Ireland: International Arbitration 2014: The Irish Perspective

1 ARBITRATION AGREEMENTS

1.1 What, if any, are the legal requirements of an arbitration agreement under the laws of Ireland?

The Arbitration Act 2010, which applies to arbitrations commenced in Ireland from 8 June 2010, applies Option 1 of Article 7 of the UNCITRAL Model Law to the requirements of an arbitration agreement. It provides that the arbitration agreement shall be in writing, whether in the form of an arbitration clause in a contract or in the form of a separate agreement. The concept of the agreement being in written form is broadly interpreted. An agreement will be in writing if its content is recorded in any form, notwithstanding that the arbitration agreement or contract may have been concluded orally, by conduct or by other means. Electronic communications can satisfy the requirement that the arbitration agreement be in writing if useable for subsequent reference. An arbitration agreement will also be considered to be in writing if it is contained in an exchange of a claim and defence in which the existence of an agreement is alleged and not denied.

1.2 What other elements ought to be incorporated in an arbitration agreement?

Various matters which facilitate the progress of the dispute before the arbitrator should be included in the arbitration agreement. To avoid delays and other difficulties after the dispute arises, it is often best to have a reasonably detailed arbitration agreement in place before any dispute.

The parties should consider making provisions for setting the number of arbitrators (the Arbitration Act 2010 sets one arbitrator as the default number), their qualification(s) and other criteria relevant to their appointment, as well as how they are to be chosen. The agreement should also set out a default mechanism if the parties cannot agree on the arbitrator, such as referring the question of who is to be appointed to a relevant professional body. Equally, the parties should consider whether they wish to make provisions for a replacement arbitrator if the appointed arbitrator cannot continue, for whatever reason. They should also consider whether they wish to make express provisions to adopt particular procedures or rules regarding the conduct of the arbitral proceedings. In addition, they might consider whether to give the High Court jurisdiction in respect of security for costs and discovery (which are otherwise excluded from the High Court's jurisdiction under Section 10(2) of the Arbitration Act 2010). The arbitration agreement might also specifically address the question of interest and costs, although there are default positions set out in the Arbitration Act 2010. A statement as to the venue for any arbitration and the language in which it is to be conducted is helpful.

1.3 What has been the approach of the national courts to the enforcement of arbitration agreements?

Irish courts have historically been very supportive of arbitration and this approach is continuing under the Arbitration Act 2010. Indeed, under the Arbitration Act 2010, the possibility of appeal to the Supreme Court is limited, which is indicative of the legislative support for arbitration. The Irish courts have displayed a strong policy of staying court proceedings in favour of agreements to arbitrate. Article 8 of the Model Law sets out the relevant principles that are applied in Irish law. If an action is brought before the court in a matter which is the subject of an arbitration agreement, the court shall refer the parties to arbitration if a party so requests, unless the court finds that the agreement is null and void, inoperative or incapable of being performed. A party seeking a stay of court proceedings and a referral of the dispute to arbitration must act without delay and, in any event, not later than when submitting his first statement on the substance of the dispute.

2 GOVERNING LEGISLATION

2.1 What legislation governs the enforcement of arbitration proceedings in Ireland?

The Arbitration Act 2010 applies to all arbitrations commenced after 8 June 2010 and it applies the UNCITRAL Model Law. The Arbitration Act 2010 itself entered into force as from 8 June 2010. It also applies to the enforcement of arbitration proceedings where the arbitration commenced after that date.

2.2 Does the same arbitration law govern both domestic and international arbitration proceedings? If not, how do they differ?

The Arbitration Act 2010 applies to both domestic and international arbitrations.

2.3 Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two?

Yes, the law governing international arbitration is based on the UNCITRAL Model Law. The Arbitration Act 2010 adopts the UNCITRAL Model Law, as amended in 2006. The UNCITRAL Model Law is reproduced in its entirety as a schedule to the Act. Section 6 of the Arbitration Act 2010 provides that, subject to the provisions of that Act, "the Model Law shall have the force of law in the State". The Act clarifies the functions of the High Court, the court's powers in support of arbitration proceedings, the tribunal's powers in relation to the examination of witnesses, consolidation of arbitral proceedings and the holding of concurrent hearings, awards of interest, and costs, as well as the question of provision of security for costs.

2.4 To what extent are there mandatory rules governing international arbitration proceedings sited in Ireland?

The Arbitration Act 2010 (and, through it, the UNCITRAL Model Law) is applicable to all arbitrations commenced in Ireland on or after 8 June 2010.

