Question on FST, would it have prevented Debt Guarantee?

PopeBuckfastXVI

If the Fiscal Stability Treaty had been in place in September 2008 would it have prevented the Government from issuing a blanket guarantee on the debt of private Irish banks on the basis that such guarantee would be considered government spending, or at least a promise to spend?

Apologies in advance but I have not read the treaty yet myself, and also apologies if this question has already been asked & answered.

SeanW

I don't think so. The signalled intention of European policymakers is to use the Irish response to the bank crisis as a template for future banking failures.

Scofflaw

SeanW wrote: »

I don't think so. The signalled intention of European policymakers is to use the Irish response to the bank crisis as a template for future banking failures.

...what? The Irish response has been roundly criticised at the European level.

puzzled,
Scofflaw

Scofflaw

PopeBuckfastXVI wrote: »

If the Fiscal Stability Treaty had been in place in September 2008 would it have prevented the Government from issuing a blanket guarantee on the debt of private Irish banks on the basis that such guarantee would be considered government spending, or at least a promise to spend?

Apologies in advance but I have not read the treaty yet myself, and also apologies if this question has already been asked & answered.

Nothing could really prevent an Irish government doing the same again, but yes - for example, the promissory notes had to be taken onto the national debt and deficit figures under the Maastricht calculations, so the absorption of bank debt as done by the government would lead it to be in breach of the Treaty.

In legal terms, the provisions of a treaty cannot of themselves be used to rule something illegal in Ireland, because Ireland is a legally 'dualist' state, where treaty obligations don't have the force of law, but have to be given effect within Ireland by Irish legislation (that's part of the reason we have 'immunity clauses' for EU treaties in the Constitution) - so whether the action could be ruled illegal would actually depend on the 'fiscal responsibility' legislation enacted here to give force to the Treaty.

cordially,
Scofflaw

PopeBuckfastXVI

Scofflaw wrote: »

Nothing could really prevent an Irish government doing the same again, but yes - for example, the promissory notes had to be taken onto the national debt and deficit figures under the Maastricht calculations, so the absorption of bank debt as done by the government would lead it to be in breach of the Treaty.

In legal terms, the provisions of a treaty cannot of themselves be used to rule something illegal in Ireland, because Ireland is a legally 'dualist' state, where treaty obligations don't have the force of law, but have to be given effect within Ireland by Irish legislation (that's part of the reason we have 'immunity clauses' for EU treaties in the Constitution) - so whether the action could be ruled illegal would actually depend on the 'fiscal responsibility' legislation enacted here to give force to the Treaty.

cordially,
Scofflaw

If we are ratifying it in our constitution perhaps it would be up to the SC to rule on it? Maybe a Crotty-esque character could have litigated?

Too late now I know, unfortunately...

Scofflaw

PopeBuckfastXVI wrote: »

If we are ratifying it in our constitution perhaps it would be up to the SC to rule on it? Maybe a Crotty-esque character could have litigated?

Too late now I know, unfortunately...

If you mean if we had been signed up to it at the time, could that have been done? Again, that would depend on the Irish implementing legislation that gave force to the Treaty provisions.

cordially,
Scofflaw

PopeBuckfastXVI

Scofflaw wrote: »

If you mean if we had been signed up to it at the time, could that have been done? Again, that would depend on the Irish implementing legislation that gave force to the Treaty provisions.

cordially,
Scofflaw

Does ratifying a treaty by a constitutional change not override any legislative implementation, could you not challenge actions and even the legislation on a constitutional basis, i.e. get the SC to decide if the legislation implements the treaty correctly, as the treaty has a constitutional basis?

Scofflaw

PopeBuckfastXVI wrote: »

Does ratifying a treaty by a constitutional change not override any legislative implementation, could you not challenge actions and even the legislation on a constitutional basis, i.e. get the SC to decide if the legislation implements the treaty correctly, as the treaty has a constitutional basis?

Interesting question - this Treaty's "constitutional basis" is actually nothing more than permission to ratify and a legislative exemption clause. Where you might find the SC making such a judgement, as far as I can see, is if someone took a constitutional challenge against the implementing legislation, and the SC ruled that the legislation was unconstitutional and not protected by the exemption clause by virtue of not being required by the Treaty.

Other than that possibility, the government is entitled to enact any legislation it likes in pursuit of the objectives of the Treaty. I don't think such legislation would be open to legal challenge in Ireland on the basis of non-compliance with the Treaty, because the Treaty itself is not law in Ireland.

Murky waters...

cordially,
Scofflaw

later12

Scofflaw wrote: »

yes - for example, the promissory notes had to be taken onto the national debt and deficit figures under the Maastricht calculations, so the absorption of bank debt as done by the government would lead it to be in breach of the Treaty.

