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Ceta appeal may be among ‘most important’ in Supreme Court’s history, judge says

Appeal around EU-Canadian trade deal raises issues for democracy and sovereignty

Green Party TD Patrick Costello’s lead counsel, John Rogers, told the Supreme Court his client’s appeal was the most important case the court would hear this year. In one of the seven Supreme Court judgments on the case on Friday, Mr Justice Gerard Hogan went further, saying the appeal “may yet be regarded as among the most important which this court has been required to hear and determine in its 100-year history”.

The complex case, resulting in seven judgments running to almost 500 pages, concerned whether the Government and Dáil could constitutionally ratify Ceta, a trade agreement reached between the EU and Canada in 2016.

There is no issue with the trade aspects of the deal, most of which are in force, and the legal dispute was about a section of the deal – yet to be ratified by Ireland and many other EU states – establishing a system of special investor tribunals which could make enforceable binding decisions on disputes between Canadian investors and EU member states without recourse to the courts of member states. Mr Costello feared this could negatively affect progressive policymaking here, including in the area of environmental regulation.

Such tribunals have become a common feature of some bilateral and multilateral trade agreements and claims are often made to them by large commercial entities. Last year a Swedish state-owned company, for example, secured a €1.4 billion settlement of its case, taken before a tribunal, against Germany over its parliament’s decision to phase out nuclear energy power plants.

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Complexity and importance

The complexity and importance of the appeal was underlined by the divisions that emerged between the seven judges on the issues that arose, and by the narrow four to three majority that concluded that ratification of the investor tribunal provisions would breach the Constitution because it would infringe Irish judicial sovereignty. Effectively, a tribunal award could take precedence over any judgment of the Irish courts in the same matter. The State, Mr Justice Hogan noted, would be exposed to damages on a strict liability basis in respect of otherwise validly enacted legislative measures.

The majority held the tribunal system meant a body composed of arbitrators – not judges – who are not appointed by, or answerable to any of the institutions of the State, could exercise judicial powers in respect of the State and give binding decisions enforceable under Irish law.

That core finding resulted in a victory for Mr Costello. A majority did not accept another important prong of his claim – that the deal would involve an unconstitutional ceding of legislative power.

Constitutional identity

The Government may take some comfort in the fact that six of the seven judges suggested a potential “cure” for the unconstitutionality by amending the Arbitration Act so as to ensure the High Court will have power to refuse to give effect to decisions of the Ceta tribunal that materially compromise the constitutional identity of the State or our obligations to give effect to EU law. It will be up to the Government, it stressed, to decide how it wishes to proceed. The Government may decide that this course of action is preferable to the referendum sought by Mr Costello.

Mr Justice Hogan and Mr Justice Peter Charleton raised very significant issues in their judgments about democracy and the diminution of national sovereignty that ratification of Ceta, as it stands, would involve. Mr Justice Charleton was particularly concerned that a new system of law applying to Canadian investors in Ireland would arise that could not be appealed to any body, “much less, as the Constitution requires, to the ultimate authority of the Irish people”.

Mr Costello and others who criticised the Government for trying to secure a swift Dáil ratification of the complex deal amid concerns about its wider implications may well feel vindicated by the Supreme Court outcome. The Government had been warned by several politicians and others, Social Democrats TD Jennifer Whitmore and Senator Michael McDowell, a former minister for justice and attorney general, that ratification of the investor tribunal system was potentially unconstitutional.

During a Dáil committee debate in November 2021, Senator McDowell noted Ireland receives a huge amount of foreign direct investment from the US without such an arbitration system as proposed under Ceta. The Oireachtas, he said, was being asked to confer additional rights to Canadian investors over those available in Irish courts and under the Constitution.

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times