Arbitration (Amendment) Bill 2025: Report and Final Stages
Seanad Éireann — 2026-06-09
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Thomas Byrne (FF), Meath East

The decision handed down by the Supreme Court in the Costello case identified constitutional concerns that prevented the ratification of CETA, and that is Irish law. We accept what the Supreme Court has said; everybody in this House accepts that. However, we have heard in some of the debate people picking and choosing between the bits they like and do not like. The Government has no option but to take the decision of the court very seriously and to work, as we wanted to and as we committed to in the programme for Government, to implement and ratify the CETA trade agreement. We can only do that if we follow the suggested advice in the Costello case in the Supreme Court. That is the place where the Government is coming from, which is a reasonable one. We want to implement this, and the Supreme Court offers us a pathway. I cannot go around picking out paragraphs, clauses of judgments or dissenting judgments. We have to take the decision as a whole and that is what we have done with this legislation, as any reasonable person would see.
We have heard much about the right to regulate and I have addressed it many times. It is not that the issue of the right to regulate comes in at the enforcement of the award stage, which is what we are talking about here. With the detailed provisions in CETA, the interpretive instrument and even the European Court decision, there is so much law on the right to regulate. It is incredible. There is so much law on the side of what I am saying. It is very strong.
However, those provisions are not taking into account at the enforcement stage. Rather, they are taking into account in the ICS, which is even a step before. The system is already set up in such a way that this is a block at the very start of the process. The legislation we are dealing with here is the enforcement of an award. My contention is that such an award would not come if it interfered with the State's right to regulate.
The reality is the right to regulate would have to be considered by the investor court before an award is made. The right to regulate in the public interest is protected in these agreements. These provisions mean that the mere fact that the interests of an investor are adversely affected by measures taken to regulate in the public interest does not amount to a breach in the agreement. However, if there is an added element - and we would want this for Irish companies - for example, abusive treatment, manifest arbitrariness, targeted discrimination or some equivalent behaviour, then it is that added element that could bring a claim within the scope of the agreement's protections and, thus, potentially result in liability. In such cases where a violation has been found and an award has been granted, the tribunal order cannot order a change to a measure giving rise to the award, but the respondent party could choose to do so. That is in the interest of protecting the parties and their rights.
A lot has been said about inward investment to this country and attracting companies. There has been some suggestion that the IDA would put us in a position of liability if it said too much to a company coming into the country, but nothing could be further from the truth. IDA Ireland is Ireland's inward investment promotion agency and it does a fantastic job to attract and retain foreign direct investment, which means jobs in every constituency and county in this country. Our attractiveness to investment is based on a value proposition that includes access to the EU and those global markets that the EU adds to by negotiating trade agreements, a strong talent base - our people are brilliant, hopeful for their future and working hard - and a decades-long track record as a location to successfully implement complex investments.
In pursuit of its mandate, the IDA promotes Ireland's value proposition and provides client companies with financial supports through its grant programme as well as non-financial supports, which are very important. This is in addition to property solutions and the advance factories we all used to call for all the time and that still exist. The IDA does not commit to grant funding until all necessary approvals have been obtained and a grant agreement is in place.
The reference in Article 8.10.4 to legitimate expectations only protects expectations that are frustrated by a breach to the obligation of fair and equitable treatment, leading to the results set out in Article 8.10.2. However, the Government is clear that a mere exercise of the right to regulation in a given sector affecting all investments, regardless of origin, is not the frustration of a legitimate expectation by unfair or inequitable treatment. Indeed, in March of this year, the CETA joint committee specified that under Article 8.10.4, representations made to an investor may only be taken into account to the extent that they are relevant as a factor in determining a breach of fair and equitable treatment set out in Article 8.10.2.
Furthermore, Article 8.9.2 of CETA specifies that the mere fact that a party regulates, including through a modification to its laws, in a manner that negatively affects an investment or interferes with an investor's expectations, including its expectations of profits, does not amount to a breach of an obligation under this section. There was an added emphasis to this. If such regulation does not amount to a breach of an obligation, there is no compensation that goes with it.
