Floating Charges and Priority Debtors after JD Brian

Sarah Slevin is currently a trainee solicitor with Ronan Daly Jermyn, Ireland’s biggest regional law firm. Previously, she studied Law and Irish at undergraduate level in University College Cork and continued to complete an LLM in Business Law for which she was awarded the E-Law Summer Institute Bursary for Postgraduate Study. Her thesis was entitled ‘Personal Guarantees of Commercial Loans: An Analysis of the Legal Protection Afforded to Guarantors in Ireland’. In this letter, she considers the recent Irish Supreme Court decision of In the Matter of JD Brian. A fully referenced version of the letter is available here.

A Chara,

On 9 July 2015, Laffoy J gave judgment on behalf of a three-judge Supreme Court in the case of In the Matter of JD Brian Limited (in Liquidation) t/a East Coast Print and Publicity [2015] IESC 62 (JD Brian). In finding that a valid notice of crystallisation had been delivered by Bank of Ireland over the floating charge at issue, and thus overturning the 2011 decision of the High Court, the floating charge was deemed by the Court to be a fixed charge which took precedence over priority debtors, including the Revenue Commissioners.

The delivery of this judgment brings to an end a legal and judicial interregnum in which the priority status of crystallised floating charges in the context of a winding up remained unclear. However, the comments of Laffoy J, particularly in light of the relative silence of the Companies Act 2014 (the 2014 Act), demonstrate a clear dissatisfaction with the current position of the law. It can be argued that, although the interpretation of the law as it stands may be correct, we are now left in a position that is at odds with modern legal and economic trends.

Finlay Geoghegan J, in the High Court, reasoned that a correct construction of section 285(7) of the Companies Act 1963 (the 1963 Act) gave preferential debts priority over the claim of the bank, irrespective of any crystallisation that may have occurred prior to winding up. In doing so, she refused to follow contrary lines of authority from the UK, such as Re Griffin Hotel [1941] Ch 129 and Re Brightlife [1987] Ch 200. In a supplementary judgment on the outstanding issue of the effect of crystallisation, it was determined that a proper interpretation of the provisions of the debenture document in question, the floating charge could not be said to have been converted into a fixed charge.

The Supreme Court, in contrast, held that the relevant clauses of the debenture displayed an intention on the part of each party, upon crystallisation, to restrict the ability of the company to use the property and assets concerned. A clause under which the company covenanted to carry on the business in a proper and efficient manner did not conflict with established law on crystallisation. On the second matter, that of the effect of section 285(7) of the 1963 Act, Laffoy J expressed the view that to interpret the provision as entitling preferential creditors to priority over a floating charge which validly crystallised prior to winding up would be to rewrite the section itself, as it was clear that the operative time for assessing priority was the time of winding up; any finding to the contrary would, in her opinion, conflict with the will of the Oireachtas.

It should be noted that although this decision follows the previously rejected line of authority in the UK, the position in that jurisdiction has since been legislatively reversed; in particular the Insolvency Act 1986 ensured that crystallised floating charges do not get priority over preferential creditors. This was followed by the Enterprise Act 2002, which abolished the right of the crown as a preferential creditor generally. This reversal follows recommendations regarding the abolition of priority debtors dating back to the opinion of the Cork Committee in 1982.

Despite the clarity with which Laffoy J articulated the operation of the law, the learned judge also highlighted the dissatisfactory result which derived from this interpretation of section 285(7). She highlights the potential of this decision to allow for the creation of a false form of crystallisation, which would secure priority for the debts whilst still allowing the debtor to trade in its assets. As well as this, the judgment draws attention to a lack of transparency arising from the absence of a need to register floating charges which have crystallised, transparency being a crucial principle underpinning the operation of company charges and insolvency law generally.

The enactment of the 2014 Act provided the legislature with an opportunity to resolve this issue by more clearly enunciating the rules regarding the status of floating charges post-crystallisation, particularly as against priority debtors. It also provided the chance to review the necessity of statutorily-protected priority debtors in the first place, given the abolition in England of crown preference (as discussed above). Consideration should have been given to the view, more prevalent in modern times, that offering priority to certain debtors does not accord with the desire to equitably distribute funds on a winding up, or with the need to protect smaller creditors who may suffer more during these events.

However, section 621(7) of the 2014 Act repeats the wording of its predecessor in its entirety. Whilst this may appear to offer little insight into the current thinking of the Oireachtas on this matter, G Brian Hutchinson believes that, rather being an indication of a lack of consideration of the matter, this verbatim repetition could represent a conscious decision to prioritise the effective operation of floating charges over any other policy.

Whilst this may be the case, the concerns of Laffoy J regarding the current legal position remain outstanding and need to be addressed. It may be appropriate, in light of this decision, the changed approach in England, and the recent overhaul of company law generally, to review not only the expression of the current principle in section 621(7), which is patently dissatisfactory, but also the reasoning behind the existence of such priority debtors at all. Although Laffoy J’s legal interpretation of section 285(7) in this case may be correct, it is up to the legislature to decide if it gives the most desirable outcome.

Is mise le meas,

Sarah Slevin

September 28, 2015

Gibraltar: An Unlikely Football Nation

Ciarán Crowley is a graduate of University College Cork (Bachelor of International Law) and Oxford University (Bachelor of Civil Law) and is currently teaching English law in Université Lille II, in France. In his letter he discusses the increased activity of the Court of Arbitration for Sport and the status of Gibraltar as a football nation. To access the full referenced version of this letter please click here.

Dear Editor,

Martin O’Neill and Roy Keane’s men faced Gibraltar in the first home game of their UEFA European 2016 qualifying campaign on the 11th of October last year, Ireland running out easy victors in a 7-0 victory. The game was noteworthy only in that it represented Gibraltar’s only second competitive international football match since it was accepted by UEFA as a full member in May 2013, following a successful appeal to the Court of Arbitration for Sport (CAS). The original decision, Arbitration CAS 2002/O/410: The Gibraltar Football Association (GFA)/Union des Associations Européennes de Football (UEFA), was handed down  by CAS on the 7th of October 2003.

It will not have gone unnoticed amongst football fans how busy CAS has been recently. The Court refused to accept Legia Warsaw’s appeal to be reinstated into the UEFA Champions League qualifiers, following the playing of an ineligible player by the Polish club in a match against Celtic. Further, only last week CAS partially upheld the four-month suspension of Luis Suarez from all football-related following the much-publicised biting incident involving Suarez with Giorgio Chellini at this summer’s World Cup. The Court softened the sanction somewhat to allow Suarez train with his new Barcelona team-mates. It is hoped that the busy Court will now be able to draw its breath.

CAS’s decision to grant membership to tiny Gibraltar, a territory of less than 30,000 people and an area encompassing a mere 2.3 square miles, was not greeted with glee on all fronts. Gibraltar is a British Overseas Territory which remains under the jurisdiction and sovereignty of the UK. This arrangement, tracing its provenance back to the Treaty of Utrecht in 1713, is fiercely contested by Spain who lodged opposition to the Gibraltar FA’s initial request for UEFA membership in 1999. Spain had – not unjustifiable fears – that the Catalan and Basque regions might also apply for UEFA membership. This fear has, however, arguably been quelled since the resounding achievements of Spanish football in club and international competitions since then.

CAS in its judgment made an imaginative distinction between the idea of a ‘nation’ or ‘country’ in the sports law environment (Lex Sportiva) and ‘its common political meaning,’ giving the examples of Scotland, Wales and the Faroe Islands which do not enjoy independent statehood either, but do of course have international football teams.

Whilst the new version of Article 5 of the UEFA Statutes, introduced in July 2001, declared that UEFA membership is restricted to football associations in countries which are recognised as independent States by the UN, CAS held the rule was inapplicable as the Gibraltar Football Association (GFA) had made an application for UEFA membership before the new version of Article 5 was introduce. Such serendipitous timing would prove crucial for Gibraltar.

Under the old rule, membership of UEFA was dependent on a national football association being ‘responsible for the organisation and implementation of football-related matters in their particular territory’. Thus, as the GFA was founded in 1895, making it one of the oldest football associations in the world, CAS held that the GFA ‘indisputably exercised sole responsibility’ for organising football on the territory. It is this change in rule that has since prevented disputed territories like Kosovo applying for UEFA membership.

In the run-up to the UEFA qualifiers, before Ireland’s facile victory over Gibraltar (and subsequently Poland’s, by the very same score line) more idealistic Irish football fans had good reason to have been intrigued about the competitiveness of the Gibraltar team, and to ask inquisitively about how Gibraltar would have fared along the same lines as other ‘water-carriers’ in UEFA international qualifying competitions such as Lichtenstein, San Marino and Andorra. Danny Higginbotham, formerly of Manchester United, has been the most famous player to have played for Gibraltar, qualifying to play under the ‘granny rule’. However, Higginbotham has now retired after 3 caps in friendly matches and the highest-profile squad member for the first qualifying match against Poland was Scott Wiseman of English League One side, Preston North End. The majority of the remaining squad were plying their trade in the domestic Gibraltar league with some players playing abroad in the lower leagues of Israel, England and Wales. Lincoln Red Imps have dominated club football in Gibraltar winning twelve consecutive league titles and recently represented the country in the first round of the UEFA Champions League Qualifiers, going out 6-3 against Faroe Islanders, Havnar Bóltfelag. The cynics have been proven correct, it seems.

Indeed, it is easy to be cynical about a team playing international football with a smaller population to pick from than Dundalk or Swords. However, when such a team upsets a greater power in the game it is undeniable that great joy is brought to neutral supporters around the globe; Italy losing to North Korea in the 1966 World Cup and Denmark beating Germany in Euro 1992, are but two examples.

And neither is the Irish national team immune to such ignominious results, eerily enough in European qualifiers themselves. Ireland’s draw away against Lichtenstein in 1995 in a European qualifier ultimately prevented the team from qualifying for the final tournament. English fans may think of San Marino scoring against them after 8 seconds in 1993, or more recently drawing lesser-known nations such as Costa Rica. Germany, recently crowned World Cup Winners also played Gibraltar on the 14th of November, and only won by a (relatively) modest four goals.

