An ancient Chinese proverb says that “when the winds of change blow, some people build walls and others build windmills.” 2023 was yet another year of change for dispute resolution in Ireland. We review some of the changes and the effect they are likely to have in 2024.
Heavy duty – the responsibilities of directors of a company in financial difficulty
Ireland has witnessed a variety of corporate governance scandals, spanning the realms of sports, charities, public broadcasting, and everything in between. There is frustration at what some perceive to be a toothless enforcement regime as alleged perpetrators of somewhat questionable business practices get off lightly. Recently, Irish courts reaffirmed that directors of limited liability companies may be held liable for company debts in certain situations where they have manifestly failed in their duties.
Moreover, to bolster this, legislative changes now impose further duties on directors when it is clear that their company is in financial trouble. Amendments to the Companies Act put duties to creditors of companies in financial difficulty on a statutory basis. With the number of insolvencies widely expected to increase in the near future, it is hoped that this increased clarity may result in some companies being saved with more prudent governance and earlier recourse to restructuring.
This follows the landmark recent decision in Powers v Greymountain in which the court ruled that company officers of limited liability companies can be held liable for company debts in certain circumstances.
Russian roulette – Who should carry the risk of sanctions?
Sanctioned assets, sanctioned countries and sanctioned individuals – we hear about them, but few understand or know much about them. Some sanctions flow down through group structures, so EU companies controlled by sanctioned persons, and indeed their assets are subject to restrictions.
Russia’s invasion of Ukraine has seen a scramble by companies to protect their assets and, where appropriate, seek to recoup losses via their insurers. This has resulted in a significant amount of litigation in Ireland, due to Ireland’s prominent place in the global aircraft leasing market.
The Irish High Court has determined that when a liquidator is appointed, this link is broken, the company assets are freed of sanctions and can be sold for the benefit of creditors.
‘Known Unknowns’ – Issuing proceedings against unidentified persons
Sun Tzu’s ‘The Art of War’ insists that you must “know your enemy” but what happens when they are not easily identifiable? A Norwich Pharmacal Order can be used to identify someone online, but what about when alleged wrongdoers are both anonymous and offline? In limited circumstances, courts will allow proceedings to be issued against persons unknown.
With Ireland in the midst of a housing crisis, it is not uncommon to read of unauthorised persons entering and living in vacant properties without the owner’s permission. The owners of buildings are entitled to seek injunctive relief to protect their properties but this can prove difficult when the unauthorised persons are unknown.
Looking ahead to 2024
Ongoing events, both domestic and international, continue to impact and shape litigation in Ireland. The wars in Ukraine and the Middle East rage on. The housing crisis continues to dominate the political agenda at home. Continuing corporate governance reform is to be welcomed but the full impact of inflation, higher interest rates and an increasingly volatile geopolitical landscape makes doing business more and more difficult.