilege:
(a) litigation privilege; and
(b) legal advice privilege.
- Litigation privilege arises only after
litigation or other adversarial proceedings are contemplated or
commenced and it protects all documents produced for the sole or
dominant purpose of the litigation in question. Litigation
privilege includes all communications between:
- a solicitor and his client;
- a solicitor and his non-professional agent; and
- a solicitor and a third party.
- Legal advice privilege protects communications between a solicitor, acting in his professional capacity, and his client, provided that the communication is confidential and for the purpose of seeking or giving legal advice. The key difference between litigation privilege and legal advice privilege is that correspondence with an independent third party is not covered by legal advice privilege. Legal advice privilege arises whether or not proceedings are contemplated or in being, and it is focussed on communications between a client and their legal advisers. The courts have held that in order to attract legal advice privilege, a document must include advice as to what prudently and sensibly should be done in the relevant legal context. The document needs to deal with strategic matters rather than just the passing of information. "Legal assistance" does not attract privilege.
- A communication made without prejudice for the purpose of negotiating a settlement, including mediation, is protected from disclosure or admissibility as evidence in court. A form of privilege is afforded to these documents in the interests of reducing litigation by encouraging settlement. However, the mere attachment of the label "without prejudice" to a document does not in itself preserve it from disclosure. The privilege extends not only to negotiations between prospective or actual plaintiffs and defendants, but also to discussions between defendants where the discussions relate to settlement of issues as between those parties.
4.3 Do the courts have powers to require witnesses to give evidence either before or at the final hearing?
Where the attendance of a witness is required at the trial of an action, the lawyer for either party can issue a witness summons on an individual resident in Ireland, which is commonly referred to as a subpoena. Any witness properly served with a subpoena who fails to attend can be attached for contempt of court, since a subpoena is a court order from the court to attend the hearing for the purpose of giving evidence and not simply a direction or request from the solicitor.
There are two types of subpoena: subpoena ad testificandum; and subpoena deuces tecum. The former required a witness simply to attend court to give oral evidence and the latter requires a witness not only to attend for the purpose of giving evidence but also to bring certain documents specified in the subpoena itself. Service is effected by delivering a copy of the subpoena, indorsed with the name of the solicitor or party issuing it, and producing the original at the same time. A viaticum (a sum of money to cover reasonable expenses) must also be paid to the witness.
If the person required to give evidence is out of the jurisdiction, it is not possible to require attendance through service of a summons. In such circumstances, it is possible to apply to take evidence on commission, or use letters rogatory, or in some cases, where the witness is in the US, rely on a procedure under Title 28 of the United States Code 1782 to compel a witness in the United States to give evidence in proceedings before the Irish Courts. A United States Federal District Court can order a witness in the US to produce documents or give testimony for use before a foreign tribunal.
4.4 Is evidence from witnesses allowed even if they are not present?
The cardinal principle is that evidence is, in general, to be given orally. The Courts have reaffirmed on a number of occasions that the examination of witnesses viva voce and in open court is central to our system of justice and therefore, this rule should rarely be departed from. In the absence of an agreement in writing between the parties, the witnesses at the trial of any action are usually examined in open court and on oath or affirmation.
In the majority of interlocutory hearings, evidence is adduced on affidavit. If evidence is given on affidavit, it is open to the other side to require the deponent to appear in court for the purposes of cross examination. Other than in interlocutory hearings, the Courts have confirmed that they will only make an order dispensing with oral evidence in relation to formal or collateral matters as opposed to issues which are central to the proceedings. Where a party shows a bona fide desire to cross examine a witness on such issues, the Court no longer has the power to dispense with the need for the witness to give evidence orally.
The Rules of the Superior Courts provide that a judge may allow a witness to give evidence, whether from within or outside the State, through a live video link or by other means as the judge may direct. The rules do not prescribe any criteria that have to be satisfied in order for this to be permitted and the judge has a wide discretion. Such an order is most likely to be made in respect of witnesses who are outside the jurisdiction and whose evidence is not central to the proceedings.
In limited circumstances, such as illness of the witness, evidence can be given by commission. This involves the questioning of the witness in a place other than the court by an independent lawyer commissioned by the Court to take the evidence.