Law and football are becoming more and more acquainted with each other, particularly in CAS as we have seen. The number of legal disputes in football will only increase as the game continues to spread economically, socially and culturally around the globe. While, legal scholars will continue to bicker about the finer points of jurisdiction of international states, the international sports law system, lex sportiva, as well as the increasing influence of CAS, football fans will look on in nervous interest too as the fate of errant and misbehaving players are decided by the court. The nervous ride will only continue for O’Neill’s boys as they navigate a group with not only the minnows Gibraltar, but the world champions, an emergent Scotland and an increasingly impressive Poland.

Is mise le meas,

Ciarán Crowley

March 31, 2015

Freedom of Expression: At Gunpoint?

Orla Kelleher is a UCC Law and French student. She completed her third year at Université Paris Ouest Nanterre La Défense in 2013/2014. She is currently living and working in Paris before returning to UCC in September 2015 to complete her final year of undergraduate studies. In her letter she explores the topicality of freedom of expression in the French Constitutional context. To access a fully referenced copy of this letter please click here.

Dear Editor,

‘Freedom of expression (…) is the matrix, the indispensable condition, of nearly every other form of freedom.’ Given the media’s instrumental role in freedom of expression, namely acting as ‘the eyes and the ears of the public’, the notion of freedom of the press has naturally become associated with the idea of freedom of expression.

Questions abound in France of late about the scope of freedom of expression and the press. On the same day the French satirical weekly, Charlie Hebdo, famous for its insolent, garish and incendiary caricatures, sold out an initial run of five million copies of its latest ‘survival’ issue – featuring a cover that boldly lampooned the prophet Muhammad – the notorious French comedian Dieudonné was arrested and charged with incitement of terrorism by suggesting on Facebook that he sympathised with one of the gunmen involved in the brutal terrorist attacks in Paris.

Firstly, this letter will briefly sketch a picture of current law pertaining to freedom of expression and the press in France. In turn, it will consider whether the different treatment accorded to Charlie Hebdo and Dieudonné can be considered sound and well founded or simply reveals the existence of insidious hypocrisy and double standards at the heart of the Fifth Republic.

Freedom of expression was fervently affirmed in France as an inalienable right by the Declaration of the Rights of Man and of the Citizen 1789, which in the wake of the Ancient Regime, describes the right as ‘one of the most precious rights of man.’ Taking its inspiration from Article 11, one of the foundational legal statements on freedom of the press and freedom of expression in France, is the Law on the Freedom of the Press of 29 July 1881, which liberalised publishing and defined the freedoms and responsibilities imposed on the media in France. Article 1 asserts, ‘Printing and publication are free.’ The Press Law of 1881 is however strongly curbed by a myriad of exceptions including: the Pleven Act of 1972, which prohibits incitement to hatred, discrimination, slander and racial insults; the controversial Gayssot Act of 1990 prohibits any racist, anti-Semitic, or xenophobic discourse or activities, including Holocaust denial; and the Law of 30th December 2004, which prohibits the use of freedom of expression to incite hatred against people because of their gender, sexual orientation, or disability. Yet, one must equally bear in mind, that one of the founding principles of the Republic is secularism; France abrogated its laws criminalising blasphemy shortly after the French Revolution in 1791. Thus, these laws work to allow for religions and their creeds to be ridiculed but condemn incitement to hatred towards a follower of a religion.

In its abstract form, France has eagerly claimed to venerate the principle of freedom of expression and the press. It is only when such freedoms come into conflict with other fundamental or constitutionally guaranteed rights or interests that these rights and this aforementioned enthusiasm to vindicate them, appears to dwindle. As EM Forster neatly put it: ‘[W]e are willing enough to praise freedom when she is safely tucked away in the past and cannot be a nuisance. In the present, amidst dangers whose outcome we cannot foresee, we get nervous about her, and admit censorship.’ Indeed, France’s laws curtailing hate speech are considered to be some of the toughest in the EU. The numbers of legal actions for hate speech have multiplied following these aforementioned amendments to the Press Law of 1881. It is advanced here that despite its landmark sanctification of the right in the wake of the French Revolution, in modern times, the ambits of freedom of expression in practice are, in fact, notably circumscribed.

This restrictive approach to freedom of expression is well illustrated by the decision of the Conseil dEtat in January 2014 to uphold the cancellation of the controversial comedian Dieudonné’s stand-up performance, because of the show’s potential to infringe upon human dignity through his notoriously anti-Semitic jokes and gestures. Freedom of expression ostensibly operates under a repressive regime in France. In other words, while discourse that breaches of the law can be sanctioned; discourse itself cannot be prohibited before it has even taken place. It is worth noting that Dieudonné’s shows do not advertise themselves as anti-Semitic, and as such, banning them before they even take place exemplifies the strikingly restrictive position taken on freedom of expression in France.

Naturally the glaring discrepancy between the treatment of Charlie Hebdo and Dieudonné, particularly against a backdrop of a French government and nation touting the Republic’s valorisation of the right to freedom of expression, further calls into question the complex relationship between the hallowed right of freedom of expression and humour in France. Interestingly, French jurisprudence does seem to recognise that the notion of freedom of expression includes a right to excessiveness, outrageousness and parody when it has a humorous purpose. In 1992, the Grand Instance Court of Paris affirmed this, stating that freedom of expression does allow us to alter and exaggerate the traits and personality of the person we are depicting; freedom of expression encompasses a right to be disrespectful and insolent. Further illustrating the existence of such a right is the ‘casse-toi, pov con scandal.  Here, the former President Sarkozy, was re-greeted with the words of his infamous foul-mouthed outburst on a placard displayed at an anti-Sarkozy demonstration, which resulted in the protestor’s arrest for causing offence to the presidential function and of the Republic. However, in 2013, France was criticised by the European Court of Human Rights who considered that the sanction imposed on the protestor was disproportionate and detrimental to freedom of expression, advancing such a sanction has a dissuasive effect on satire, which can contribute to the discussion on questions of public interest. In 2007, Charlie Hebdo, whose cartoons belong to a particular genre of humour known as ‘la gouaille parisienne that is deliberately galling and irreverent, defended itself and won its court case for its republication of caricatures ridiculing the prophet Muhammad, as he laments fundamentalist violence (these cartoons were also purportedly a trigger for the shootings at the satirical magazine’s offices on 7th January 2015). Here, the Grand Instance Court of Paris reasoned that despite the shocking, even offensive character of the caricatures, unlike a publication on public billboard that is almost unavoidable, no one is obliged to buy or even read the weekly satirical magazine. It held that limits on freedom of expression had not been surpassed because it aimed its ridicule at Islam in general, without deliberate intention to directly and gratuitously offend the Islamic community.

The immediate response in France to the recent massacre has been a crackdown on hate speech and anti-Semitism, with mounting arrests for comments both spoken and written on social media that appear to glorify terrorism. Among those detained was the highly contentious comedian, Dieudonné, who will shortly be tried under anti-terrorism laws, originally found in the Press Law 1881 and moved into the criminal code in November 2014, for his alleged sympathising with terrorism on social media. These laws allow for harsher, fast-track punishments including a €100,000 fine and 7 years imprisonment when the incitement to terrorism takes place on the internet. Despite the comedian’s claims that he was merely trying to make people laugh, his Facebook comment at issue, described by French Interior Minister Bernard Cazneuve as both lacking respect and desiring to stir up hatred, potentially goes far beyond the aforementioned right to excessiveness for the purposes of humour and may well result in a conviction under these notably stringent laws.

However, this knee-jerk response resulting in a string of arrests in France on the ‘vague’ charge of condoning terrorism, continues to spark a furore with certain human rights NGOs, including Amnesty International. Dalhuisen advanced that the French authorities must be careful not to infringe upon the right of freedom of expression themselves. It is argued that ambiguous and loosely defined offences such as ‘defence of terrorism’ overly circumscribe expression by potentially criminalising discourse, which, while offensive to some, lacks intention to incite violence or discrimination.

In conclusion, the different treatment of the incendiary caricatures of Charlie Hebdo and Dieudonné’s terrorism condoning remarks might well be explicable by reference: socially, to the tangible fear among the French citizenry in the aftermath of three days of terror in the French capital; and legally, to the complex collection of laws regulating freedom of expression in France, which clearly recognise the particular place for its centuries’ old Gallic tradition of satire but strictly censure speech which could be perceived as defending terrorism. Nevertheless, it is submitted here that, such laws marred by arguably ‘selective restrictions and ambiguities’, including an ominously low threshold of expression that may incur liability even in the absence of intention, ought to be lambasted, or at the very least challenged for potentially over-circumscribing expression and for what, by some, might brand political favouritism. The way in which French authorities act in the turbulent aftermath of the horrific killings will be the litmus test for its actual commitment to vindicating the supposedly sanctified right to freedom of expression, as they engage in the perennial balancing act of competing human rights. ‘Freedom of expression does not have favourites’ and measured response to curtailing speech is indispensable to the preservation of the venerated right of freedom of expression, the ‘lifeblood’ of democracy.

 Is mise le meas,

Orla Kelleher

March 26, 2015

Social Media in the Workplace – Are We CluedIn?

This article was co-authored by Rebecca and Ruth Keating, both Law graduates from Trinity College Dublin. Rebecca is currently an associate at Dropbox and Ruth is an associate at Ci. In this letter they discuss social media’s impact on employment relationships. To access a fully referenced copy of this letter please click here.

Dear Editor,

Social media platforms have revolutionised interaction. Twitter, LinkedIn and Facebook have changed the face of both personal and business relationships. This poses huge issues for employers and employees in terms of evolving concerns. It is a developing area which involves the integration of both old ideas and the new, inviting the creation of new norms and standards. In an era of smart phones and social media, the issue of productivity in the workplace may at first appear to be the most apparent problem. However, the rise of social media raises issues at every stage of the employment relationship. This letter will first consider the impact that social media will have on the employment relationship itself, focusing on the particular example of disciplinary proceedings. Finally, the impact of social media on the conclusion of employment will be highlighted.

The advantages of social media can be a double edged sword. An employee may communicate with customers and clients through social media with ease but may also create negative attention for the company on a scale previously unimaginable. This represents a new dilemma of how an employer will deal with misconduct by an employee.