I think it's debatable what could or could not arise out of what the treaty calls "exceptional circumstances"

From Article 3 : 1 (c)

the Contracting Parties may temporarily deviate from their respective medium-term objective or the adjustment path towards it only in exceptional circumstances, as defined in point (b) of paragraph 3;

From Article 3 : 3 (b)

"exceptional circumstances" refers to the case of an unusual event outside the control of the Contracting Party concerned which has a major impact on the financial position of the general government or to periods of severe economic downturn as set out in the revised Stability and Growth Pact, provided that the temporary deviation of the Contracting Party concerned does not endanger fiscal sustainability in the medium-term.

So the question boils down to fiscal sustainability. We are currently in a situation where the promissory notes are (and were, in 2010) argued not to be materially deleterious to fiscal sustainability in themselves, so one would have to at least wonder about the suggestion that the Treaty would have prevented, or would prevent in future, an intervention similar to the intervention at Anglo Irish Bank.

However, I fully take your point that we could just walk away from the treaty in any case. Nobody is really going to be prevented from taking such measures if they are really determined to do so.

Predalien

Scofflaw wrote: »

Because Ireland is a legally 'dualist' state, where treaty obligations don't have the force of law, but have to be given effect within Ireland by Irish legislation (that's part of the reason we have 'immunity clauses' for EU treaties in the Constitution) - so whether the action could be ruled illegal would actually depend on the 'fiscal responsibility' legislation enacted here to give force to the Treaty.

cordially,
Scofflaw

I thought it's only directives that don't enjoy the force of law and have to be implemented by legislation? I thought our treaty obligations do enjoy the force of law under the doctrine of the supremacy of EU law.

beeftotheheels

Predalien wrote: »

I thought it's only directives that don't enjoy the force of law and have to be implemented by legislation? I thought our treaty obligations do enjoy the force of law under the doctrine of the supremacy of EU law.

Yes. But the FST is not a European Union Treaty so its position is different. It is a multilateral treaty signed by numerous countries all of whom happen to be EU Member States.

We may yet end up thanking Mr Cameron for forcing us down that route.

Predalien

beeftotheheels wrote: »

Yes. But the FST is not a European Union Treaty so its position is different. It is a multilateral treaty signed by numerous countries all of whom happen to be EU Member States.

We may yet end up thanking Mr Cameron for forcing us down that route.

Ah, cheers for that, I'd almost forgotten the UK's position meant it was just an international treaty, rather than a European Union treaty.

Scofflaw

Predalien wrote: »

I thought it's only directives that don't enjoy the force of law and have to be implemented by legislation? I thought our treaty obligations do enjoy the force of law under the doctrine of the supremacy of EU law.

As beeftotheheels says, the Treaty isn't an EU one, so what applies here is the 'dualist' nature of the Irish legal system:

Like other common law legal systems, the Irish legal system is a dualist one. This means that the terms of an international agreement do not become part of the domestic law of the State unless expressly incorporated by or under an Act of the Oireachtas. This principle is contained in article 29.6 of the Constitution.

By contrast, some other states have monist legal systems in which a treaty may enjoy supremacy over conflicting domestic law.

It is, in any event, rarely necessary for the terms of an international agreement themselves to be incorporated into domestic law in order for the State to consent to be bound by that agreement or to fulfil the obligations it assumes under it.

http://www.dfa.ie/home/index.aspx?id=351

The EU is provided for specifically by the European Communities Act 1972, which includes:

2.—From the 1st day of January, 1973, the treaties governing the European Communities and the existing and future acts adopted by the institutions of those Communities shall be binding on the State and shall be part of the domestic law thereof under the conditions laid down in those treaties.

So the EU Treaties themselves have binding force in Ireland - as do EU Regulations and Decisions - only by that piece of Irish legislation, not by virtue of the "principle of primacy of EU law".

cordially,
Scofflaw

beeftotheheels

Scofflaw wrote: »

So the EU Treaties themselves have binding force in Ireland - as do EU Regulations and Decisions - only by that piece of Irish legislation, not by virtue of the "principle of primacy of EU law".

cordially,
Scofflaw

Not strictly true and best illustrated by that classically dualist and eurosceptic neighbor of ours in Factortame No 2. The UK and US are properly dualist by the way, we're not entirely dualist, not entirely monist, somewhere in between. More to do, I think, with our understanding of the State which is more inclusive than the concept of the UK or US. The US for example has accepted that International Conventions, while binding on the Federal Government, cannot bind the States (including in matters of life and death). HMRC won a case in the UK Court of Appeal that their failure to instruct Treasury to properly implement the terms of a particular tax treaty deprived the taxpayer of their right to rely on that provision. Revenue would not fight a case on such basis, but I strongly suspect that the Irish Courts would give it short shift, trying to rely on your own failure to deprive someone else of rights.