3 JURISDICTION

3.1 Are there any subject matters that may not be referred to arbitration under the governing law of Ireland? What is the general approach used in determining whether or not a dispute is "arbitrable"?

As a general principle, unwritten arbitration agreements do not fall within the scope of the Arbitration Act 2010. More specifically, Section 30 of the Act clarifies that the Act does not apply to disputes regarding the terms and conditions of employment or the remuneration of employees, or to arbitrations conducted under Section 70 of the Industrial Relations Act 1946. The Arbitration Act 2010 also does not apply to arbitrations conducted by a property arbitrator appointed under Section 2 of the Property Values (Arbitration and Appeals) Act 1960. Under the Arbitration Act 2010, consumer disputes, where the arbitration clauses are not individually negotiated and which are worth less than €5,000, are only arbitrable at the election of the consumer.

3.2 Is an arbitrator permitted to rule on the question of his or her own jurisdiction?

Yes. Article 16 of the Model Law governs the situation and provides that the "arbitral tribunal may rule on its own jurisdiction", which includes any questions regarding the existence or validity of the arbitration agreement. Any assertion that the tribunal does not have jurisdiction must be raised no later than the submission of the statement of defence. A plea that the tribunal is exceeding the scope of its authority should be raised as soon as the matter arises in the proceedings. The Arbitration Act 2010 designates the High Court as the relevant court for purposes of Article 16(3) and any subsequent challenge to a tribunal's determination on jurisdiction.

3.3 What is the approach of the national courts in Ireland towards a party who commences court proceedings in apparent breach of an arbitration agreement?

As set out above at question 1.3, the Irish courts are supportive of agreements to arbitrate. Where an arbitration agreement exists, the courts are obliged under Article 8 of the Model Law to refer the parties to arbitration, if an application by a party is brought not later than submitting the first statement on the substance of the dispute and provided that the written arbitration agreement is not null and void, inoperative or incapable of being performed. No appeal to the Supreme Court is permitted in respect of a decision of the High Court under Article 8.

3.4 Under what circumstances can a court address the issue of the jurisdiction and competence of the national arbitral tribunal? What is the standard of review in respect of a tribunal's decision as to its own jurisdiction?

In relation to jurisdiction, see question 3.2 above.

Article 14 of the Model Law provides that if an arbitrator becomes de facto or de jure unable to perform his functions, or for other reasons fails to act without undue delay, his mandate terminates if he withdraws or the parties agree upon termination. However, if a controversy remains, the High Court may decide upon the termination of the mandate. Equally, Article 12 of the Model Law provides that an arbitrator may be challenged if circumstances exist that give rise to doubts as to his impartiality, independence, or if he does not possess the qualifications agreed upon by the parties. That latter issue, in particular, could touch upon issues of competence. If the challenging party does not agree with the tribunal's decision in respect of the challenge, the High Court can be asked to decide under Article 13.

There is no Irish case law in respect of the standard to be applied by the tribunal in considering such a challenge. However, although there is no definitive statement, there is authority in respect of the standard of review which the High Court is to adopt when it is faced with deciding upon the existence of an arbitration agreement under Article 8. In such cases, it appears that the court should reach its decision based on a full consideration of the position on hearing both sides. For a tribunal considering its jurisdiction, it would be prudent to adopt the same standard and not the alternative prima facie basis in taking the applicant's case at its highest and assuming that all evidence is true.

3.5 Under what, if any, circumstances does the national law of Ireland allow an arbitral tribunal to assume jurisdiction over individuals or entities which are not themselves party to an agreement to arbitrate?

None at all. The tribunal cannot exercise any jurisdiction over a party who is not a party to the arbitration agreement. Moreover, the tribunal cannot order the consolidation of arbitral proceedings or concurrent hearings unless the parties agree (Section 16, Arbitration Act 2010). The courts cannot give a tribunal jurisdiction over individuals or entities that are not a party to an arbitration agreement. However, pursuant to Section 32 of the Arbitration Act 2010, the courts can adjourn court proceedings to facilitate arbitration if it thinks it appropriate to do so and the parties consent.

3.6 What laws or rules prescribe limitation periods for the commencement of arbitrations in Ireland and what is the typical length of such periods? Do the national courts of Ireland consider such rules procedural or substantive, i.e., what choice of law rules govern the application of limitation periods?