In respect of misconduct, the net of responsibility has been cast further. The Trade Union Congress famously referred to Facebook as ‘3.5 million HR accidents waiting to happen.’ In April 2009 two workers for the pizza chain Dominos uploaded a video of themselves clothed in their work uniforms mishandling food. The video received close to one million hits. Although Dominos acted quickly, by the time the video had been removed it had been shared so extensively that it was virtually impossible to eradicate its existence from the internet. This resulted in significant reputational damage for the company. In this respect, given the number of viewers of the video and consequently the level of reputational damage, the use of disciplinary action and dismissal was justified. However, not all cases will be as clear cut for all employers. The use of social media offers concrete proof of misconduct, but equally any response must be proportionate. A noteworthy example of this is the UK decision of Taylor v Somerfield. Here the low level of YouTube hits for the video meant that the company’s reputation was not damaged. Therefore, the usual rules regarding proportionality were applicable. It is important to note that the employer can determine the ramifications of an abuse of social media. The creation of a clear social media policy will firmly ground an employee’s responsibilities in respect of social media usage. In Mehigan v Dyflin Publications an employee was dismissed for disseminating pornographic images through his work email. In the hearing, the employee had been found to be unfairly dismissed as there was no clear breach of the Company policy.

The creation of a social media policy is central in practice. In order to adequately accommodate for this, employers should regularly update this policy to keep up with the rapidly developing area of social media.

The ownership of company contacts is a developing area of interest. The reality is that employees not only amass these contacts on networks such as Linkedin, but often do so at the request of their employers. In the absence of Irish legislative guidance on the matter, any gap must be filled in by analysing the contract between the parties and common law principles. In this regard developments on this topic in the UK and US are noteworthy.

The leading case in the UK is that of Hays Specialist Recruitment (Holdings) Limited v Ions. The Court held that an employee who records client contact details with the intention to utilise them in future competing business would be potentially in breach of their employment obligations. It serves to highlight the developing tension in client management and the personal employer/employee relationship. In this regard the case of Eagle v Edcomm is of interest. In Edcomm Dr. Eagle as CEO set up a Linkedin account, with the assistance and encouragement of Edcomm. Following her termination her Linkedin account was taken over by the new CEO, and all her contacts were subsumed into that of companies in this way. The court held in Dr. Eagle’s favour and pointed out that Edcomm did not have a policy in place determining who owned the accounts. However, it was noted that any such instance must balance the privacy of the individual against the need of the employer to protect their interests.

It is submitted that this will become a very important area in future employment law disputes. What is crucial is that employer’s offer clear and unambiguous guidance as to who owns LinkedIn contacts.

The overriding advice to employers is to implement a social media policy and to ensure that employees are both aware of the policy and understand its affects. The greatest impact of the rise of social media exists in its ability to transport information quickly and easily. It is these two aspects which represent the most concern for employers. While many may fear the new rise of the ‘digital water cooler’ the real challenges to the world of employment are in the effects it will have on the traditional conflicts across all stages of the employment relationship.

Le meas,

Rebecca and Ruth Keating

March 25, 2015

Who is the mother? A discussion on the desperate call for surrogacy legislation in Ireland

Dear Reader,

This letter was due to be published on 20th January 2015. However, due to unforeseen technical difficulties COLR were unable to publish the letter at that time. In the meantime the Government has agreed to prepare new laws to regulate surrogacy and the broader area of assisted human reproduction and associated research, and bring to an end the legal uncertainty in which these services currently operate including the areas of surrogacy and stem cell research.

Annie Nevala is a final year BCL (International) Student at University College Cork. In this letter, she explores the recent developments in the Supreme Court in area of assisted reproduction in Ireland. To access the fully referenced copy of this please click here

Kate Murphy


Who is the mother?
A discussion on the desperate call for surrogacy legislation in Ireland

 Dear Editor,

Despite the increased awareness of the use of surrogacy internationally and domestically, the concept currently remains entirely unregulated in Ireland. No form of assisted human reproduction is presently recognised in the Irish Statue Books, although reform in the area of donor-conception is on the way.

This has created a framework where the courts increasingly find themselves teasing out the complexities of new reproductive technologies without any legislative guidance. The recent Supreme Court decision of MR and DR v An t-Ard-Chláraitheoir [2014] IESC 60 (MR) is a clear example of the current legal lacuna surrounding surrogacy in Ireland and demonstrates the desperate need for statutory direction on the issue.

In a six to one majority the State won its appeal against the landmark High Court ruling that the genetic mother of twins born to a surrogate mother was entitled to be registered as their legal mother on their birth-certificates. The case centred on twins born through the use of genetic material from their parents to a surrogate who was the sister of the genetic mother.

Issues arose when the Registrar of Births registered the genetic father as the legal father but refused to register the genetic mother as the legal mother on the basis of the maxim mater semper certa est – the mother is always certain. This age-old Roman law principle dates back to the pre-IVF era where it was presumed that the mother who gave birth to her child was both the legal and the genetic mother. The genetic parents successfully challenged this position in the High Court, where Justice Abbott ruled that the genetic mother was also the twin’s legal mother.

On appeal to the Supreme Court Chief Justice Denham noted that following in the slip stream of modern medical developments in assisted human reproduction, other States have passed legislation to govern and regulate the area but that no such statutory development has yet occurred in Ireland.

Since Ireland has failed to address issues arising from surrogacy the Chief Justice allowed the appeal and quashed the orders of the High Court. The core issue of the case was the registration of a ‘mother’ under the Civil Registration Act 2004 and whether the genetic or the surrogate mother should be named as the legal mother on the twin’s birth-certificate.

The Chief Justice noted that there is no definition of a ‘mother’ in the Irish Constitution. The only two references afforded to the ‘mother’ fall within Article 40.3.3° and Article 41.2.2° which deals with the right to life of the unborn child and the protection of mothers in the home.

Despite the fact that Chief Justice Denham refused to recognise that mater semper certa est is or have ever been part of Irish common law, the Chief Justice indicated that the current legal lacuna surrounding surrogacy gave her no other choice but to allow the appeal. She stated that the issues raised in the case are important, complex and social, which are matters of public policy for the Oireachtas and that the current lacuna in the law should be addressed in legislation and not by the Court.

In separate judgments, Justice Murray, Justice Hardiman, Justice O’Donnell, Justice McKechnie and Justice MacMenamim agreed that the appeal should be allowed while Justice Clarke dissented.

In a country where unmarried fathers have no automatic guardianship rights to their children and where genetic mothers cannot be registered as their child’s legal mother unless physically giving birth to her child (or adopting her genetic child) – one may wonder what will come next. It took the Oireachtas over 20 years to pass legislation to address the legal developments that followed on from the X-case in 1992. It was only in light of the events that followed on from the tragic death of Savita Halappanavar in 2012 that the Irish lawmakers finally got down to action in putting a legislative framework in place.

Surrogacy is not a new phenomenon. IVF-treatment has helped thousands of couples across the globe that cannot reproduce children on their own since the mid 1980’s. The mother in MR was facing a potential childless life, was it not for the option of surrogacy. The State’s failure to recognise the reality of modern-day families and provide equal legal rights to genetic mothers as to genetic fathers creates a serious question of whether the State is properly vindicating the rights of the genetic mother.

As a response to MR, Minister for Health Leo Varadkar issued a press release stating that legislation on assisted human reproduction, surrogacy and gamete donation was long overdue in Ireland. Minister Varadkar claimed that he intended to bring a memorandum for an Assisted Reproduction Bill to Government by the end of 2014, which would be likely to deal with the issue of legal parentage, surrogacy, egg and sperm donation, and other related issues.

Surrogacy was initially included in the extensive Children and Family Relationships Bill 2014, which was introduced in late January 2014. However, due to the pending Supreme Court decision of MR, Frances Fitzgerald (Minister for Justice and Equality) removed surrogacy altogether from the Bill in September 2014.

Ms Fitzgerald felt that there were critical issues that needed to be resolved and that more policy work and consultation was required on the issue. Although surrogacy was removed from the 2014 Bill, assisted human reproduction remained.

Even though the 2014 Bill is welcomed in terms of acknowledging assisted human reproduction, surrogacy has remained in a legal limbo. In a state where lawmakers traditionally have adopted a reactive approach to legal developments, one may only hope that the strong comments from Chief Justice Denham in MR will give the legislature the push it needs to put surrogacy down in writing.

As for the statements made by Mr Varadkar, these have remained merely promises so far. Ireland is still waiting on further legislative developments regarding a potential Assisted Reproduction Bill. It is however hoped that the legislative changes necessary will occur without needless delay.

Is mise le meas,

Annie Nevala

March 23, 2015

Debates on the Regulation of High Frequency Trading are Revived

Flash Boys and Cassandras

Debates on the Regulation of High Frequency Trading are Revived


Róisín Áine Costello


Róisín Áine Costello holds an LLB from Trinity College Dublin, an MPM from the Institut dEtudes politiques de Paris and is currently an LLM Candidate & Fellow of International Economic Law, Georgetown University Law Center. In this letter she explores the current discourse on High Frequency Trading. A fully referenced copy of this work can be found by clicking here.

Dear Editor,

In the last twenty years the stock market began a significant shift as a combination of new technology and regulations led to the emergence of high frequency trading (HFT). Through the use of complex algorithms and high-speed internet connections, traders can buy and sell in fractions of seconds, potentially making an exceptionally high number of small profits, sufficiently fast so as to result in significant overall gains. These algorithmic trading systems require little or no human involvement and rely on computerised quantitative models to execute thousands of orders per second. The advances in trading technologies which have facilitated the rise of HFT have also accelerated the speed at which shocks can travel through the financial system at a pace that far outstrips the capacity of regulatory reaction.

Goldstein writing in the New York Times noted, by 2009, HFT yielded billions of dollars a year and accounted for some 60 percent of US stock trades. Although the rise of HFT is regularly presented as a story concerning the rapid advancement of the technology, it is contended that the rise of HFT is, in fact, an unintended consequences of regulation. During the 1990s and early 2000s, a series of Securities and Exchange Commission (SEC) rules were proposed with the aim of aiding individual investors by requiring stock exchanges to compete through prohibiting exchanges from hoarding orders (including the Securities and Exchange Commission, Proposed Rule on the Elimination of Flash Order Exception from Rule 602 of Regulation National Market System). Though the proposal was designed to allow easier matching of buyers and sellers, in fact it resulted in significant complications as the traditional stock market evolved into a complex web of over twelve separate exchanges which now operate, in many ways, as competing technology companies, in which rooms full of computers match buyers and sellers. This proliferation has forced exchanges to compete more aggressively, and as the profitability of exchanges is based partially on volume, HFT has emerged and grown in importance.