Council Regulation (EC) No. 1206/2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters, permits the court of one Member State to request the court of another Member State to take evidence for use in proceedings in the court of the first Member State. Both evidence and documents may be obtained under this procedure. The Rules of the Superior Courts provide for the taking of evidence from witnesses resident outside the EU. (Ireland is not a party to the Hague Convention on the taking of evidence abroad in civil or commercial matters.)
4.5 Are there any restrictions on calling expert witnesses? Is it common to have a court-appointed expert in addition or in place of party-appointed experts?
There are no general restrictions on calling expert witnesses. Each party generally appoints an expert. However, in certain categories of case, for example competition law and personal injury cases, legislation grants the court authority to appoint one expert. Despite this authority, a single court-appointed expert is rarely appointed in practice.
The rules of the Commercial Court require the parties to exchange expert reports in advance of the trial and pre-trial directions will include directions in relation to expert reports. It is not common, however, for expert reports to be exchanged pre-trial in other courts.
The role of an expert is to "elaborate on the principles applicable to an esoteric discipline and to indicate why, as a matter of good sense and as a matter of opinion, a finding of fact ought to be made in one way rather than the other" (as per Charlton J in James Elliot Construction Limited v Irish Asphalt Limited (2011)). Charlton J cautioned in that case, however, that expert witnesses, however skilled or eminent, cannot usurp the functions of the court. Their duty is to furnish the judge with the necessary scientific opinion criteria for testing the accuracy of their conclusions, so as to enable the judge to form his/her own independent judgment by the application of these contacts to the facts provided in evidence. Every expert witness has to be evaluated on the basis of sound reasoning. The following factors will be considered by the judge in deciding what weight to attach to a witness' opinion:
- the internal consistency and logic of his/her evidence;
- his/her precision and accuracy of thought as demonstrated by his/her answers;
- how the expert responds to cross examination and in particular, the extent to which an expert accepts the logic of a proposition put in cross examination or is prepared to concede points that are seen to be correct;
- the extent to which an expert has conceived an opinion and is reluctant to re-examine it in light of later evidence or demonstrate a flexibility of mind which may involve changing opinions previously held;
- whether or not the report is biased or lacks independence; and
- the expert's demeanour in the witness box.
4.6 What sort of interim remedies are available from the courts?
The most common interim remedy is an injunction. The court has an equitable discretion to grant an interim injunction ex parte so as to maintain the status quo between the parties from the time of the grant of the injunction until the final disposal of the action. However, if time permits, the application should be made on notice to the other side. An ex parte interim injunction is usually granted on the same day but is generally only granted in cases of urgency for a short period of time, typically until the date on which the interlocutory injunction application is to be heard.
An interlocutory injunction is one which must be applied for on notice to the other side and are only granted after a court hearing has taken place with all parties present. Interlocutory injunctions, while temporary, last until the court makes some further order or until trial. Mandatory injunctions are available and the court takes the same factors into account as for prohibitory injunctions. However, as a mandatory injunction imposes a positive obligation to carry out some act, the court is generally more hesitant to grant it.
An applicant for an injunction must provide an undertaking in respect of any damages suffered by the respondent for which he may be liable as a result of the injunction being granted in the event that he is ultimately unsuccessful in the proceedings.
The fundamental principles the court will adopt when deciding whether to grant an injunction are: (1) whether there is a serious issue to be tried; (2) whether damages would be an appropriate remedy; and (3) whether the balance of convenience lies in favour of the grant of the injunction.
Specific types of injunction include the following:
- Quia Timet injunction prevents an anticipated infringement of a legal right:
- a Mareva injunction prevents the removal or dissipation of assets from the jurisdiction;
- Anton Pillar Orders allow for entry onto the premises of a defendant for the inspection and removal of items of evidence; and
- Bayer Injunctions can be sought to prevent a defendant from leaving the jurisdiction.
It should be noted, however, that the courts rarely grant Anton Pillar Orders, Mareva injunctions or Bayer injunctions because of the onerous impact they may have on an individual's rights and they are therefore only available in limited circumstances.
