The civil justice system in Ireland is in the process of undergoing some of the most radical reforms seen in the history of the State.
The Government's Justice Plan 2022 (the "Justice Plan") sets ambitious targets for the next three years, including improving access to justice, modernising the courts system and accelerating innovation and digital transformation across the justice sector. Separately, the landmark Review of the Administration of Civil Justice Report (the "Kelly Report"), which was published in December 2020, proposes wide-ranging reforms to civil litigation practice and procedure. An action plan to implement the recommendations in the Kelly Report was published by the Government at the end of May 2022 (the "Kelly Plan").
In parallel with these significant changes, an agenda for increased corporate and financial regulation with enhanced enforcement powers is unfolding, evidenced not least by the establishment of an independent Corporate Enforcement Authority (the "CEA"), as well as the publication of the landmark Central Bank (Individual Accountability Framework) Bill 2022 (the "IAF Bill").
The insolvency landscape in Ireland is also changing with recent amendments to the Irish examinership regime and proposed new legislation for enhanced worker rights. An increase in insolvency activity generally is anticipated given the turbulent global and domestic economic climates.
Key Themes in Litigation
The Kelly Plan provides for sweeping procedural reforms to be brought in by way of new legislation and amended court rules on a phased basis, to be completed by 2024/2025. The reforms include a new streamlined discovery regime and a new multi-party litigation procedure.
Third party litigation funding, which has been largely prohibited in Ireland to date by the rules against maintenance and champerty, is also set for change. The Kelly Plan provides for the introduction of a limited form of third party litigation funding for insolvency matters. Similarly, the Government has announced its intention to legislate for third party funding of international commercial arbitrations while the European Parliament has recommended the introduction of common minimum standards for third party litigation funding across Europe.
The General Scheme of the Representative Actions for the Protection of the Collective Interests of Consumers Bill 2022 is undergoing pre-legislative scrutiny and, once enacted, will allow for a form of consumer class action for breaches of consumer protection legislation from June 2023.
"The [Kelly] Plan clearly sets out how we will widen access to civil justice and, importantly, sets timelines for when we will deliver reforms. Modernisation will not only help those who need legal services: it will also help legal professionals, the Courts Service and the judiciary to operate more efficiently and effectively, while equipping them for the challenges of the future. "
Recent progress in relation to the Hague Judgments Convention, which will now come into force between the EU and Ukraine in September 2023, is also paving the way for enhanced judicial cooperation in cross-border litigation. This convention facilitates the recognition and enforcement of foreign judgments in civil and commercial matters and will become a more powerful tool as additional countries join.
Minister for Justice, Helen McEntee
With the establishment of the new independent CEA in July 2022, there is now increased momentum and power behind the investigation and prosecution of corporate crime in Ireland. The CEA is significantly better resourced than its predecessor, the Office of the Director of Corporate Enforcement, and is expected to tackle larger and more complex cases.
Compliance is also being forced up the agenda for financial service providers with the publication of the Central Bank (Individual Accountability Framework) Bill at the end of July 2022. This legislation is discussed in our Financial Services – Regulation section. This landmark bill, set against the backdrop of the recent record number of enforcement decisions issued by the Central Bank against financial institutions, seeks to strengthen and enhance individual accountability in the financial services industry. Enhanced duties and standards of conduct will be prescribed for senior executives working in the sector and the requirement for the Central Bank to prove regulatory breaches by a firm before it can sanction an accountable individual (the 'participation link') has been removed.
"The [CEA] is now officially established. We're giving it real teeth, making sure it has the autonomy and resources to thoroughly investigate suspected wrongdoing, such as fraudulent trading and larger, more complex company law breaches…I am confident that the extra staff and additional funding will ensure that the new Authority can really make a difference and meet the differing and evolving demands of its remit, which includes investigation, prosecution, supervision and advocacy."
Leo Varadkar, Tánaiste and Minister for Enterprise, Trade and Employment
The Government provided a range of supports to businesses during the Covid-19 pandemic, which have now been withdrawn. Together with continuing global supply chain disruptions, increasing interest rates and the burgeoning energy crisis, an escalation of corporate insolvencies and restructurings is anticipated.
Ireland continues to be a key restructuring venue for cross-border insolvencies and on 27 July 2022, the European Union (Preventive Restructuring) Regulations 2022 were signed into law. They transpose certain mandatory provisions of the Preventative Restructuring Directive 2019/1023 (the "PRD"), by way of changes to the examinership (and other) provisions of the Companies Act 2014. Of particular note is the exclusion of employee claims from the stay on enforcement during the examinership period, meaning that employees may now continue to pursue their claims. Other optional articles of the PRD, which include a potential further extension of employee rights, are being considered by the Government as part of a wider review of the Irish examinership regime.
This increased focus on employee rights on insolvency is reflected by the introduction of two new bills to the Autumn Legislative Programme: The Companies (Administrative Governance & Insolvency Amendment) Bill, to give effect to (amongst other things) government commitments on rights of workers as creditors; and the Protection of Employees (Employer's Insolvency) (Amendment) Bill, to update existing legislation governing the protection of employees during an employer's insolvency.
“Preventive solutions are vital to supporting the long-term viability of businesses in temporary financial difficulties. To this end, the Regulations also provide for directors to have regard to an early warning system setting out good practice which can alert companies so that they can act to take the steps necessary to avoid or overcome insolvency. This will shortly be available on the [CEA] website and will set out useful information and corrective steps that viable businesses need to take in order to respond and recover, thereby helping such companies to maintain employment or minimise job losses.”
Robert Troy, Minister for Trade Promotion, Digital and Company Regulation