The Supreme Court justices, in the Costello judgment, referenced the similarities between CETA and Irish law in this context. The Chief Justice said the standard of fair and equitable treatment is recognisable and normally amounts to matters which would undermine the validity and lawfulness of a measure as a matter of Irish law. Ms Justice Baker said that CETA also makes provisions for a claim by a disappointed investor under a general rubric of legitimate expectation. The parameters and limitations of the claim are broadly similar to those in Irish law. The Government is not anticipating taking steps and we are not feeling chilled in our wish to legislate. The Seanad should not feel chilled in its desire to legislate either. Many of these things are certainly not worrisome to the people.
I have already spoke about the Costello case; that is why we are here. The Bill sets out the response. The drafting, which amendments Nos. 4 and 5 seek to change here, has been very carefully considered. We have looked at the Supreme Court case. We have gone with what Mr. Justice Hogan is saying. We do not want to be overly prescriptive. In fact, he said he did not want to be overly prescriptive because the courts have powers too. Amendment No. 4 will introduce a new provision regarding the right to regulate in the public interest but I have outlined this is already contained within the agreement. It would not arise at the enforcement stage because it is already there before you get to an award. That is already there and it is not necessary to do this.
The agreements affirm that the parties preserve their right to regulate for public policy purposes. They clarify that measures that negatively affect an investor's expectations of profits are not sufficient. In any future case under an ICS - all of these ISDS cases are not relevant because this is a new system with new procedures and new ways of doing things - relevant arguments will be raised at consultation, mediation, tribunal and appeal stages in relation to the right to regulate, if it were to arise, which is way before we come to the provisions of this legislation, which is about the enforcement stage of an award. It is hard to see how these cases arise but let us pick a hypothetical case. It has already gone through all of that and all that is happening here in the legislation is the enforcement of the award. We are saying that the provisions of CETA are such that an award could not be made in any event that would affect our right to regulate.
On amendment No. 5, I recall that, as set out in the joint interpretive instrument, CETA includes commitment to co-operate on trade-related environmental issues of concern, such as climate change. In CETA, the EU, its member states and Canada have further agreed not to lower levels of environmental protection in order to encourage trader investment. We have agreed to work hard on the environment together and it is no surprise because we are like-minded countries. In the event, there is no question of the State not meeting its obligations under the agreements referenced in this amendment and the amendment is completely unnecessary. Therefore, I cannot accept amendments Nos. 4 and 5.
On amendment No. 6, I note that although the proposed amendment states "For the avoidance of doubt", it does not appear to reflect the current legal position in the Bill or the current law. As drafted, the amendment is unclear and refers to awards that were sought in a foreign jurisdiction or from an international body. The amendment may be designed to address forum shopping and this was identified as an issue in the previous system but the newer investor court system agreements have been designed to prevent forum shopping, subject to specific exceptions. If the investor decides to initiate proceedings under the ICS of the applicable agreement, they must withdraw or continue any existing proceedings before a tribunal or court under domestic or international law with respect to a measure alleged to constitute a breach referred to in the claim. They must also waive their rights to initiate any claim or proceeding before a tribunal or court under domestic or international law with respect to a measure alleged to constitute a breach referred to in the claim. This is one of the many improvements of the new ICS compared with the old system.
At the separate stage of enforcement, it may be the case that enforcement of the award is pursued in different jurisdictions - that can happen in all sorts of cases and not just under trade agreements - if the state against which the award has been made has assets in those jurisdictions. The Villa Spada, which has been referenced a number of times, would be protected under the Vienna Convention. Diplomatic property is immune from any court proceeding anywhere in the world so there is no question of any of our lovely embassies or residences being seized in any circumstances, unless the country was to breach the Vienna Convention. That will not arise. Enforcement could only be pursued in different jurisdictions to obtain full satisfaction of an award and not double-payment of an award. We cannot agree to amendment No. 6.

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Record URI: https://data.oireachtas.ie/akn/ie/debateRecord/seanad/2026-06-09/debate/main
Retrieved: 2026-08-14T04:55:01+00:00
Sitting date: 2026-06-09