The Court, at its discretion, may make an interim attachment order to preserve assets pending judgment. An application for an order can be brought where it can be established that the defendant has assets within the jurisdiction and there is a serious risk of those assets being dissipated with the intention of evading judgment prior to the hearing of the action. This is very hard to prove and such orders are rare. Additionally, the claimant is responsible for any loss resulting from the freezing of the defendant's assets if the order was not honestly obtained with full and frank disclosure.
4.7 Is there any right of appeal from the decisions of the courts of first instance? If so, on what general grounds? How many stages of appeal are there?
The courts of first instance in civil matters are the District Courts, Circuit Court and the High Courts. An appeal lies from any decision of the District Court in civil matters to the Circuit Court. The Circuit Court is a court of limited and local jurisdiction organised on a regional basis. There lies an appeal from the District Court to the Circuit Court in all matters, however either party can also make an appeal on a point of law by way of case stated to the High Court. An appeal from the District Court to the Circuit Court is a re-hearing of the full action de novo before the judge of the Circuit Court, in the Circuit where the District Court is situated, unless the judge orders otherwise.
There is a right of appeal from the Circuit Court to the High Court. The High Court has full original jurisdiction in and the power to determine all matters, whether of law or fact, civil or criminal. There is a further right of appeal from the High Court to the Supreme Court. A decision may be appealed to the Supreme Court on a point of law or fact. However, the Supreme Court will generally be reluctant to overturn a finding of fact by the High Court, unless it is satisfied that the evidence which has been acted on could not reasonably have been correct.
There are currently significant backlogs in the Supreme Court, however a new Court of Appeal is expected to be introduced in the third quarter of 2014, to deal with appeals from the High Court and alleviate the current delays in the system. It is expected that 10 new judges will be appointed to the Court of Appeal, which will hear both civil and criminal appeals and leave the Supreme Court free to focus on cases of public or constitutional significance. The Court of Appeal will hear appeals from the High Court except when the Supreme Court believes a case is of such public importance that it should go directly to the highest court in the State. The Supreme Court will also take appeals directly from the High Court where it deems "the interests of justice" require it.
4.8 Is interest generally recoverable in respect of claims? If so, what is the current rate?
Section 22(1) of the Courts Acts 1961 provides that in proceedings where a court orders the payment of a sum of money (damages), the court also has discretion to order the payment of interest on the whole or any part of such damages in respect of a part or the entire period between the dates when the cause of action accrued and the date of judgment. Under section 50 of the Court and Court Officers Act 2002, the Master of the High Court and Circuit Court County Registrars also have the discretion to order payment of interest on the whole or any part of the damages, up to the date of judgment. This rate of interest currently stands at 8 per cent. This is discretionary and it is only awarded in cases where the trial judge deems it appropriate.
4.9 What are the standard rules regarding costs? Are there any potential costs advantages in making an offer to settle prior to trial?
The general rule is that costs follow the event i.e., the loser pays. However, there is a growing body of case law, mainly emanating from the Commercial Court which suggests that if the litigation is "complex", the court should engage in a more detailed analysis and should not just award full costs to the winning side in these cases if the plaintiff has not succeeded in all claims. "Complex" tends to mean that there are a number of discrete issues being claimed that are separate from each other, and not just one claim. The principles applicable to the assessment of costs in complex litigation were set out by Clarke J in Veolia Water UK plc v Fingal County Council (2006). In complex litigation, where a winning party has not succeeded on all issues, the court should consider whether it is reasonable to assume that the costs were increased by the successful party having raised additional issues upon which it was not successful, and reflect this in the costs order.
There are a number of tools which a defendant can use to put the plaintiff "on risk for costs", including lodgments, tenders and calderbank offers. The Rules of the Superior Courts (High and Supreme Courts) (Order 22, rule 1(1) RSC) provide for a lodgment procedure to encourage early settlement of cases thereby avoiding the expense and court time involved in full trial. In essence, the defendant can lodge money in court by way of offer to the plaintiff in full and final settlement of the plaintiff's claim. If the plaintiff refuses or fails to accept the lodgment and fails to "beat the lodgment" at the hearing of the action, the plaintiff will be penalised as to costs. Generally, the plaintiff will have to bear their own costs from the date of lodgment onwards and also discharge the defendant's costs from that date onwards, unless the court orders otherwise. Insurers are permitted to make a tender offer in lieu of lodging the money into Court.