In particular, this proliferation has forced exchanges to compete more aggressively, and as the profitability of exchanges is based partially on volume HFT has emerged and grown in importance. Exchanges also began renting space next to the computers powering the exchanges, and, as it takes time for information to travel over networks, those traders whose computers were closest to the exchange’s computer would exchange information fractions of a second ahead of trader’s located further away – fractions of seconds that could mean billions of dollars.

In certain quarters this escalating competitiveness as well as the relative lack of attention granted to HFT is blamed for exacerbating and indeed causing, the 2010 ‘flash crash’, during which the Dow plummeted 1,000 points in just a few minutes. HFT was also at the centre of a scandal involving Thomson Reuters, who were revealed to have sold key market data to high-paying clients two seconds before the markets and the general public received the information thus allowing them, in HFT terms, a significant trading advantage. Yet it is only in the last 12 months that regulators like Eric Schneiderman, New York’s Attorney General have revived the long-running debate surrounding HFT by highlighting the connections between stock exchanges and trading companies – a relationship Schneider has referred to as ‘Insider Trading 2.0’. Of even greater concern to regulators is whether HFT has the potential to increase the volatility of equity markets and contribute to a reduction in investor confidence. Normal accident theory holds no system of oversight can completely exclude the possibility of periodic crises yet HFT appears particularly volatile. In 2011, the Investment Industry Regulatory Organisation of Canada began a crackdown on the ‘manipulative and deceptive’ trading practices associated with HFT.

The most evident and immediate challenge identified by the Organisation for those who would seek to regulate HFT is its preponderance to crash suddenly and, often without warning, causing dives (in confidence and significant losses for traders involved as evidenced, most recently, by the August 2013 crash of the NASDAQ. Indeed the ‘flash crash’, coupled with a number of stock market failures gives this concern considerable weight. In 2012 Knight Capital lost some $440 million after flawed software flooded the market with orders forcing Knight to unload shares at a significant loss and causing the firm to face near bankruptcy before being bought by Getco Holding Co. HFT has entered the headlines in 2014 once more with the publication of ‘Flash Boys’ by Michael Lewis which charts the ‘rigged’ nature of the market. In the weeks before the book’s publication Goldman Sachs suddenly threw its weight behind HFT market reforms following years of heavy investment by the firm in HFT.

In Flash Boys Lewis highlights the case of Sergey Aleynikov, a high-frequency trading programmer at Goldman who, after leaving the firm, was arrested and charged by the FBI with stealing computer code he had developed for Goldman while an employee there. Goldman claimed the code at issue could be used to ‘manipulate markets in unfair ways’ when placed in the wrong hands. As Lewis notes, the question which such claims raise but which remain unanswered is, if the code had such potentials, exactly what potential manipulations were Goldman using it to achieve.

If the code used for HFT is indeed so potentially efficacious in its markets effects it is, surely, time to listen to the Cassandras among us who have been decrying its destructive potential. Goldman through its conspicuous throwing of its weight behind efforts to reform and regulate HFT may in fact be seeking to pass their flash boys off as Cassandras and thus maintain their standing even as the HFT landscape shifts under the watchful eyes of regulators. Whatever Goldman’s motivations the outcome seems to be becoming clearer – HFT is belatedly following the broader pattern which has characterised post-crisis markets which, at least in theory, privileges regulatory foresight over flash in the pan market forces.

Is mise le meas,

Róisín Áine Costello

November 16, 2014

Musings on our Shared History

Stephen Daly is currently a DPhil candidate and Tutor at Lincoln College, Oxford University. He holds a BCL (International) from University College Cork and an LLM (Corporate Law) from University College London. In this letter, he explores the relationship both the UK and Ireland have with the taxation of multinational corporations.

Dear Editor,

It has been much the repetitive mantra of late that Ireland and the UK have a ‘shared history’. Recent events in Ireland relating to tax however demonstrate both symmetries and asymmetries of this ‘shared history’. Whilst the introduction of new taxes is met with the same disdain in both jurisdictions, the relationship with multinationals offers an interesting distinction.

It is fair to say that the Irish public has not warmed to the idea of a Water Charge. This levy has spurred a series of demonstrations, with more set to occur. In December last year, during the second stage of the Water Services (No 2) Bill (2013) 123 in the Dáil, Luke ‘Ming’ Flannigan famously invited Minister of State Fergus O’Dowd to drink a glass of ‘piss’ water he had retrieved from Castlerea in Roscommon. Sinn Féin’s Mary Lou McDonald, elsewhere, has written that, ‘We are committed to fighting water charges as we believe that fresh, free-flowing water is a basic human right.’

Much the same resistance accompanied the introduction of the Poll Tax by Margaret Thatcher’s Tory government in the late 1980s. The Poll Tax was a Community Charge which was levied at a fixed rate per adult, with reductions for the unemployed, disabled and students. There was considerable anger at this new tax. A series of protests were organized, with some famously turning into riots.

Such symmetry between Ireland and the UK as regards backlash against additional charges should come as little surprise. Indeed, since time immemorial, it has been a cardinal rule that the public will not take kindly to new taxes. As far back as 1776 Scottish philosopher Adam Smith reflected upon the fact that novel taxes inevitably generate discontent:

Every new tax is immediately felt more or less by the people. It occasions always some murmur, and meet with some opposition. The more taxes may have been multiplied, the higher they may have been raised upon every different subject of taxation; the more loudly the people complain of every new tax, the more difficult it becomes to either to find out new subjects of taxation, or to raise much higher the taxes already imposed upon the old.

 This dissatisfaction is often aggravated by the perception of unequal treatment: that not everybody is paying their fair share in the new circumstances but rather that what is being observed is the working class being squeezed to the benefit of the wealthy.

The UK has borne witness in recent times to such aggravated discontent. The perception of inequality came in the form of contrast between austerity measures affecting the populace and the ‘Sweetheart’ deals afforded to large multinational corporations. During the course of 2010 and 2011, it came to light that HMRC (the UK tax authority) had arrived at large settlements with both Vodafone and Goldman Sachs. A backlash ensued, fuelled in particular by protest groups who were apoplectic about the apparent benevolent treatment. For instance, the group UK Uncut forced the closure of up to 30 Vodafone stores by virtue of its protests and subsequently took a judicial review action against HMRC in relation to the Goldman Sachs deal.

However, such outspokenness in relation to inequality of treatment, with regard the tax affairs of multinational companies, has not travelled so well across the Irish Sea. This is particularly interesting in light of the six continuous years of austerity which have been inflicted to date. To this end, the accusation by the European Commission of a ‘Sweetheart deal’ between the Irish Revenue Commissioners and Apple has received a much more muted response in Ireland. The Commission has claimed that the Revenue provided selective treatment to Apple, thereby breaching EU State Aid rules. In effect, this amounts to the charge that Apple paid too little tax in Ireland.

Perhaps this contrast in public mood serves to underline a cultural difference between Ireland and the UK generally as regards relationships with multinationals. Before the US Chamber of Commerce in March of this year for instance, Taoiseach Enda Kenny remarked that it was the Government’s goal to ‘make Ireland the best small country in the world for business.’ Indeed, Barrister Kieran Corrigan presciently picked up on the Irish attitude to businesses and taxes back in 2000, noting the ‘public inclination towards [State-sponsored] tax avoidance.’

 Whilst there is undoubtedly a shared history between Ireland and the UK, it is not beyond the scope of asymmetries. Whilst the introduction of novel taxes produces an equivalent discontent, a corresponding anger towards large businesses is largely absent.

This is not to promote or criticise the prevailing Irish attitude to multinational companies, but merely to outline the curiosity in the contrast. It is notable that a subsequent report into the settlements with Goldman Sachs and Vodafone in the UK found the deals to be ‘reasonable’. Only time will tell then whether the relative Irish reticence is justified.

Is mise le meas,

Stephen Daly

October 20, 2014

The Transfer of Sentenced Persons Convention: Lost in Translation

Cillian Bracken graduated from UCC with a BCL (Law and German) degree in 2014. Since graduating he has worked in an extensive range of legal research roles in the areas of public and corporate law. In this letter, Cillian Bracken explores the recent developments in the superior courts of the Transfer of Sentenced Persons Convention for the law of Habeas Corpus in Ireland and its potential implications. For the fully referenced version of this letter, please click here.

Dear Editor,

Despite a dearth of coverage, the law regarding Habeas Corpus in Ireland with reference to one of the most successful international treaties of the Council of Europe, the Convention on the Transfer of Sentenced Persons (TOSP), is undergoing significant litigation at the moment, potentially with the capacity to affect application of the Convention and its relevant domestic Irish legislation, the Transfer of Sentenced Persons Act 1995 (as amended by the Transfer of Sentenced Persons Act 1997), on the transfer of prisoners between Ireland and elsewhere, most significantly the country with the largest number of Irish expatriates and closest Irish ties, the United Kingdom.

Some background; on 21 March 1983 TOSP was opened for signature by the European Committee on Crime Problems, the committee within the Council of Europe entrusted with the overseeing and coordinating of the Council’s activities in the field of crime prevention and crime control. Its purpose was, and still is, as referenced by TOSP’s preamble to ‘achieve a greater unity between [the Council of Europe’s] members’, ‘develop international co-operation in the field of crime law’ and ‘require that foreigners who are deprived of their liberty as a result of their commission of a criminal offence should be given the opportunity to serve their sentences within their own society.’ Essentially TOSP allows a person sentenced in a contracting State to be transferred to their home country to serve the whole of their sentence or the remaining part thereof. This is a noble enough intention allowing those imprisoned abroad to serve their time near their families.

Ireland duly signed TOSP in 1986 and then ratified the convention and passed it into domestic law via the 1995 Act. TOSP currently has 64 contracting States, including all the members of the Council of Europe barring Monaco, as well as the USA, Australia, Israel and Canada amongst others.

The criteria necessary to be fulfilled for a transfer remains reasonably straightforward: the sentenced person in question must be a national of the ‘administering State’, that is the State the person is to be transferred to; the judgment is final; at least 6 months remain to be served on the sentence; the person consents to the transfer; the act for which the sentence was imposed constitutes a criminal offence according to the law of the administrating State; and both the administrating State and the ‘sentencing State’, that is the State who imposed the original sentence, consent to it. Section 1(1) of the 1995 Act defines ‘sentence’ as being ‘any punishment or measure involving deprivation of liberty ordered by a court or tribunal …’. Sections 7(4) and (5) of the act serve to translate the sentence, either allowing for the continuance of the sentenced imposed by the sentencing State, or the adaptation of the sentence ‘to a sentence prescribed by the law of the State for an offence similar to the offence for which the sentence was imposed’ respectively.

