Ireland as a Common Law Port after Brexit: A paper by the Chief Justice

The Chief Justice of Ireland, Mr Justice Frank Clarke, has written a paper titled Ireland as a Common Law Port after Brexit for delivery to a seminar at Fordham University in New York.

The Courts Services provided copies of the paper, which I have uploaded here: Ireland as a Common Law Port after Brexit; and an accompanying paper here: Potential impact of Brexit on selected aspects of private international law.

 

The Courts Services sent out the following press release:

The Chief Justice of Ireland, Mr Justice Frank Clarke, has said that the issue of Brexit is of singular importance to Ireland, to the European Union, to the United Kingdom and, indeed, to countries such as the United States which have close relations with all of us. He said the problems which will arise from Brexit span so many areas. In particular the consequences for Ireland of the possible re-emergence of a hard border between North and South is potentially a critical issue.

Speaking to a seminar in Fordham University in New York, the aspect of Brexit he concentrated on was its impact both on the European legal order and on legal issues involving other friendly countries, in particular the United States, which have regular dealings with Europe.

He said that in many areas EU law has become entwined with the national legal order of member states and it is that very fact which makes the disentanglement required by Brexit all the more problematic.

Possible Central role for Ireland in International Litigation

Ireland will almost certainly have to play a leading role, post Brexit, as the main common law jurisdiction remaining within the European Union. On the other hand, that very fact provides opportunities for the Irish legal system, including its courts and arbitral tribunals, he said, to act in a significantly expanded way as a location for dispute resolution in international litigation, including insolvency, where both the common law and recognition throughout the European Union are of importance.

The Chief Justice pointed out that Brexit critical dates begin in six months, and that commercial and business contracts being negotiated and finalised now could well be adjudicated under different, post Brexit arrangements.

The uncertainty which pervades the type of legal order which will then prevail has a very real potential, therefore, to affect the outcome of arrangements entered into today. The uncertainty to which that gives rise and the challenges and opportunities which follow are the particular focus of the issues he addressed.

Ireland will be largest Common Law Country in EU

He said that post Brexit, Ireland will be by far the largest common law country in the EU and will, in substance, be the only country whose legal system could reasonably be described as being fully in the common law tradition with both Cyprus and Malta having, to a greater or lesser extent, a mixed system.

· In the past, the smaller EU common law countries have placed significant reliance on the UK both to do the research necessary to identify potential problems for the transposition of proposed EU legislative measures into a common law jurisdiction and also to make the case to the European institutions for solutions.

· Increasingly Ireland is being asked to nominate senior judges to many EU legal bodies.

· Likewise, the Chief Justice pointed out that the Irish Attorney General has acknowledged that it may be necessary for Ireland to intervene in many more cases before the European Court of Justice where there is a particular common law interest in the issues at stake.

Uncertainty and Difficulties Over Future Legal Arrangements with the UK

Throughout the EU, in very many cases, there is a single streamlined basis both for determining which member state has jurisdiction to deal with a particular legal issue and the obligation of all other member states to recognise and give full effect to the result of litigation which is conducted in the member state having jurisdiction.

The Chief Justice said that “We just do not know what arrangements, if any, will be negotiated between the EU and the UK to replace the fact that the UK is today a fully integrated member of that legal order based on mutual trust and recognition”.

He said that “there are potential difficulties with at least most of the potential solutions and there remains the undoubted political difficulty which stems from the understandable desire of the European Union to ensure that the UK cannot just cherry-pick those aspects of its relations with the EU which it wishes to retain and extract itself from those obligations with which it is not happy……….. if it were to be seen to be the case that a member state could leave the European Union and keep the bits that suited it and discard the bits that did not then that driver of cohesion would be lost”.

“There remains very significant doubt about the precise nature of the arrangements which are likely to be entered into not least because of the political red line identified by the UK Government which suggests that the UK is unwilling to accept the jurisdiction of the Court of Justice in any future arrangements. While it is not impossible to envisage arrangements which get around that difficulty it does remain a significant barrier. Thus the legal regime which will come about either in March 2019 after the expiry of the Article 50 notice or in January 2021 when the possible transition period will come to an end, is very hard to predict.”

At one extreme there is the so-called “No Deal” Brexit whose consequences are explored in the paper. This would give rise to very great difficulties in relation to legal issues involving the UK and any other member state of the EU and, indeed, any such issues involving also third parties such as US Corporations.

Opportunities : Irish ‘Examinership’ Model Closer to that of US

The UK has established a very substantial place in the market for international insolvency litigation utilising its corporate recovery models of administration and schemes of arrangement. But a great deal of what led to the success of the UK in establishing itself as a major centre for insolvency stemmed from the fact that, under the Insolvency Regulation, orders made by UK courts carried throughout the European Union. It seems unlikely that will remain to be the case post Brexit. ….. the playing pitch will change with Brexit in that it may well be that the orders of UK courts will not have cross European recognition while the orders of the Irish courts will.

Ireland has, in its examinership corporate recovery model, a system which is perhaps closer to Chapter 11 (US model) than the UK system of administration. Like Chapter 11 the company in examinership remains under the control of its existing management during an examinership but, unlike Chapter 11, the scheme for recovery is prepared by a fiduciary rather than by the company itself.

Chief Justice Clarke, “I think I can safely say that the Irish examinership model would provide at least as an effective means of dealing with cross European insolvency as the UK administration system has to date”.

Jurisdiction is based on the concept of determining the centre of main interests (or COMI) of the corporation concerned but any experienced insolvency practitioner will tell you that, with a little time and a little effort, it is often possible to establish COMI in a jurisdiction of choice.

It seems to me to follow that Brexit also affords significant opportunities for Ireland in the legal sphere. This is particularly so in the context of transactions or litigation which involve common law countries who wish to do business within the EU in a legal system with which they are familiar but where European rules including, in particular, rules which give Europe wide recognition, apply.

Ireland’s ability to cater for increased work

It has been suggested, by some potential competitors for a slice of the UK market, that Ireland has a limited capacity to take on the sort of additional high level international litigation which might arise. While there is an obvious limit to the capacity of any jurisdiction, I could not agree that the Irish courts, and Irish litigators, would be found wanting if called on to take on significant additional international work.

There is little doubt but that Ireland will have competitors but in my view we, in the Irish legal system, are very well placed. Ireland will remain a common law country. The ordinary language of the Irish courts will continue to be English. But importantly Ireland will remain a member of the European Union and the decisions of Irish courts will continue to be easily enforceable throughout the European Union. Those are advantages which we have and which are not shared by any other jurisdiction.

Ireland can provide, not least for those outside the EU in the common law world, a safe haven. In a time of great uncertainty I would like to think that safe haven may prove to be a significant advantage.

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  1. ‘Ireland as a Common Law Port after Brexit: A paper by the Chief Justice’ | Private Law Theory - Obligations, property, legal theory

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