A calderbank offer is an offer to settle the proceedings made "without prejudice save as to costs" and has a statutory basis pursuant to Order 99 of the Rules of the Superior Courts. Where the settlement offer is declined, and the plaintiff does not beat the calderbank offer, this can severely reduce any award for court costs that that party might otherwise have been legally entitled to, and in some cases can result in the winning party being made to pay the losing parties legal costs. The Courts have recognised the desirability of imposing financial consequences on a plaintiff who refuses what ultimately proves to have been a reasonable offer of settlement notwithstanding that the same was made on a without prejudice basis. A calderbank offer will not be effective where a lodgment or tender could have been made. In personal injuries actions, this effectively limits the use of calderbank offers to actions for non-monetary relief.
4.10 Can the courts compel the parties to mediate disputes? If so, do they exercise such powers?
No. However, in the High Court and Circuit Court, a judge may adjourn legal proceedings on application by either party to the action or of its own initiative, to allow the parties to engage in an Alternative Dispute Resolution (ADR) process. This means mediation, conciliation or any other dispute resolution process approved by the High Court. Where the parties decide to use the ADR process, the rules provide that the court may extend the time for compliance with any provision of the rules. The courts may also make any orders or directions it considers necessary to facilitate effective use of the mediation process.
The court can invite the parties to use ADR but cannot compel them. There are costs sanctions for parties who unreasonably refuse to mediate.
A draft general scheme of a Mediation Bill was published in 2012 by the Department of Justice. The aim of the proposed Bill is to encourage and facilitate the use of mediation in resolving civil, commercial and family disputes. It seeks to provide an effective and efficient alternative to litigation by reducing legal costs and speeding up the resolution of disputes. Under the Bill, solicitors will be required to advise clients, prior to initiating proceedings, to consider mediation and sign a certificate accordingly, confirming that they have been so advised. The publication of the Mediation Bill has been further delayed until late 2014 and enactment will be likely to follow in 2015.
4.11 If a party refuses to a request to mediate, what consequences may follow?
A party failing to mediate following a direction of the court can be penalised as to costs.
5.1 What approach do the courts take in relation to arbitration and how far is the principle of party autonomy adopted by the courts? Are the courts able to intervene in the conduct of an arbitration? If so, on what grounds and does this happen in many cases?
The Irish courts have adopted a very "hands-off" approach in relation to arbitration proceedings. Irish arbitration law is governed by the Arbitration Act 2010 (the "2010 Act"). The 2010 Act provides certainty in relation to the arbitral process in Ireland while maintaining the independence of the arbitral process and protecting the autonomy of the parties who have chosen to arbitrate and agreed on the application of certain procedures.
Section 9 of the 2010 Act provides that the High Court is the relevant court for applications under the 2010 Act. Section 11 provides that there is no right of appeal from the High Court in respect of applications under the 2010 Act. This means that the High Court's decision is final in respect of any application made to it which would include:
- A stay application under section 11(a).
- An application to set aside under section 11(b)(i).
- An application for the recognition and enforcement of an arbitration award under section 11(b)(i) and 11(c).
The High Court has powers for granting interim measures of protection and assistance in the taking of evidence, although most interim measures may now also be granted by the arbitral tribunal under the 2010 Act. The Irish High Court's powers are subject to section 10(2) of the 2010 Act which provides that the High Court is not at liberty to order security for costs or discovery of documents unless otherwise agreed by the parties. Additionally, section 32 of the 2010 Act provides that the court may adjourn court proceedings at any time with the consent of the parties in order to give the parties time to consider whether the dispute should be referred to arbitration. Once an arbitrator is appointed and the parties agree to refer their dispute for the arbitrator's decision, then the jurisdiction for the dispute effectively passes from the court to the arbitrator.