Notwithstanding the current issues to be discussed, TOSP and the Act remain functioning and integral parts of our modern criminal legislative framework; in 2013 alone 14 applications for transfer were received by the Department of Justice, with 12 from the UK, up from 6 UK applications in 2012.

The current TOSP difficulties arose in Sweeney v Governor of Loughan House Open Centre & Ors [2014] IESC 42. On 7 December 2006, Vincent Sweeney was convicted of serious drug offences in the UK and sentenced to 16 years of which, pursuant to the UK Criminal Justice Act 2003, one half would be served in custody and one half would be served ‘on licence in the community’, a system that does not exist in Irish criminal law and it is upon this point that the issue hinges. On 16 December 2008, upon his consent, he was transferred under the 1995 Act to serve the remainder of his sentence in Ireland, on the basis of a warrant issued by the High Court on 22 October 2008, which by way of judicial review he wished to have declared ultra vires the act through the action. Sweeney contended that the sentence imposed by the English court should be understood as comprising two halves; 8 years in custody and 8 years on licence in the community at liberty, and so Ireland, on the basis of the act and TOSP, could only administer a custodial sentence of 8 years as only this falls within section 1(1) of the Act as well as the fact that such a system does not exist in Ireland, and as such 29 March 2014 should be considered the expiry of his sentence.

Counsel for the respondent argued the semantic point was that the sentence imposed by the English court was one of 16 years imprisonment, which the State was obliged under the terms of TOSP and the act to enforce. However the 16 years was subject to the Irish system of 25% remission for good behaviour and so the appellant could potentially be liable for release on 12 December 2016. The respondents underlined that Article 10 TOSP requires that ‘the administering state shall be bound by the legal nature and duration of the sentence as determined by the sentencing state.’ It was further argued that the appellant had consented to serving the remainder of his 16 year sentence, and had been informed of this prior to transfer.

Murray J in his judgment came to the decision that the appellant was liable only for the 8 year custodial sentence on the basis that the descriptive terms of the sentence imposed clearly made a difference between the custodial and the licenced sentences and occurred by operation of law and not by virtue of remission. He also placed great weight on the interpretation of section 1(1).

Interestingly, the court did not discuss the implications for Anglo-Irish relations with reference to the act, given the potential consequences due to the political nature of a large number of Irish nationals imprisoned in the UK. Although alluded to by both judges, somewhat surprisingly a more in-depth examination of the analogy between a suspended sentence and a sentence under licence does not seem to have been analysed, however as both Clarke and Murray JJ discussed the possibility of a section 7(5) adaption, and that the 1995 Act concerns itself only with the custodial sentence this question may be unnecessary to examine. The implications of this are clear – a person sentenced to 16 years in the UK could well end up serving only 6 years in Ireland including 25% Irish remission, a possibility not discounted by the judgment. (As an aside this could even possibly be less given the decision in Ryan v Governor of Midlands Prison [2014] IEHC 338 which ruled that there existed no reason why the higher one third rate of remission within order 59.2 of the Prison Rules 2007 shouldn’t apply in appropriate circumstances. Although this was overturned on appeal to the Supreme Court on the basis of misapplication by way of Article 40 procedure in Ryan v Governor of Midlands Prison [2014] IESC 54 it still leaves the door potentially open for a correct application).

Most recently the Sweeney decision has again come to light in the Habeas Corpus Article 40.4.2˚ application in O’Farrell v Governor of Portlaoise Prison [2014] IEHC 416 and O’Farrell v Governor of Portlaoise Prison [No 2] [2014] IEHC 420. Here the appellant and two others were convicted of terrorism offences after travelling to Slovakia to buy weapons and explosives from agents whom they believed to be Iraqi arms dealers for the Real IRA but were in fact British security forces. They were sentenced to 28 years after extradition to the UK in 2002 under the Terrorism Act 2000 and were then transferred to Ireland on the basis of a warrant of the High Court on 28 July 2006 for the same 28 year sentence under the 1995 Act. Notably the appellant was convicted prior to the UK Criminal Justice Act 2003 and he would have been required to serve a two-third custodial sentence, and a third under licence, rather than the current two halves system. In the first action, Hogan J held that there was a defect on the face of the warrant in following the ratio of the Supreme Court in Sweeney and that the proper sentence was one of 18 years and 7 months and then adjourned the case for the respondent to apply to vary the section 7 order pursuant to section 9(1)(b) of the amending 1997 Act to properly reflect the sentence and amend the defective warrant, and reserved his judgment as to whether the court had jurisdiction to exercise variation of said warrant . In the second action, ordering the release of the appellant forthwith, through detailed examination of the legislative framework, Hogan J did critically note that the sentence could well have been adapted to fit Irish law under section 7(5) of the 1995 act rather than being continued as it was under section 7(4) of the same. He goes as far as to explicitly enunciate how the sentence could have been adapted, but is, as he says, ‘helpless to effect the curative action which would be necessary to remedy the defective warrant’.

By taking the Sweeney and O’Farrell decisions together, one can clearly see the consequentialism. It would be unfair to blame the courts for giving effect to the legislation rather than the State for not correctly adapting the sentences but, without the benefit of hindsight, the current result is that prisoners sentenced in the UK, and quite possibly elsewhere given the nuance of country-by-country criminal law, are not serving all of what was originally believed to be their sentences, whether by only serving the custodial sentence they are or are not fulfilling the original intended sentence handed down by the English or Welsh judge remains unclear. Many questions still surround whether or not the UK would originally have consented given the political nature of many of those transferred, or even would the State itself have consented. There is no doubt the State is now on notice to adapt the sentence of future applications accordingly, but given there are no hard figures as to how many people are affected by the Sweeney decision, future releases are most certainly not precluded. The issue of whether or not the UK will continue to consent to transfers remains to be seen, or prospectively if prisoners would be dissuaded from applying for transfer on the basis of how the State could adapt the custodial sentence without licence, nevertheless is it a quandary which shall be very interesting to follow as the jurisprudence develops in coming months.

Is mise le meas,

Cillian Bracken BCL (Law and German)

October 6, 2014

Luis Suarez and the Gaelic Athletic Association

Daniel Watters is a PhD candidate in Queens University, Belfast. He holds an LLB from UUJ and an LLM from TCD. His current research in QUB centers around the use of criminal law in dealing with occurrences of violence between sports participants.

Dear Editor,

Over the last two years, Luis Suarez, a leading footballer in the Premier League, has been involved in two unsavoury acts committed on the field of play. In the same period of time, numerous similar acts have been reported and dealt with (very rarely satisfactorily) by the Gaelic Athletic Association (GAA).

The first of these incidents concerned the alleged use of racist language towards an opposing player. A complaint was made by Patrice Evra, alleging that Suarez had made a racist remark to him during the course of a match. The incident was investigated by the FA and submissions were made by both sides. The inquiry was chaired by a leading Queen’s Counsel in England and a full 115 page report was released by the FA two months after the alleged incident took place. The report contained all details of the investigation, submissions by both sides, expert evidence regarding the alleged abusive words, the main factual disputes, the charge, the penalty and finally the conclusion of the inquiry team. The final result was that Suarez was found guilty of the charge against him, fined £40,000 and also handed an eight game ban from football.

In the GAA world over the last two years, there have been numerous racial incidents reported. Lee Chin, dual inter-county star for Wexford, was racially abused by two opposing players during a match in 2012 and both players were suspended for the minimum of eight weeks each.  There was no publication of an official report or transcript of the investigation into the incident. Neither was any reasoning provided to explain the sanctions imposed on the players.

A more worrying example is that of Aaron Cunningham. During a match against Kilcoo, Cunningham alleged that he was the victim of abuse by two opposing players. An initial investigation by the Ulster Council led to bans of six and four months for the players. On appeal, the six month ban was reduced to four months while the four month ban was rescinded. As with the previous case, there was no written report published regarding the investigation or the appeal. Such a lack of transparency will not only deter future players from playing the game, it could also lead to players looking elsewhere for justice, such as making a complaint to An Garda Siochana or the Police Service of Northern Ireland which is a rare occurrence due to the ‘sporting omerta’ that players currently adhere to.

The second Suarez incident concerns him biting an opposing player during a live televised game in April 2013. The FA charged Suarez with violent conduct and decided that the standard three game ban was insufficient and applied for a longer ban. As a result of the FA inquiry he was handed a ten game ban by the independent panel and a report, this time twenty-one pages long, was published by the FA.

Two biting incidents were reported this year in the Irish media concerning the GAA, yet no transparency is evident. The first concerned Paddy McBrearty, an All-Ireland winner with Donegal in 2012. At half-time of a match against Dublin in April 2013, McBrearty told the referee he had been bitten. Afterwards he was examined by the Donegal medical team and subsequently went to a hospital for precautionary blood tests. As a result of this incident, the Central Competitions Controls Committee (CCCC) proposed a three game ban for the offending Dublin player; Kevin O’Brien. The Dublin County Board refuted the allegation and appealed the decision. McBrearty was asked to attend the appeal but choose not to, and as a result of his absence the Central Hearings Committee (CHC) cleared O’Brien of any wrongdoing. This led to a bitter war of words between the Donegal manager and the GAA. The Donegal manager Jim McGuinness said that the committee had all the evidence they needed to prove the allegation, while the President of the GAA accused Donegal of not seeing the matter through. Once again, there was no report released by the CCCC or the CHC on the actual investigation or the reasoning for their respective decisions.

The second biting incident occurred in May 2013 and resulted in the victim requiring stitches for a wound to his ear. Anthony Gaynor, the perpetrator, received a twenty week ban for his part in this assault. Gaynor never attended the hearing or appealed the decision but the father of the victim called for a minimum suspension of a year for such a ‘serious and despicable act’. Like the previous cases mentioned, there was no report published by the Cavan County Board who advised it is their policy not to publish the outcome of disciplinary hearings.

The major issue that arises here is one of transparency and consistency regarding investigations and disciplinary hearings in the GAA. The GAA is essentially a professional organisation running an ‘amateur’ sport. It is time that the powers that be within the organisation give the players and administrators an effective and transparent disciplinary system, similar to the FA procedure. While it is acknowledged that there are differences between the FA and the GAA, the FA procedure represents best practice regarding conducting inquiries into incidents on the pitch and the subsequent publication of inquiry reports and reasons behind disciplinary decisions. While a 115 page report may not be necessary in GAA, a simple five to 10 page document outlining the charge, the arguments for and against, the decision and reasoning for the decision would improve players’ trust in such proceedings.

