Arbitration, long established as a preferred method for dispute resolution in many global contexts, boasts of a nuanced and intricate framework in Ireland. While it offers a structured and legally backed avenue for parties to address and resolve conflicts, there are certain disputes which, by nature or statutory provision, fall outside its purview. Moreover, while arbitration agreements provide a foundational basis for the process, questions often arise around their enforceability, especially in the face of changing circumstances such as insolvency or the involvement of third parties. This blog delves into the complex tapestry of arbitration in Ireland, elucidating key aspects like arbitrability of specific disputes, prerequisites of arbitration agreements, and the circumstances under which such agreements may be rendered unenforceable. Drawing from established legal texts and significant case law, we aim to provide readers with a comprehensive understanding of the subject, shedding light on common queries and misconceptions. Whether you’re a legal professional, a business entity contemplating arbitration, or simply a curious mind, join us as we navigate the multifaceted landscape of Irish arbitration.
Arbitrability
Are there any types of disputes that are not arbitrable?
Disputes concerning the grant or revocation of patents and trademarks are not arbitrable (section 7 and section 57 of Patents Act 1992) Disputes involving competition law are arbitrable, but an annulment by a court can arise on the grounds of public policy (Case C-126/97 Eco Swiss China). Other disputes that are not arbitrable include the imposition of criminal liability, family and constitutional issues, aspects of employment law, certain landlord and tenant disputes and disputes concerning contracts whose objects are illegal or contrary to public policy (B. Mansfield Arbitration in Ireland (2nd ed. Claurus Press, Dublin, 2018) at p. 101-102; Dowling-Hussey and Dunne, Arbitration Law 2nd ed. (2014, Dublin: Round Hall) at 2-01n).
Requirements
What formal and other requirements exist for an arbitration agreement?
As per section 2 of the Arbitration Act 2010 (2010 Act), the requirements of an arbitration agreement are set out in Option 1 of article 7 of the Model Law. The parties cannot waive formal requirements.
An arbitration agreement shall be in writing (article 7(2)-(6)). An arbitration agreement is in writing if its content is recorded in any form, including by electronic communication:
- if the information contained therein is accessible and useable for subsequent reference;
- if contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other; or
- if there is a reference in a contract to any document containing an arbitration clause, if that clause forms part of the contract.
There are no formal execution requirements. Arbitration agreements can be contained in general terms and conditions.
Enforceability
In what circumstances is an arbitration agreement no longer enforceable?Agreement
An arbitration agreement will no longer be enforceable if there is an agreement to terminate by the parties.
Repudiation
If one party is in breach of contractual arrangement, the party not in breach can accept same and choose to end the contractual arrangement or seek to enforce the arbitration agreement.
Capacity
The normal rules of Irish contract law apply to the validity of an arbitration agreement. Individuals will most often be deemed to lack the ability to enter into an arbitral agreement where they are minors or adults who can be said to be suffering from a lack of capacity due to, for example, intoxication (Matthews v Baxter[1873] LR 8 Exch. 132) or poor mental health (Imperial Loan Co v Stone [1892] 1 QB 559). A corporate entity may lack capacity where the person who signed the relevant documents did not have the authorisation to do so under the Companies Act 2014 and the agreement was made ultra vires the company.
Death
Section 26 of the 2010 Act provides that an arbitration agreement shall not be discharged by the death of any party thereto, but shall be enforceable by or against the personal representative of the deceased.
Insolvency
Section 27(1) of the 2010 Act sets out that where an arbitration agreement forms part of a contract to which a party is bankrupt, the agreement shall, if the assignee or trustee in the bankruptcy does not disclaim the contract, be enforceable by or against them insofar as it relates to any dispute arising out of, or in connection with, such a contract.
Section 27(2) sets out that where a person who has been adjudicated bankrupt had, before the commencement of the bankruptcy, become a party to an arbitration agreement, and any matter to which the agreement applies requires to be determined in connection with or for the purposes of the bankruptcy proceedings, and the case is one to which subsection (1) does not apply, any other party to the agreement or the assignee or the trustee in bankruptcy may apply to the court for an order directing that the matter in question be referred to arbitration.
A valid arbitration agreement will retain its validity until the point that the company is dissolved, when it will become a nullity as the company that signed it is no longer in existence (Dowling-Hussey, Dunne at 3-22).
Separability
Are there any provisions on the separability of arbitration agreements from the main agreement?
Kelly J in Doyle v National Irish Insurance Co Plc [1998] 1 IR 89 endorsed the doctrine of separability. The doctrine is also set out in article 16(1) of the Model Law.
Third parties – bound by arbitration agreement
In which instances can third parties or non-signatories be bound by an arbitration agreement?
An arbitrator has no power to make orders or give directions against a party who is not a party to the arbitration agreement, unless that party has in some way indicated an intention on his part to be bound by the arbitrator’s awards (Mustill and Boyd, Commercial Arbitration (1989), pp. 414-415 cited by Dowling-Hussey and Dunne).Assignment or novation of contract
A third party can be bound by an arbitration agreement when a contract is novated or assigned over to them.
Third parties – participation
Does your domestic arbitration law make any provisions with respect to third-party participation in arbitration, such as joinder or third-party notice?
At common law, an arbitrator may not join additional parties to proceedings (noted by Dowling-Hussey and Dunne at 1-54, citing, inter alia, Interbulk Ltd v Aiden Shipping Co Ltd [1984] 2 Lloyd’s Rep. 464).
Under section 16 of the 2010 Act, an arbitrator may not direct that different proceedings be consolidated or heard together without the agreement of the parties. Under section 32 pf the 2010 Act, the High Court and Circuit Court may adjourn court proceedings, which are otherwise properly before the courts, to facilitate arbitration if appropriate and on consent.
In Maguire v Motor Services Ltd t/a MSL Park Motors [2017] IEHC 532, Barrett J held that, while an arbitration agreement can apply to a non-party, they must meet a ‘sufficient connection’ test.
Joinder provisions are common in certain contracts (eg, construction contracts) to allow multiple parties’ disputes to be resolved in a single arbitration.
Groups of companies
Do courts and arbitral tribunals in your jurisdiction extend an arbitration agreement to non-signatory parent or subsidiary companies of a signatory company, provided that the non-signatory was somehow involved in the conclusion, performance or termination of the contract in dispute, under the ‘group of companies’ doctrine?
Under Irish company law, the court may sometimes treat a group of companies as one entity where to do otherwise would have unjust consequences for outsiders dealing with companies in the group (as confirmed by the Supreme Court in Fyffes Plc v DCC Plc [2007] IESC 36). However, the ‘group of companies’ doctrine’ as understood by International Chamber of Commerce tribunals and French courts has not seen discussion in Irish jurisprudence nor has it been expressed in legislation.
Multiparty arbitration agreements
What are the requirements for a valid multiparty arbitration agreement?
There are no specific requirements or provisions set out in Irish legislation or case law for multiparty arbitration agreements.
Certain contract (eg, construction contracts) contain joinder provisions whereby parties to a subsequent dispute agree to be joined to an existing related dispute and agree to the tribunal already constituted determining their dispute.
Consolidation
Can an arbitral tribunal in your jurisdiction consolidate separate arbitral proceedings? In which circumstances?
A tribunal can consolidate separate proceedings and hold concurrent hearings where parties to an arbitration so agree to the making of such an order, on such terms as may be agreed between the parties concerned (section 16 of the 2010 Act).
Consolidation can be provided for in a contract (eg, in construction disputes).