In Factortame No 2 the UK brought in the Merchant Shipping Act 1988 to discriminate against Spanish (and to a lesser extent Irish) fishermen by restricting non nationals registering boats.

The House Of Lords was faced with a properly dualist history, and the doctrine of implied repeal whereby traditionally the original Act (EC Act) had to give way to the newer Act which was offended (MSA '88).

The HL asked the ECJ for guidance and was told to do something to give effect to EU law so they suspended the application of the 1988 Act.

So in and of itself the EU clearly does create a new legal system, a new legal order regardless of the domestic standing of the EC Act.

I guess that that is the caveat to the FST. It is not an EU treaty but could it be imbued with some of the powers of the direct Effect of EU law by the CJEU?

Predalien

Scofflaw wrote: »

So the EU Treaties themselves have binding force in Ireland - as do EU Regulations and Decisions - only by that piece of Irish legislation, not by virtue of the "principle of primacy of EU law".

The decisions in various cases by the European courts (Factortame for example) also confirm the supremacy of EU law.

Scofflaw

Predalien wrote: »

The decisions in various cases by the European courts (Factortame for example) also confirm the supremacy of EU law.

They do, and I'm not arguing the toss on the question of the primacy of EU law. However, reading around the subject, and having had the opportunity to ask the question directly to some experts, the position seems to be - and this applies in respect of beef's points too - that while it is accepted in Ireland (and in the UK) that EU law has supremacy, it still has no direct effect except as allowed for in Irish legislation.

That is a position the CJEU doesn't actually agree with, and a certain amount of clever footwork is done in order to avoid direct clashes between the CJEU's position and the dualist positions in the UK and Ireland. In the event of such a clash being entirely unavoidable, the strict legal position is that EU law is only effective by virtue of being allowed to be, and must therefore bow to domestic law.

I've had that directly explained to me as the position being that if the Oireachtas deliberately decided to implement legislation that contradicted EU law, the Irish Courts would strictly speaking have to follow the Irish law, not the EU one, despite the fact that the Irish Courts accept the primacy of EU law. In practice, the government allows the primacy of EU law by always giving way in the event of conflict - it is, however, not required to do so.

cordially,
Scofflaw

beeftotheheels

Scofflaw wrote: »

I've had that directly explained to me as the position being that if the Oireachtas deliberately decided to implement legislation that contradicted EU law, the Irish Courts would strictly speaking have to follow the Irish law, not the EU one, despite the fact that the Irish Courts accept the primacy of EU law. In practice, the government allows the primacy of EU law by always giving way in the event of conflict - it is, however, not required to do so.

cordially,
Scofflaw

I would say that that is questionable given the intention of the Queen in Parliament by passing the Merchant Shipping Act was to negate the effect of the fundamental freedoms on the UK fishing community given the accession of Spain and the ending of the transitional provisions in relation to the Spanish fishing fleet.

The breach of EU law was not accidental, it was the very purpose of the Act, a point acknowledged by the Courts in Factortame.

I think anything short of passing an Act leaving the EU would get swept up by Factortame No 2.

Ignoring EU law on leaving the EU I think you're probably right that an Irish Act could unilaterally leave, but anything less than leaving, is, I think, covered by Factortame No 2.

http://www.bailii.org/cgi-bin/markup.cgi?doc=/eu/cases/EUECJ/1990/C21389.html&query=factortame&method=boolean

Scofflaw

beeftotheheels wrote: »

I would say that that is questionable given the intention of the Queen in Parliament by passing the Merchant Shipping Act was to negate the effect of the fundamental freedoms on the UK fishing community given the accession of Spain and the ending of the transitional provisions in relation to the Spanish fishing fleet.

The breach of EU law was not accidental, it was the very purpose of the Act, a point acknowledged by the Courts in Factortame.

And the outcome of that was that the courts were "willing" to give EU law priority, not that they had to.

beeftotheheels wrote: »

I think anything short of passing an Act leaving the EU would get swept up by Factortame No 2.