 All four of the incidents that occurred during GAA matches could potentially lead to criminal prosecutions (criminal charges were brought against John Terry in England for alleged racism and Suarez was interviewed by police following the bite). Luckily for the offenders and the GAA, no such action was pursued. However, if players aren’t happy with the internal sanctions imposed it is only a matter of time before external measures are resorted to. Such measures could have very serious repercussions for the future of the GAA.

Is mise le meas

Daniel Watters

March 6, 2014

Observations on Ireland’s approach to Climate Law

Thomas L Muinzer is a legal researcher based at the Law department at Queen’s University Belfast.  Mr Muinzer holds Masters Degrees in Environmental Law and Legal Science, both from QUB.  At present he is a PhD researcher engaged in investigating the development of modern UK climate law in the context of Northern Ireland and the UK’s other devolved regions. In this letter he takes an opportunity to peek over the North/South Irish border in order to offer comment on the condition and trajectory of climate law in the Republic of Ireland at the present time.

A fully referenced version of the letter is available here.

Dear Editor,

Climate change is a matter of significance for each and every person living on the island of Ireland, to say nothing of the wider world beyond.  The science behind the issue runs as follows.  A stock of greenhouse gases present in the earth’s atmosphere traps a portion of the sun’s heat and duly contributes to the warming of the planet.  Since the inauguration of the modern industrial revolution human activity has been contributing radically to an increase in this atmospheric stock through the sustained burning of fossil fuels.  The scientific community has identified a correlation between this anthropogenic (i.e., human-induced) increase in the stock and an associated increase in global warming.  It is this global warming that in turn produces the anthropogenic climate change with which climate law is chiefly concerned.

A young but developing web of climate law is beginning to manifest across the international community in an effort to both mitigate and adapt to the effects of this climate challenge.  In particular, the United Nations Framework Convention on Climate Change (UNFCCC) came into force in 1994 and has presently been ratified by 195 countries.  The UNFCCC establishes in law the duty to redress the dangers posed by climate change, and in doing so places an onus upon developed nations – the most abundant contemporary and historic emitters – to lead the way in an international emissions reduction drive.  In 1997 the Kyoto Protocol committed nations listed in Annex I to the UNFCCC to specific greenhouse gas reduction targets for the period 2008–2012.  The European Union (EU) received an aggregated target under these arrangements, and within the target bubble Ireland was obligated to cap its greenhouse gas emissions at a maximum 13% increase on 1990 levels.  The compliance period expired in 2012 and a second phase is presently in negotiation.

The EU has emerged as a positive supporter of robust emissions reduction.  Whilst pushing for progress at the international level it has simultaneously implemented its own internal strategies.  By 2020 the EU has legally obligated itself to achieve: a 20% reduction in greenhouse gas emissions from 1990 levels; a 20% increase in renewable energy; a 20% improvement in energy efficiency.  Under this framework energy generation and heavy industry in Ireland have become subject to an EU Emissions Trading Scheme (ETS).  Ireland is also required by 2020 to source 16% of its gross final energy consumption from renewables and to reduce non-ETS emissions by 20% from 2005 levels.

Notwithstanding their mandatory adherence to the EU’s supranational climate framework, Ireland and the other EU Member States are nonetheless afforded significant room to manoeuvre, and Ireland has successfully brought some semblance of its own national character to domestic climate law.  Most recently, in February of last year Ireland’s outline Climate Action and Low Carbon Development Bill 2013 was published.  Hearings on the document were conducted in July 2013.  The outline proposes to obligate the Government to establish both a series of plans designed to plot out Ireland’s transition away from greenhouse gases and a national roadmap that paves the way toward a low carbon 2050.  A stream of progress reports is to be laid before Dáil Eireann, and an Expert Advisory Body on National Climate Change is to be created.  If sufficient support is forthcoming the proposals will be developed into Ireland’s first major climate statue.  This Act would approximate in Irish terms to the United Kingdom’s Climate Change Act 2008 (CCA 2008).

The UK’s CCA 2008 constitutes that most endangered of legal species, a genuinely impressive national climate statute. The Act represented the first major example in the world of one country placing upon itself robust long term legally binding greenhouse gas emissions reduction targets, and its provisions presently commit the UK to reductions of: 80% from 1990 levels by 2050; 34% from 1990 levels by 2020. It establishes a pan-national carbon budgeting framework in order to realise these objectives in practice and bolsters the process with an intricate set of reporting arrangements and the establishment of an independent advisory Committee on Climate Change.

A recent in-depth study by Irish and UK environmental policy expert Peter Doran has scrutinised the outline Irish Bill and juxtaposed its framework with the CCA 2008.  The research convincingly concludes that in failing to establish long term legally binding reduction targets, and in thus lacking a carbon budgeting / comparable reduction system designed to meet those targets, and in further failing to establish an independent climate change committee that can exist at a remove from political wrangling and associated influences, the present Irish legislative agenda is comparatively weak.

What concluding observations might be drawn here?  In truth, Ireland seems to be making a reasonable effort to keep pace with its EU obligations, and the outline climate Bill does not significantly undermine those reasonable efforts per se.  Yet one also wonders what concluding observations John Tyndall (1820-1893) might draw, were he alive today.  Remembered as ‘one of the outstanding scientific personalities of the Victorian age’, Tyndall’s experiments profoundly contributed to the modern understanding of global warming: he remains ‘deservedly credited’ by history ‘with establishing the experimental basis for [the] “greenhouse effect”’, and the UK’s distinguished Tyndall Centre for Climate Change Research is today named in his honour.  Born and raised in County Carlow, perhaps ‘calling to the mind’s eye’ the memory of this genuinely remarkable Irishman might embolden the vision of Ireland’s legislators. No longer content with mere reasonable efforts that falteringly endeavour to toe a common-denominator EU baseline, perhaps they might craft climate law that excels those standards and thereby helps to set another remarkable Irish example to the world.

Is mise le meas

Thomas L Muinzer

February 24, 2014

Disconnecting Internet users: An ineffective means of copyright enforcement?

Damian Clifford graduated from the University of Limerick in 2009 (LLB Law and European Studies) and the Universite Jean Moulin (Lyon 3) in 2010 (LLM International and European Law) before spending two years working in online policy enforcement. He is currently enrolled in the LLM in IP and E-law at UCC and is an ELSI Bursary holder.

Dear Editor,

The enforcement of copyright online has become an increasingly important and controversial issue. Finding effective means of protection has been difficult with legislators left scrambling in the wake of open source development and free access sharing services. The seemingly limitless powers of the online community to mobilise responses and circumvent controls has resulted in a frustration of traditional legal norms. Indeed the P2P data sharing problem that exists today was in some respects a direct response of the digital community to the targeting of host servers. The recent decision of the French Administrative Authority (Hadopi) to discontinue the disconnection of digital infringers of copyright has once again brought the questions regarding proportionality, legality and effectiveness of this mechanism to the fore. In my opinion this area is ready for reform and, given its already questionable legal basis; it is time to move to a more balanced approach.

The motivations behind these schemes are obvious. The internet presents a jurisdictional nightmare with users capable of transferring content across the globe virtually instantaneously. Disconnecting service is a means of targeting infringing users even when the other user(s) or software creator is located outside the jurisdiction. It is a cost effective and speedy means of enforcement which aims to change the persistent public acceptance of this activity. As such, it aims to act more as a deterrent than an actual punishment with the disconnection of only repeat offenders.

Nevertheless, the legal foundations of this enforcement means have presented polarised views on legitimacy and have exposed concerns regarding data protection and privacy. Currently in Ireland the position is somewhat unclear with only one Internet Service Provider (Eircom) enforcing this process through an arrangement with copyright holders in a ‘three-strikes’ graduated format. The case law and judicial opinion present an outdated and ineffective viewpoint on IP and fail to grasp the changes required in the digital age. What is evident is that the courts and the legislature are clearly more inclined to balance these issues in favour of the copyright holder, despite the reservations of many leading academics and public perceptions.

I hold many of the same concerns specifically relating to the legitimacy of the schemes, the proportionality of the punishment and concerns over potential breaches of fundamental rights, due process and data protection legislation. Judicial opinion in this jurisdiction is in sharp contrast to the French Constitutional Court’s decision regarding the adoption of Hadopi I. The legal issues highlighted by this case (as discussed in the various decisions of the both the UK and Irish courts) have presented a rigid dichotomy between the ‘new’ and ‘old’.  Aside from the arguments regarding legality, the effectiveness of the mechanisms is also in doubt. In the UK delays, in no small part due to judicial review, mean that it will be 2014 at the earliest before the first warnings are sent to customers, a whole 4 years since the adoption of the Digital Economy Act. Given the rapidity of change and development one must question the influence this process will have upon its introduction. Clearly the French decision to abandon this form of enforcement reflects its decreasing relevance in the fight against online abuse of IP rights. In furtherance of this effectiveness argument one must also acknowledge the increasing availability of public access networks. Indeed, circumventing suspension does not require a lot of imagination arguably rendering this punishment virtually ineffective.

Furthermore, the response to the threat posed by the use of IP addresses as a means of discovering the offline identity of users has been swift. Many bit-torrent software services are now implementing means of masking IP addresses and this migration to non-IP based methods of transfer effectively renders tracking of infringing behaviour impossible. Accordingly, given the more recent developments in software development it appears logical that the more technically savvy a user is the less likely they will be discovered infringing copyright. In an Irish context, as the recent Irish Data Protection Commissioner case has shown (EMI Records (Ireland) Ltd & Ors -v- The Data Protection Commissioner & Anor [2012] IEHC 264 and its confirmation in the Supreme Court), even without these developments accuracy remains an issue. Requiring ISPs to provide information on their customers raises concerns regarding the accuracy of the information received and the time committed to a balanced and legitimate investigation of accusations. One must be highly sceptical of the genuine legitimacy of this mechanism especially regarding the de facto switching of the burden of proof. I am concerned that efficiency and cost concerns have become the primary motivating factors superseding accuracy.

