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23 November 2010
The Arbitration Act 2010, which came into force on June 8 2010, sets out a new regime for arbitrations in Ireland and repeals all prior legislation dealing with arbitration. While Irish law previously followed a bifurcated approach, in that different regimes applied to domestic and international arbitrations respectively, the new act applies the United Nations Commission on International Trade Law (UNCITRAL) Model Law uniformly to all arbitrations. The act introduces a number of important changes to the way in which arbitrations, particularly, domestic arbitrations, were previously conducted. A key objective of the new legislation was to standardise and modernise arbitration law in Ireland, as well as making Ireland a more attractive venue for international arbitrations.
The act was not long in force when the first applications were made pursuant to the new legislation. In Osmond Ireland On Farm Business Limited v Fergal McFarland(1) the court heard different applications brought by each of the parties to the litigation. One application, brought by the defendant, sought to stay the court proceedings in favour of arbitration, premising the application on an arbitration clause in the relevant agency agreement entered into in February 2001. This clause provided that:
"In the event of any dispute arising out of or in relation to this Appointment and this Agreement same shall be decided by arbitration in accordance with the provision (sic) of the Arbitration Acts or any statutory modification or enactment thereof for the time being [in] force."
The other application, brought by the plaintiff, sought the court's intervention to restrain, by way of injunctive relief, the defendant from canvassing or soliciting customers of the plaintiff (which was expressly prohibited under the terms of the agreement). Chronologically, the latter application was brought first. However, the judge considered that the "logical approach" to the determination of the applications was to address the defendant's stay application first.
In delivering her ruling on the defendant's stay application, the judge recited the legislative history of arbitration in Ireland and highlighted that a new regime now applies to arbitrations under Irish law. She particularly identified that the UNCITRAL Model Law is now uniformly applicable. She then addressed the relevant provisions by reference to which the court must approach applications to stay court proceedings. Under the act, Article 8(1) of the UNCITRAL Model Law is squarely applicable. This article, the judge acknowledged, makes 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".
Accordingly, she held that the arbitration clause in the parties' agreement was operative and capable of being performed. Therefore, she referred the parties to arbitration. This reflects the clear obligation on a court under Article 8(1) to stay proceedings, so long as the application is brought in time, in favour of arbitration unless the arbitration "agreement is null and void, inoperative or incapable of being enforced".
The judge also had to consider, as part of the dispute before her, whether, on the application of the plaintiff to the proceedings, injunctive relief sought could be awarded. Since the defendant's application for an order referring the parties to arbitration had succeeded, the court noted that the plaintiff's injunction application fell to be considered as an application for an interim measure of protection under the UNCITRAL Model Law. Having directed herself to the appropriate articles of the UNCITRAL Model Law (ie, Articles 9 and 17), she satisfied herself as to the scope and extent of the jurisdiction afforded the court in that regard. She felt that the reference to an "interim measure" in Articles 9 and 17J of the UNCITRAL Model Law must include an interlocutory injunction. Thereafter, in exercising that jurisdiction, she then applied the relevant legal standard for the interim measure sought (ie, injunctive relief, reflected by the test laid down by the Supreme Court in Campus Oil Ltd v Minister for Industry and Energy).(2) Ultimately, she decided that the plaintiff had not met the requirements of the relevant test and refused the application.
This decision is important because it is the first case under the Arbitration Act 2010. Perhaps more importantly, however, it confirms that the Irish courts have acknowledged, without question, that a new regime is applicable to arbitrations, particularly to disputes which might previously have been subject to a regime peculiar to domestic arbitrations. The willing consideration of new principles has confirmed that the Irish courts are arbitration friendly and have embraced the new legislation. Moreover, the decision shows that the act (and the UNCITRAL Model Law) is capable of clear and straightforward interpretation, which should continue to be the case as more applications are made under the new act.
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