TODAY, THE SUPREME Court ruled that the Oireachtas cannot ratify Ceta – the Canada-EU Trade Agreement – as planned without violating the Constitution of Ireland.
But in a move reminiscent of Solomon, the Court also held that there was a way that the Oireachtas could ratify Ceta without having a referendum on the issue.
The judgment of the Court is massively complicated; there were seven judgments from seven different members of the Court, with many different focuses and emphases, and which require close reading. While I have taken great care to make this summary accurate, there is a risk that I have missed some important detail.
Moreover, when the dust settles, the most important parts of the Court’s judgment from a political point of view might be not the actual legal holding.
“This Investor Court System would be unconstitutional as it transfers vital elements of the State’s sovereignty to external institutions not accountable to the Irish legal system. Investor Courts are a real threat to climate action and progressive public policy.” pic.twitter.com/ybivq1VtAr
— Patrick Costello TD (@Costellop) November 11, 2022
The most important element might be the apparent view of two judges that ratification of Ceta may fundamentally undermine the democratic or sovereign nature of the State, as Ceta can be interpreted and therefore amended by the Ceta Joint Committee without democratic oversight.
For today, however, my focus will be on what the majority of the Court legally decided.
The case against Ceta
Ceta has been provisionally in force since 2017, but it must be ratified by EU member states to fully take effect. It is planned to ratify Ceta in the Oireachtas, which is the usual process for ratifying an international treaty.
Patrick Costello TD took a legal challenge objecting to Ceta’s ratification on several grounds. His legal action focused on the effects of Ceta on the constitutional powers of the Irish government.
The famous case of Crotty v An Taoiseach from 1987 held that the government could not ratify the Single European Act because it gave away some powers of the Irish government over foreign policy decisions.
Such a ceding of power could only be done with a constitutional change. This is why Ireland, uniquely in the EU, has referendums to ratify any EU treaties that involve new powers being given to the Union that might see member states giving powers up.
Costello’s challenge claimed that Ceta ratification, like the ratification of the EU treaty in Crotty, entailed unconstitutional ceding of power in several ways: giving up some of the judicial power—the power of the courts—to a Ceta arbitration tribunal and giving up some of the Oireachtas’ power of lawmaking power to Ceta’s Joint Committee that would interpret and oversee the agreement.
A seven judge Supreme Court heard his case over three days and has issued a deeply split decision – four votes to three – in his favour on his first argument, the argument related to judicial power. A majority of the court was not convinced that the legislative power was taken away, so this argument failed. It was only on the judicial power point that Costello succeeded, and so this will be my focus.
Ceta and the judicial power
Ceta is a trade agreement that provides – as many such agreements do – for ‘investor tribunals’ to resolve disputes that may arise as a result of trade and investment under the agreement.
Ceta sets up a special arbitration tribunal made up of various Canadian, EU, and independent members. Disputes arising from trade and investment between the EU and Canada under the agreement – whether a Canadian investor has been discriminated against in Europe, for example – can be heard by this tribunal.
If an investor were to win a dispute before the Tribunal, they might receive an award of compensation (which could be in the hundreds of millions), and this could then be enforced in the domestic courts of EU member states to claim that compensation. This part of Ceta does not come into force until it is ratified, and many member states have yet to do this.
The fatal problem with the CETA arbitration tribunal was that its determinations would have to be enforced in Ireland in a manner that is ‘almost automatic’, as Ms Justice Baker put it. This could lead to a situation where an award made by the Ceta tribunal could be enforced over and above a judgment in the same matter from the Irish courts. The Ceta ruling would essentially have precedence over Irish court judgments if they conflicted. This, she said, ‘detracts’ from the powers of the Irish courts.
There was also no protection, Mr Justice Hogan said, against determinations of the Tribunal being enforced that were fundamentally at odds with fundamental Irish constitutional or EU norms and principles.
The Court also rejected the argument that the ratification of Ceta was ‘necessitated’ by membership of the EU. The Irish Constitution contains a provision that says that anything Ireland is required to do because of its Union membership can be done, even if it is not compliant with the Constitution. This is a function of the supremacy of EU law. But ratifying Ceta is not something that member states are required to do to be Union members, the Court held, so this provision could not allow ratification if that violated the Constitution.
The net effect of this was, as Mr Justice Hogan put it, it is not ‘constitutionally acceptable manner to ratify Ceta as matters stand.’ Ratifying the agreement, in short, would breach Irish judicial sovereignty.
A possible solution
Mr Justice Hogan, though finding Ceta ratification would violate the Constitution on the grounds of judicial power, also highlighted a way that this problem could be solved. Five other judges of the Court agreed with his suggestion.
The fundamental issue was the possibility of a Ceta tribunal ruling essentially be supreme to those of the Irish courts on the same matter, or not respecting our fundamental norms. This was a function of Ireland’s rules about arbitration awards and how they are recognised and enforced – almost automatically. This is provided for in the Arbitration Act 2010.
These rules, Mr Justice Hogan noted, could be changed. The Irish courts might be empowered to refuse to recognise the decisions of the Ceta Tribunal where they considered that the determination ‘materially compromised the constitutional identity of the State or fundamental principles of our constitutional order, or… our obligation… to give effect to EU law (including the Charter of Fundamental Rights and Freedoms) and to preserve its coherence and integrity.’
If this were done, Ceta might be ratified in a manner that was constitutional. The effect of this is to open up the possibility that Ceta could be ratified by the Oireachtas without a constitutional change, and thus without a referendum.
Mr Justice Hogan stressed it was up to the government and the Oireachtas to decide if this is what they wished to do. The courts do not tell the legislature whether or how to change the law. The government and Oireachtas might prefer to not proceed with ratification in this circumstance or to propose to amend the Constitution instead. The Court was not mandating what would happen next, but merely highlighting the source of the problem, and showing that it could, if the legislature wished, be fixed.
A hugely important case
Though Costello’s victory is, legally speaking a narrow one, and the Court’s judgment offers a route to ratify Ceta without a referendum, the judgment is a huge vindication of this decision to take the case.
That the case prompted so much discussion from the Court, both in the hearing and the judgments, would be vindication enough. But this case will, at the very least, mean that Ceta’s implementation will be materially altered in Ireland.
The political implications are yet to be seen. And the legal issues it raised – about sovereignty and when we give it up – are profound, and the commentary of the Supreme Court has much left to dissect beyond the net outcome.
As Justice Hogan said in his judgment, this case ‘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.’
David Kenny is Assistant Professor of Law at Trinity College Dublin.
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