5.2 Is it necessary for a form of words to be put into contract of (re)insurance to ensure that an arbitration clause will be enforceable? If so, what form of words is required?
Despite the Courts' "hands off approach", a contract which does not contain a written arbitration agreement is not arbitrable and is specifically excluded from the application of the 2010 Act. The arbitration agreement must be in writing whether by way of a clause in the substantive contract or by way of separate agreement. While section 2(2) of the 2010 Act stipulates that such clauses should be in writing, this provision has been given a broad interpretation to include an agreement concluded orally or by conduct as long as its content has been recorded in writing. The importance of a properly worded arbitration clause cannot be over-emphasised. Frequently, agreements contain arbitration clauses which are poorly drafted and are either inadequate as a basis for the intended arbitration or are ill suited to the kind of dispute which the arbitration is intended to resolve.
A particular feature of the 2010 Act is that it gives the parties autonomy over a range of issues which include not only the arbitration procedure but the powers to be given to the arbitral tribunal and to the court. However, where the parties have not directed otherwise, the 2010 Act contains important default provisions and accordingly, when drafting an arbitration clause, parties should give careful consideration as to whether or not they are agreeable for the default provisions to apply.
5.3 Notwithstanding the inclusion of an express arbitration clause, is there any possibility that the courts will refuse to enforce such a clause?
Article 8 of the 2010 Act provides that the Court will refuse to refer the parties to arbitration where it finds the arbitration agreement to be null and void, imperative or incapable of being performed.
The 2010 Act also excludes arbitration agreements which relate to employment disputes. The purpose of excluding such employment arbitrations from the provisions of the 2010 Act was to allow these types of disputes to be dealt with by tribunals established to specifically deal with these issues.
Section 31 of the 2010 Act further provides that a party to an arbitration agreement who is a consumer shall not be bound (unless he or she has agreed after the dispute has arisen) by an arbitration agreement where the agreement between the parties contains a term which has not been individually negotiated concerning the requirement to submit disputes which may arise to arbitration and the dispute involves a claim for an amount not exceeding €5,000.
5.4 What interim forms of relief can be obtained in support of arbitration from the courts? Please give examples.
The Irish courts are not precluded from granting interim measures, although most interim measures may now also be granted by the arbitral tribunal, for example the tribunal has a default power to order interim measures such as the grant of interim injunctions and securing monies or goods in dispute. The High Court can further assist the arbitral tribunal or a party in relation to the provision of evidence, however it has no jurisdiction with regard to discovery without the express agreement of the parties. Section 10 of the 2010 Act provides that the High Court may not, unless otherwise agreed by the parties, make any order for the security of costs or discovery of documentation. Accordingly, party autonomy will govern the court's jurisdiction over these issues.
5.5 Is the arbitral tribunal legally bound to give detailed reasons for its award? If not, can the parties agree (in the arbitration clause or subsequently) that a reasoned award is required?
Section 31 of the 2010 Act places a requirement on the arbitral tribunal, unless the parties have agreed otherwise, to give reasons for its award. Accordingly, if parties do not want the arbitral tribunal to give reasons in its award they should provide for this in the arbitration agreement. An arbitrator can only make one final award, therefore, once he has made that award, his jurisdiction in relation to the arbitration for all intents and purposes ends.
5.6 Is there any right of appeal to the courts from the decision of an arbitral tribunal? If so, in what circumstances does the right arise?
Article 34 of the 2010 Act deals with applications to the court for setting aside an award. The grounds on which a court can set aside an award are extremely limited and correspond with those contained in Art V of the New York Convention which requires the party making the application to furnish proof that:
- a party to the arbitration agreement was under some incapacity or the agreement itself was invalid;
- the party making the application was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
- the award deals with a dispute not falling within the ambit of the arbitration agreement; the arbitral tribunal was not properly constituted; or
- the award is in conflict with the public policy of the State.
An application to set aside the award under article 34 must be made within three months from the date on which the party making the application has received the award, or if a request for correction and interpretation of the award has been made to the arbitral tribunal under article 33, then within three months of the date when a decision on the request has been made by the arbitral tribunal.
Originally published by Global Legal Group Ltd, London.
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