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Major Changes for Irish Companies entering into Commercial Contracts
The Law Society Newsletter - Tuesday, 03 August, 2010
The enactment of the Arbitration Act 2010 is a step in the right direction for Irish companies trading internationally.
The Act gives Irish companies instant access to a recognisable and internationally accepted code of international arbitration law, originally devised by the United Nations Commission on International Trade Law, and colloquially known as the 'Model Law'.
Why is this important?
Enforcement The Act enables Irish businesses to obtain an arbitration award/judgment easily enforced against a company in another country if that country has either adopted the Model Law or has ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. So long as this is the case, a Court in another country has very limited grounds for refusing to recognise and enforce a foreign arbitration award.
This is good news for Irish businesses which may become embroiled in disputes with international trading partners, as it removes the obstacles attendant upon trying to firstly get a judgment from an Irish court and then trying to enforce that Irish court judgment in another jurisdiction, especially where the target in the litigation does not have any assets in Ireland. This will be of benefit especially for Irish companies trading outside the European Union.
Expertise Commercial disputes can involve complex and often technical issues. Arbitration offers the added bonus of allowing the parties to choose an arbitrator who is an expert in the particular subject matter of the dispute.
Costs An important development under the Act is that an agreement on costs made between the parties will be enforceable. The parties can agree on the allocation of costs either before or after a dispute has arisen. From a practical perspective, it is best to obtain an agreement on costs written into the terms and conditions of the contract long before any dispute develops.
Selection of the appropriate arbitrator The selection of the most suitable arbitrator is vital to ensure a successful arbitration takes place. Where the parties cannot agree on the identity of the arbitrator, there are professional bodies, including the Law Society, which assist with the nomination and appointment of an arbitrator.
Arbitration clause In order to avail of arbitration as a method of dispute resolution, an arbitration clause should be included in any commercial contract. For contracts entered into with a company in another country, the clause should provide for Irish law to govern the conduct of the arbitration and Irish law to be the substantive law of the arbitration. An example of a standard clause is available in the members' area of the Society's website, under the Arbitration and Mediation Committee.
Colleen Farrell Arbitration and Mediation Committee Secretary
* Irish solicitors may not calculate fees or other charges in contentious business as a percentage or proportion of any award or settlement nor is it our practice to do so.
Paul Kelly & Co. Solicitors: Rye Cottage, Main Street, Leixlip, Co. Kildare, Ireland
