The Arbitration Amendment Bill is more important than it sounds

Legislation introduced by Foreign Affairs Minister Helen McEntee, was voted through the Dáil last week at 1:00am under the innocuous name, The Arbitration (Amendment) Bill 2025.

The bill intends to adapt Irish law so certain international trade agreements can be fully ratified, particularly the Comprehensive Economic and Trade Agreement (CETA), a free-trade pact between Canada and the EU.

Members of the opposition have strongly opposed the bill, saying it could leave the government exposed to million euro lawsuits from foreign investors, if policy interferes with profits.

An attempt by the previous government to ratify the deal in 2021 was halted after Green Party TD Patrick Costello launched legal action against his own coalition, taking issue with the role of investor courts in the agreement.

Investor courts aren't judiciaries in the traditional sense. They are international arbitration or tribunal systems that allow foreign investors to sue states when investors claim that government actions breach investment treaties, such as CETA.

The opposition says, that in theory, a Canadian property developer operating in Ireland could sue the Irish Government if they decide to tighten rent controls, raise taxes or increase the minimum wage, seeking damages for any loss in expected profits.

Fine Gael TD, Barry Ward rejects these claims.

"Let us say for argument's sake that a future Government tries to put in place a policy that is going to be detrimental to petrochemical companies.

There is nothing in the CETA agreement that would allow such a petrochemical company, be it Canadian or a US-owned Canadian subsidiary, to go to an investor court and say it thought it would be pulling in the big bucks for the next ten or 20 years."

While CETA does leave EU States open to litigation, it has tighter protections than older trade pacts, such as the Energy Charter Treaty (ECT), which was developed in the 90s to promote international investment in the energy sector.

The EU as a collective has agreed to withdraw from the ECT citing compatibility issues with energy transition goals, and claims brought about by investors.

Spain was disproportionately targeted with investor court claims after cutting energy sector subsidies in 2013.

Investors have collectively launched suits worth over €10 billion with the Spanish tax payer coughing up about €1.5 billion so far.

In one case, Spain refused to pay an award to a private equity firm, granted by an international investor court.

The infrastructure investment firm, Antin, then appealed the case in a London High Court, which ruled that the investors could seize Spanish assets within the UK to enforce the €120 million judgment.

While CETA's scope for litigation isn't as broad as the ECT's, Ireland could find themselves in investor courts if a policy measure that significantly harms an investor’s profits is alleged to breach a specific CETA treaty obligation.

The Green's Patrick Costello in 2021, insisted that a referendum would be necessary for the investor court system to be available in Ireland.

"Any time we've created new courts, we've done so by way of constitutional amendment.

Ratifying the International Criminal Court, the Court of Appeal, signing up to the Courts of Justice of the European Union, always took a constitutional referendum," he said to Gavan Reilly in his book, The Secret Life of Leinster House.

The High Court rejected Costello's challenge against his own government but after an appeal to the Supreme Court, a majority ruling found that the ratification of CETA would be unconstitutional unless the Arbitration Act of 2010 was amended.

Earlier in the year Sinn Féin MEP Lynn Boylan said that fully ratifying the agreement wasn't necessary, as it had already been in effect for a number of years.

"The one part that isn’t operating are private investor courts. These courts let big businesses sue states if they take any action that harms the profits of these businesses. This meant that even vulture funds could sue Ireland."

Trade has increased between the two countries by €3.2 billion in 2016 to more than €10 billion in 2023 without the presence of investor courts.

The Supreme Court also found in its rulings that despite Ireland's EU membership there is no legal obligation to ratify CETA.

Supreme Court Judge, Mr. Justice Gerard Hogan said “the present appeal may yet be regarded as among the most important which this Court has been required to hear and determine in its almost 100-year history.”

Despite the legal complexities of CETA the Government has been accused of rushing the legislation after attempting to skip pre-legislative scrutiny of the bill.