In essence enforcement is a fight against a ruthless hydra with the monster changing tactics and the point of attack with each severing counter-measure. As technology advances, a better method may be to consider a more collaborative solution and rather than isolating users, include them in finding of an answer tailored for the digital age. The constant battle between infringers and copyright holders reflects the need for a coherent system that can adapt to the dynamic nature of the industry. Lobbying by groups representing copyright holders has perhaps had too great an influence over the development of legal safeguards, and it is now time for a more inclusive and comprehensive approach. If lawmakers continue down the same well-trodden path the effectiveness concerns will re-emerge.

The developments in France highlight deficiencies and have given the Irish legislature an opportunity to form a more settled approach regarding the enforcement of IP rights in this jurisdiction. I believe it is time to modernise the approach and adjust the mechanisms of enforcement to deal with these dynamic issues. Ireland has failed to adopt an effective response resulting in a somewhat heavy handed approach to enforcement. Indeed as the idiom goes ‘if your only tool is a hammer then every problem looks like a nail.’ Thus, reform is needed and I believe the solution lies in user influenced coding that can be constantly adapted and not static legislation. However, the means of achieving this are unclear and therefore the future of this area remains uncertain.

Damian Clifford LLB, LLM, LLM (Candidate at UCC)

February 10, 2014

Condemned to Repeat: Can Europe Avert Tragedies at Sea for Refugees and Migrants?

A fully referenced version of this letter is available here.

‘Two months ago the tragedy in Lampedusa triggered a very wide and emotional reaction across Europe – a chorus of voices calling for actions to avoid such disasters in the future. I trust this impetus has not vanished. Today we are putting on the table measures and proposals for a truly European response that can make a difference. I call on Member States to make full use of this unique opportunity to show that the EU is built on solidarity and concrete support. Now is the time to act’, Cecilia Malmström, EU Commissioner for Home Affairs (4 December 2013)

The moral, political and legal complexities of humanely addressing the question of how to protect those fleeing persecution, violence and poverty were once again thrown into stark relief by the 11 October 2013 sinking of a boat containing migrants in the waters between Lampedusa and Malta. Despite the media coverage of the tragedy disappearing from our screens, the long-term impacts of such events within Europe remain to be tackled. Over 260 people are now known to have lost their lives when the crowded boat they were travelling in from Libya sank in the Mediterranean. Yet this is simply the most recent and large-scale example of the immense risks that, wittingly or unwittingly, thousands of refugees and other migrants seeking protection face in their attempts to reach the perceived safety of Europe.

Following the upheavals caused by the Arab Spring and armed conflicts in Libya and Syria, the past few years have unfortunately seen an increase in the number of people attempting to cross the Mediterranean in crowded and unseaworthy vessels. The challenges of accessing European protection and migration mechanisms has driven many into the dangerous clutches of people smugglers and traffickers, who often have scant regard for the lives and safety of those they are transporting. Yet the responses by European authorities to the victims of such smugglers and traffickers have also faced severe criticism. In February 2012, the Grand Chamber of the European Court of Human Rights ruled against Italy in the case of Hirsi Jamaa and others (27765/09), holding that the actions of the Italian authorities in intercepting and ‘pushing back’ migrants from Italian waters constituted a violation of Article 3 ECHR (due to the risk of ill-treatment in Libya, and subsequent risk of repatriation to Somalia and Eritrea), and also Article 4, Protocol No. 4 concerning the prohibition of collective expulsion of aliens.

This judicial ruling was quickly followed by the Council of Europe’s damning report on the so-called “left-to-die boat” incident. In that case, a boat containing 72 migrants left Tripoli on 26th March 2011 during the height of the conflict in Libya, and was washed up on the Libyan shore 15 days later with only 10 survivors. Following intensive investigations, the Parliamentary Assembly of the Council of Europe identified a catalogue of failures by the Libyan and Italian authorities in response to the boat itself, and the lack of preparation for such attempts to flee Libya by NATO member States in the planning and execution of their armed intervention. The report highlighted that both the Italian and Maltese authorities were aware that a boat was in distress within the zone of water which fell within the responsibility of the Libyan authorities for search and rescue activities under the International Maritime Search and Rescue Convention. Considering the on-going armed conflict in Libya at the time, it was reasonable to assume that the Libyan authorities may not have been in a position to assist such a vessel. Furthermore, as the Italian authorities were the first to be informed of a boat in distress, they held a greater responsibility to ensure the boat’s rescue.

The frustration of Tineke Strik, Rapporteur of the Parliamentary Assembly of the Council of Europe, was obvious following a newspaper investigation into the 11th October 2013 tragedy which described the unwillingness once again of the Italian and Maltese authorities to take responsibility for the boat once they were informed of its predicament. While acknowledging the Italian and Maltese authorities eventually rescued 212 people, Mrs. Stirk asked: ‘what about the 200 persons who drowned? Could not their lives have been saved if lessons had been learned from the 2011 incident that I investigated?’

Against this background, the recent announcement by the European Commission of concrete actions in response to the Lampedusa tragedy deserves a cautious welcome. The EU Justice and Home Affairs (JHA) Task Force established at the October 2013 JHA Council meeting has set out five areas for priority action which can broadly be grouped into three themes: increased surveillance and border control measures; legal migration options; and co-operation with third countries. The Task Force has proposed increased use of the recently established European Border Surveillance System (EUROSUR) which includes use of satellites and drones to provide better imagery of the external borders of the EU, in conjunction with the Frontex European Patrols Network. Likewise financial support and solidarity measures are intended to provide funding for EU Member States such as Italy for, inter alia, border surveillance operations; while Europol is to be given a stronger role and resources to co-ordinate EU activities in the fight against people smuggling and trafficking.

In addition to the surveillance and crime prevention aspects of the Commission’s proposals, the question of the extremely low levels of resettlement of recognised refugees into the EU as a whole has been acknowledged. As noted by the Commission, in 2012 only 4,930 refugees were resettled into the EU (by only 12 of the 28 Member States) while during the same time the USA resettled over 50,000 people. Such refugee resettlement programmes should be complemented by new legal channels for migrants to access the EU both for temporary and permanent stays. Finally, the proposals highlight the role that Mobility Partnerships with countries such as Tunisia and Azerbaijan can play in identifying channels for regular migration, in conjunction with the establishment of regional protection regimes.

Within the context of this letter, it is not possible to examine each of these proposals in detail. Indeed, the debate surrounding the Australian ‘Pacific solution’ of denying entry onto Australian soil for asylum seekers and irregular migrants who arrive by sea should provide us with serious cause to examine the best methods of ensuring access and safety to our shores for those unable to access regular methods of migration or protection. However, a focus on border control and crime prevention can only be one part of a holistic European strategy to address the perils faced by migrants crossing the Mediterranean. Arguably the increased land border controls between Greece and Turkey have consequently pushed more migrants into the hands of people smugglers and traffickers at sea. While the EU’s recognition of the need for increased legal avenues for those fleeing persecution, violence and poverty is to be welcomed, such calls have been made repeatedly since the conflict in the former Yugoslavia in the 1990s. So while concerted efforts must be made to arrest and detain those actively profiting from people smuggling and trafficking, serious measures also need to be introduced to make the latest proposals for increased refugee resettlement and legal migration channels a reality across the EU. Likewise, EU Member States must take collective responsibility for the protection of vulnerable migrants. This implies financial and physical burden sharing between all Member States, as well as true co-operation between those States at the front line to ensure that vessels in distress are provided with prompt and effective assistance as soon as possible. Otherwise, we will be condemned to repeat the failures of the past and more deaths will occur within European waters.

Dr Dug Cubie, Lecturer in Law, Faculty of Law, UCC

January 21, 2014

The Need for Recognition of a Right to Adequate Housing to Vindicate the Rights of Local Authority Tenants

Claire-Michelle Smyth graduated from NUIM with a BA in Psychology and from Griffith College Dublin with an LL.B in Irish Law and an LL.M in International Human Rights Law. She is currently a PhD Candidate at Queens University in Belfast researching the justiciability of social and economic right through the European Convention on Human Rights.

Dear Editor,

As Ireland spiralled into the economic abyss, the swollen waiting lists for social housing bulged. Those in need of social housing languished on the ever increasing file burdened with an inability to pay private sector rents due to continued decreases in rent supplement. While the spotlight focused on this undoubtedly serious issue it was shifted away from the fact that once a property is allocated, that does not necessarily spell the end of hardship for the Local Authority tenant.

Just as there is no right to be housed recognised within the Irish system, there is likewise no right to adequate housing. Therefore there is no guarantee that the property designated to Local Authority tenants will be of an acceptable standard compared to private rented accommodation.

In the landmark case of Siney v Dublin Corporation the Court declared that there was an implied warranty in the agreement between the tenant and the housing authority that the accommodation was fit for human habitation. Further in Burke v Dublin Corporation the Court considered an issue whereby a child tenant contracted asthma as a result of a conversion of the heating system. The Supreme Court held that there was a continuous obligation on the Corporation to inspect the system and to fix any defects. Chief Justice Finlay went on to hold that it was an implied warranty of fitness for human habitation in the contract which included that the property would be capable of being healthily, safely and properly heated.

Despite these court rulings, the fact remains that many Local Authority tenants reside in sub standard accommodation which are clearly not fit for human habitation. The tragic death of Rachel Peavoy in her flat in January 2010 brought the plight of many Local Authority tenants once again to the fore. Ms Peavoy resided in a block of flats in the Ballymun area of Dublin which was the subject of a regeneration project. The vast majority of flats had been vacated and as a result of this the Council conceded that the heating may not have been working efficiently. Ms Peavoy died of hypothermia while she slept in her flat during the coldest month in Dublin for 45 years. The adequacy of the heating was not something that was discussed, despite the ruling in Burke, when the Coroner returned a verdict of death by misadventure.

At a recent Human Rights Law Conference I heard one of the residents of the Dolphin’s Barn flats speak about their ongoing struggle with the Local Authority to remedy serious and dangerous defects within their properties. Residents of this development have been living in damp and mould infested conditions for over two decades. More recently raw sewage has been entering the properties through sinks, baths and washing machines. An independent report in 2010 found that the sewage was toxic and harmful to health and a further report in 2011 confirmed that the mould spores were also harmful to health. Surveys of those living in these conditions found a high percentage of the residents suffer from some form of pulmonary disease which can be directly or indirectly attributed to the living conditions.

While these conditions are extreme, they unfortunately are not unique among council and social housing tenants with 28% of tenants stating that there were significant issues relating to adequate heating and dampness in their property.

