The Irish Supreme Court stated that the amendments would give Irish courts the power to reject CETA awards if they compromise the country’s constitutional identity, fundamental principles, or EU obligations.
MP Patrick Costello, a member of the governing coalition’s Green Party, had challenged the government’s plan to ratify CETA, arguing that its investor-state dispute settlement mechanism impinges on the state’s juridical and legislative sovereignty, and thus a referendum is required.
The court’s decision came after a detailed examination of the issues, spanning 476 pages, in which the seven judges presented their differing perspectives.
Investor-state disputes are heard by the CETA Tribunal, which can make binding awards against the state for violations of the agreement. These awards are treated as arbitral awards under the New York or ICSID Conventions, both of which have been incorporated into Irish domestic law through the Arbitration Act of 2010. In this framework, ICSID awards have virtually automatic enforceability in Ireland.
However, Justice Hogan argues that enforcing CETA awards through the 2010 act would unconstitutionally broaden the scope of that act. It was meant to give effect to conventional arbitral awards, in which the state consents to external dispute resolution in specific commercial contracts. In contrast, CETA subjects the state to a general ISDS mechanism under a multilateral treaty.
Irish Supreme Court believes there may be conflict with ECJ
Three judges (Dunne, Baker, and Charleton) also pointed out that the same set of facts, such as an alleged violation of fair and equitable treatment, could be used to make a claim against the state under both Irish law and CETA. To pursue a CETA claim, domestic proceedings must be discontinued, meaning that Irish courts would lose jurisdiction over that dispute.
For the majority, Justice Dunne concluded that this parallel jurisdiction and near automatic enforceability of awards breaches the state’s juridical sovereignty.
In Opinion 1/17, the Court of Justice of the European Union (CJEU) determined that the ISDS mechanism in the CETA agreement does not compromise the autonomy of the EU legal order. Specifically, the court noted that Article 8.31.2 of the agreement states that the CETA Tribunal may consider domestic law only as a matter of fact, and in accordance with prevailing domestic interpretations. This satisfied the CJEU that its role as the definitive interpreter of EU law would not be challenged.
However, Justices Hogan and Baker expressed skepticism that the CETA Tribunal may still disregard or misinterpret EU or Irish law. In contrast to the CJEU, they criticized the lack of any structures for dialogue between the CETA Tribunal and domestic courts.
The CJEU concluded that the CETA Tribunal could not question the level of public interest protection established by the EU legislature, and six Irish judges also rejected the arguments made by Green Party MP Patrick Costello that the agreement would have a “legislative chill” effect, primarily based on the Irish constitutional separation of powers. Some judges considered it inappropriate for the Irish Supreme Court to even consider potential “legislative chill” (e.g. Justice Dunne, paras. 249-261).
The text discusses how some commentators believe that the CJEU (Court of Justice of the European Union) has a form of “negative jurisdictional” or “external” sovereignty through its principle of autonomy. It compares this to the Irish majority approach and how it relates to the Union’s constitutional architecture.
The text explains that the CJEU emphasized that its ability to have the final interpretative word on EU law is important for the proper functioning of the Union’s legal order. It also mentions that a minority of three judges considered the CETA’s Joint Committee’s interpretative powers to be a breach of Ireland’s “sovereignty clause.”
They argued that the possibility of an external body altering the CETA text without Irish consent or parliamentary input offends the democratic nature of the state and ceded legislative sovereignty.