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Arbitration Goes International

DATE: 23.06.2011

 

 

The Arbitration Act 2010, which came into force from 8 June 2010, sets out a new regime for arbitrations in Ireland and repeals the prior legislation. Prior to this Act, arbitration law in Ireland differentiated between domestic arbitrations, governed principally by the Arbitration Act 1954, and international arbitrations, governed by the Arbitration (International Commercial) Act 1998 (which applied the UNCITRAL Model Law to such arbitrations). However, the new Act applies a uniform regime to all arbitrations, to which the UNCITRAL Model Law is applicable, as well as reaffirming that the New York and Washington Conventions have the force of law in the State. A key objective in enacting this new legislation was to standardise and modernise arbitration law in Ireland and to make Ireland more attractive as a modern venue for international arbitrations.

The new Act introduces a number of significant changes from the regimes which previously prevailed. In particular, reduced scope for Court oversight and limited right of appeal to the Supreme Court gives effect to the choice of the parties in opting for private determination of their disputes by arbitration and reflects the goal of making the arbitral process as final as possible. This finality is also reflected by the Act only permitting recourse against an award on very narrow grounds in all cases. The Act also makes important changes to the powers of the arbitrator and the High Court by including default provisions regarding the powers of each, for example, in respect of security for costs and interim measures. Indeed, in drafting an arbitration clause or agreement, there are number of provisions which will apply by default which can have tactical implications for the conduct of an arbitration and careful consideration should be given to the framing of the arbitration agreement itself.

The Act was the subject of its first High Court decision a matter of days after coming into force in June in the case of Osmond Ireland On Farm Business v McFarland [2010] IESC 295 where Laffoy J. was faced with a defendant's application to refer the parties to arbitration. In delivering her ruling, Ms Justice Laffoy recited the legislative history of arbitration in Ireland to highlight that a new regime now applied to arbitrations under Irish law and, particularly, that the UNCITRAL Model Law was now uniformly applicable. She then went on to consider the relevant basis to stay Court proceedings, namely Article 8(1) of the UNCITRAL Model Law, which she acknowledged made it "mandatory for a court to compel the parties to an arbitration agreement to engage in the arbitral process as a means to resolving their dispute or dispute when one party makes an application seeking an order to do so in time". Ultimately, she held that the arbitration clause in the parties' agreement was operative and capable of being performed and, on that basis, referred the parties to arbitration. She also had to consider the extent to which the Court could direct interim measures in respect of arbitration proceedings in an application brought by the plaintiff in the same proceedings. She again directed herself to the appropriate Articles of the UNCITRAL Model Law with regard to her jurisdiction, before applying the standard legal test for the interim measure sought (namely, injunctive relief).

The decision shows that the Irish Courts have embraced the new Act and that they are willing to show themselves to be arbitration friendly. Moreover, the decision shows that the Act (and the UNCITRAL Model Law) is capable of clear and straightforward interpretation.

A more detailed summary of the Arbitration Act 2010, together with relevant contact details, appears on our website at the following link.

Nicola Dunleavy and Gearoíd Carey

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