Why then are tenants of the Local Authorities living in such deplorable conditions? The answer lies in the rights afforded to them. With the right to adequate housing outside the remit of the courts, it falls to the legislature to determine what rights tenants have. The protection afforded to private tenants by way of the Residential Tenancies Act 2004 expressly excludes social housing tenancies.

The Housing (Standards for Rented Houses) Regulations 1993 provide that properties must meet a certain minimum standard of structural soundness and amenity provision. Article 5(2) provides that they must be ‘(e)ssentially sound, with roof, floors, ceilings, walls and stairs in good repair and not subject to serious dampness or liable to collapse because they are rotted or otherwise defective.’

This regulation was expressly incorporated into the Residential Tenancies Act 2004 by section 12(1) which refers to the regulations and incorporates them into the Act. In addition, it is not possible for a landlord to contract out of these minimum standards requirements, which will override any conflicting clause in a lease or tenancy agreement. However, as social housing tenancies are expressly excluded, they do not have the benefit of this minimum standard.

Further Regulations which govern rented accommodation do not apply equally to tenants of social housing and as such lower standards in relation to heating, food preparation and laundry are allowed.

Where a private tenant is living in substandard accommodation they have options, they may leave or take a claim to the Residential Tenancies Board to enforce their Landlord’s obligation to maintain a minimum standard. Local Authority tenants do not have those options. If they leave their tenancy they will not get any State assistance and will effectively become homeless. They are excluded from the provisions of the 2004 Act and have no forum to have their grievances independently adjudicated upon.

It is quite clear that until there is recognition of the right to adequate housing in Ireland as a fundamental human right, there will continue to be long waiting lists and sub standard accommodation for clients of Local Authorities.

Is Mise Le Meas,

Claire-Michelle Smyth B.A, LL.B, LL.M, PhD Candidate at Queens University Belfast.

December 23, 2013

An analysis of the Newbridge Credit Union takeover: what comes next for Ireland’s Credit Unions?

Keith Winters BCL, LLB, is a graduate of University College Cork. Since completing his LLB in 2012, he has gone on to gain extensive experience working in the areas of financial regulation and compliance. Mr Winters is currently involved in the design and innovation of new systems in risk management and strategic planning for Credit Unions. This places him in a prime position to explore the issues that led to the recent high profile High Court order which allowed for the transfer of assets from Newbridge Credit Union to Permanent TSB. This decision has resulted in much scrutiny of our Credit Unions’ systems, which in turn uncovered some worrying practices, and highlighted a certain need for change. In his letter below, Mr Winters will reflect on contributing factors and proposed responses, to the regulatory and compliance issues that Credit Unions are now facing.

Dear Editor,

Given the recent spate of coverage in national and local media regarding the Irish credit union sector, and having worked in a legal and risk capacity with a credit union over the past year, I thought it might be useful to relay some of my own reflections on the issues facing a movement that has become so deep-rooted in the Irish psyche.

On the evening  of the 10th of November 2013 the High Court, in dramatic fashion befitting the prospect of a ‘run’ on deposits at a financial institution, convened a late night sitting which ultimately resulted in the Court giving its approval of an application by the Central Bank to use its powers under the Central Bank and Credit Institutions (Resolution) Act 2011 in directing the transfer of the assets of Newbridge Credit Union Ltd. (NCU) to Permanent TSB.

This is the first time that a credit union has been taken over by a bank in Ireland and while the precedent is theoretically a worrying one for those within the Irish Credit Union movement it is unlikely to be replicated across the sector. NCU presented the Central Bank with a particular set of problems whose scale is not mirrored to the same degree among the one-hundred or so credit unions (of 392) that have been identified as requiring closer supervisory scrutiny. For other credit unions in trouble it is unlikely that a course of action as severe as has been taken with NCU will be necessary with the voluntary transfer of engagements into more stable anchor credit unions being the preferred route. The political repercussions of the NCU transfer will be unknown until the depth of the problems within credit unions are addressed in the context of the new regulatory arrangements.

The legal issues that have arisen as a result of the meteoric rise and fall of NCU are beyond the scope of this letter, and are in any event too raw and fresh to be adequately analysed at this time. Whether NCU’s failure was imminent and whether such a failure would have spread contagion across the credit union sector and the wider financial services sector is a matter of debate, but the Court was convinced by the Central Bank’s speculation in making its decision, a decision which seems to be rooted primarily in political considerations resulting from Ireland’s imminent departure from the EU/IMF bailout programme.

Notwithstanding the legal issues at play, the NCU story is itself a microcosm of the now jading and oft-told tale of the Irish financial institution that outperformed its peers, grew exponentially and ultimately lost the run of itself during the Celtic Tiger years, before coming crashing down to earth following the disappearance of a make-believe economy built solely on the sandy foundations of an overheated property market. The principal difference here though, is that NCU, as a credit union subscribed to an ethos at variance with that of the for-profit banking sector, and because of that ethos its difficulties should never have reached the point where a bailout  of such magnitude was required.

One of the contributing factors to NCU’s demise rests undoubtedly in a huge governance failing on the part of the credit union as detailed in the High Court by the affidavit of the Head of Resolution at the Central Bank, and while the problems in NCU may have been amplified compared with its peers, the standards of governance within credit unions have and still vary considerably from institution to institution. It cannot be denied that there was also a significant failure in the regulation of the sector, which persisted up until the commencement of the bulk of Credit Union and Co-operation with Overseas Regulators Act 2012 (CUCORA) in October 2013. In the years when the seeds of instability were sown in the sector the Financial Regulator failed to adequately reign-in delinquent boards of directors, which stemmed from a combination of light-touch regulation and the fact that the Regulator’s powers of enforcement and sanction were virtually non-existent.

This failure to effectively regulate credit unions allowed them an environment where it was acceptable for them to move away from their traditional community-based, small lending model and flirt with commercial lending practices more at home in the banking sector than a member-owned and member-run not-for-profit organisation. Equally, some credit unions were so flush with cash that their investment strategies began to elevate return-on-investment over risk, which had some devastating consequences, most notably for those credit unions who were unlucky enough to stay the course with custom-made bonds sold by Anglo Irish Bank, which was, incidentally, an A-rated bank at the time. Peculiarly credit unions became, and remain, the only Anglo bondholders to have been ‘burned’.

Of course not all credit unions got involved in reckless lending practices, nor did all credit unions make risky investments, but it does seem to have been far more common than is widely believed. Unfortunately, this loose control of credit unions often led to the availability of cheap and easy credit as well as the delivery of a generous dividend on members’ shares each winter. Happy members were understandably acquiescent to such loose practices  and tended not to question the governance arrangements or underwriting surrounding the extension of credit and dividends. As a result lots of credit unions overextended their loanbooks and neglected their capital positions. Once we hit the late 2000’s the global financial meltdown contagion spread and the Irish property market shuddered to a halt; people were quickly out of jobs, arrears mounted, consumption decreased, loan-demand dissipated, investments crashed, and the poor governance structures within credit unions made it difficult for them to respond to the series of systemic-shocks effectively, thus compounding their many problems.

In the wake of such a lax approach to governance within some credit unions and such poor supervision of them, an assertive approach to resolving the issues within the sector is essential in ensuring that there remains a strong and viable movement within Ireland. Many of the problems that exist within the sector today stem from inadequate supervision of these organisations run voluntarily, and they could and should have been avoided by better regulation with an effective enforcement regime. Unfortunately what we have now with the coming into force of CUCORA is a more complex and disjointed regulatory regime, introduced nearly all at once and applied with near-universally with  a severe lack of clarity to a sector used to what must have seemed like self-regulation.

The new regulatory framework has the right goal – that of bringing credit unions into line with the standards of governance expected of institutions of their size – but the end does not justify the means, unless of course, there is a genuine desire on the part of the Central Bank to see the sector being put under so much pressure that its very existence is jeopardised. Falling loan-books and increasing arrears across the sector are being stressed further by an expected drop in investment income for credit unions as a result of their reclassification under Basel III, and that’s before credit unions even begin to realise the unfavourable effects of being unsecured lenders under the new personal insolvency regime.

Following the final Report of the Commission on Credit Unions, published in the Spring of 2012, the Government published the Credit Union Bill 2012 which was enacted as CUCORA. This piece of legislation has introduced sweeping changes to the governance arrangements within Irish credit unions and aims to provide for the professionalisation of credit union management while at the same time refocusing directors’ energies on mapping out the strategic direction and vision for their institutions.

These changes of focus are underpinned by new fitness and probity standards for staff and volunteers introduced under the Central Bank (Reform) Act 2010 as well as a requirement under CUCORA for credit unions to appoint a manager, compliance officer, risk management officer, internal audit function as well as having in place a strategic plan. The distinction is definitively made between the day-to-day management, or executive function of the credit union, and the governance function as exercised on behalf of the members by the board of directors, which should ensure that the day of volunteers being involved in the minutiae of how the credit union office functions, is gone.

The rules on who can do what within the credit union have also been tightened with more of an emphasis on a separation of duties. All these things make absolute sense but the approach to implementation is unrealistic at best and reckless at worst. All of these requirements are already obligatory for credit unions (with the exception of those with total assets below €10million) and are causing huge strains on boards and management who fear the prospect of the Registrar of Credit Unions making use of her new enforcement powers. The Commission Report spoke at length about a tiered approach to regulation; alas it never materialised in CUCORA and credit unions are suffering as a result.

In addition to the aforementioned internal requirements CUCORA introduced the Credit Union Restructuring Board, or ReBo, which has been established to facilitate the voluntary restructuring of the sector. Sharon Donnery, the Registrar of Credit Unions, has made it quite clear that she has no agenda in consolidating the sector, but rather, that her mandate as a regulator is to implement the Commission’s proposals using the regulatory machinery now available to her. From the point of view of good regulation a consolidated credit union sector with less but larger credit unions will certainly be easier to supervise, and it should be easier to ensure that those involved in the running of credit unions meet the necessary standards as the movement recovers, grows and consolidates.

Credit Unions accept the need for better regulation but argue that this could be achieved with a more even handed approach, and I have to say I agree. Fortunately from what I have seen, Ms. Donnery seems like she will have a common sense approach to enforcement, but the law is the law and credit unions are going to find compliance a huge issue. While this will mean changes for Credit Unions as we know them, for the many law students among COLR’s readers, it may well create an alternative future career path.

Is mise le meas,

Keith Winters

December 17, 2013