The Statute of Limitations Act 1957 (as amended) applies to arbitration in the same way as it applies to actions taken in the courts. Therefore, the limitation periods for the commencement of arbitrations are those limitation periods applicable to causes of action in the courts. The applicable limitation period will depend on the particular cause of action in law which is the subject matter of the dispute. As a general principle, the limitation period for contractual claims is six years from the date of commencement or accrual of the cause of action. Section 7 of the Arbitration Act 2010, clarifies when arbitral proceedings are deemed to have commenced, amending the Irish Statute of Limitations. It should be noted that, unlike a court (which views these rules as procedural), an arbitral tribunal does not have any power to extend the limitation periods laid down by the Statute of Limitations. In such circumstances, any limitation issue falls to be determined by the law governing the underlying dispute. However, under Irish law, should that apply to the underlying dispute, the parties may, by agreement, circumscribe and foreshorten the limitation periods applicable to their dispute. Accordingly, the arbitration agreement itself may impose a limitation period for the commencement of arbitration.

3.7 What is the effect in Ireland of pending insolvency proceedings affecting one or more of the parties to ongoing arbitration proceedings?

Section 27 of the Arbitration Act 2010 provides that where an arbitration agreement forms part of a contract to which a bankrupt is a party, the agreement shall be enforceable by or against him if the assignee or trustee in bankruptcy does not disclaim the contract.

4 CHOICE OF LAW RULES

4.1 How is the law applicable to the substance of a dispute determined?

Generally, and in the first instance, the law applicable to the substance of the dispute is determined by reference to the choice of law governing the agreement. If there is no express choice of law, the arbitrator may determine the governing law by reference to applicable international standards (such as the Regulation 593/2008/EC on the Law Applicable to Contractual Obligations – the "Rome I Regulation").

4.2 In what circumstances will mandatory laws (of the seat or of another jurisdiction) prevail over the law chosen by the parties?

As a general principle, none, save that certain provisions of local law will be mandatory in terms of the existence or otherwise of a binding arbitration clause, and the conduct of the arbitration itself. However, the principal difficulty that might arise is where the agreement between the parties, in respect of which the dispute arises, may be said to be contrary to the public policy of the seat of the arbitration (for example, if the subject matter involves fraud or corruption).

4.3 What choice of law rules govern the formation, validity, and legality of arbitration agreements?

If the arbitration is being conducted in Ireland under the Arbitration Act 2010, Irish law governs the formation, validity and legality of arbitration agreements to the extent set out in that Act.

5 SELECTION OF ARBITRAL TRIBUNAL

5.1 Are there any limits to the parties' autonomy to select arbitrators?

There are no limits on the parties' autonomy to select arbitrators or the criteria for selection. The parties are also free to agree upon the number of arbitrators to form the tribunal. Given that agreement upon the arbitrator(s) can be difficult to reach, many agreements provide for a default mechanism, which typically involves an application by either party to the president of a named professional body requesting that he or she appoint an arbitrator. If the parties make no choice as to the number of arbitrators or mechanism of appointment, the default position is a tribunal of one arbitrator, with that arbitrator to be appointed by the High Court.

5.2 If the parties' chosen method for selecting arbitrators fails, is there a default procedure?

In the absence of agreement on appointment or an alternative default mechanism, the Arbitration Act 2010 provides that the default number of arbitrators shall be one and Article 11 of the Model Law, when read with the Arbitration Act 2010, provides that the High Court is the default appointing authority.

5.3 Can a court intervene in the selection of arbitrators? If so, how?

The courts cannot intervene in the selection of arbitrators, save under Article 11 in circumstances where the parties cannot agree upon an arbitrator and do not provide for an alternative default mechanism in their agreement. The High Court can also determine whether an arbitrator may continue to act where a challenge is brought under Articles 13 or 14 of the Model Law.

5.4 What are the requirements (if any) as to arbitrator independence, neutrality and/or impartiality and for disclosure of potential conflicts of interest for arbitrators imposed by law or issued by arbitration institutions within Ireland?

Article 12 of the Model Law provides that where a person is approached in connection with appointment as an arbitrator, they are obliged to disclose any circumstances that are likely to give rise to justifiable doubts as to impartiality or independence. The duty to make such disclosure is ongoing and an arbitrator is obliged to disclose any such circumstances throughout the arbitral proceedings.

To read this Chapter in full, please click here.

This article appeared in the 2014 edition of The International Comparative Legal Guide to: International Arbitration; published by Global Legal Group Ltd, London.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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