Ignoring EU law on leaving the EU I think you're probably right that an Irish Act could unilaterally leave, but anything less than leaving, is, I think, covered by Factortame No 2.

http://www.bailii.org/cgi-bin/markup.cgi?doc=/eu/cases/EUECJ/1990/C21389.html&query=factortame&method=boolean

“Thus our courts, led by the House of Lords, have shown a clear willingness to accord supremacy to directly effective Community law, either by a (fictional) ‘construction’ of domestic law, or, where necessary, by applying EC law directly, in priority over national law.” (J. Steiner, Textbook on EC Law). Note, however:

The Possibility of Express Repeal

Lord Denning in Macarthys Ltd v Smith (and Lord Diplock in Carland) have made it clear that if Parliament were expressly to attempt to repudiate its EU obligations our courts would be obliged to give effect to Parliament's wishes. Whilst this is unlikely to happen as long as we remain members of the EU, it is a theoretical possibility and the principle of Parliamentary Sovereignty remains intact.

http://www.lawteacher.net/PDF/European%20Law%202%20%28Effect%29.pdf

Legal fictions preserving constitutional principles...

cordially,
Scofflaw

beeftotheheels

Scofflaw wrote: »

And the outcome of that was that the courts were "willing" to give EU law priority, not that they had to.

I think anything short of passing an Act leaving the EU would get swept up by Factortame No 2.

Ignoring EU law on leaving the EU I think you're probably right that an Irish Act could unilaterally leave, but anything less than leaving, is, I think, covered by Factortame No 2.

http://www.bailii.org/cgi-bin/markup.cgi?doc=/eu/cases/EUECJ/1990/C21389.html&query=factortame&method=boolean



http://www.lawteacher.net/PDF/European%20Law%202%20%28Effect%29.pdf

Legal fictions...

cordially,
Scofflaw

Denning? You've resorted to citing Denning at me?

I rest my case!

There was no choice involved - I hate to ask this but are you up for reading two House of Lords decisions?

http://www.bailii.org/uk/cases/UKHL/1989/1.html

This is the first time Factortame hit the House of Lords and they had to consider the doctrine of implied repeal etc and that they couldn't as a matter of domestic law grant the interim relief sought, however, given the issue of supremacy of EU law they had to make an Art 177 [267] reference. Lord Bridge is the only one who gives a speech and his consideration of EU law is right at the end if you want to short circuit it. This is not a man considering what he will, and will not do. This is a man considering what he can, and cannot, do.

http://www.bailii.org/uk/cases/UKHL/1990/7.html

This is the case back in the House of Lords after the Court of Justice ruling a quoted in my above post where the relief sought was granted. This one has the special treat of Goff delivering the majority speech.

Denning? Pah! And a Denning Diplock one two? You only need Scarman to complete the lunatic fringe from that era.
The man was a retired maverick (retired way too late mind) by the time that a real intellectual heavyweights like Bridge and Goff grappled with this.

The final point, but I won't link to it, is Factortame IV which is the one about damages. Damages granted against a Member State for certain breaches of EU law. So even if the interim relief hadn't been granted, the damages would still have accrued for a sufficiently serious breach of EU law, and an intentional breach is clearly sufficiently serious to warrant damages. Meaning that even if, and I don't believe that anyone who has read the Factortame speeches properly could conclude that, you think an Act of the Oireachtas could be allowed to stand intentionally breaching EU law, that breach would still give rise to damages. Damages which could be sought through another Member State's legal system, if necessary.

PS Denning was a nut job. Not that he made up the law - Goff was the one who told us to be grown ups and accept that there is no tooth fairy and that judges don't "find" the common law, they make the common law. The difference is that Goff was impartial and logical. Denning didn't admit that he made up the law, but was entirely swayed by the emotions of the case in front of him. Not logic. And in later life, he brought his own prejudices to bear on cases. Brixton riots actually destroyed his career, famous claims about black jurors not being trustworthy in trials involving black defendants. Policy arguments appealed to him as almost no other in the British judiciary at the time. The all time classic...

"Just consider the course of events if their action were to proceed to trial ... If the six men failed it would mean that much time and money and worry would have been expended by many people to no good purpose. If they won, it would mean that the police were guilty of perjury; that they were guilty of violence and threats; that the confessions were involuntary and improperly admitted in evidence; and that the convictions were erroneous. ... That was such an appalling vista that every sensible person would say, "It cannot be right that these actions should go any further.""

Don't cite Denning at me. Denning dicta is worthless in terms of precedent, and is bound to be influenced by matters which he should not have directed his mind to.

The British judiciary have long understood this.

Given the above quote, I doubt that the Irish judiciary would struggle with it.

Predalien

Scofflaw wrote: »

that while it is accepted in Ireland (and in the UK) that EU law has supremacy, it still has no direct effect except as allowed for in Irish legislation.

Eh? It has been consistently found that it does have direct effect, and people have relied on and have been successful in establishing that.

Scofflaw wrote: »

the strict legal position is that EU law is only effective by virtue of being allowed to be, and must therefore bow to domestic law.

Yep and in Ireland this is as a result of legislation and case law, in the UK the position is the same, of course ultimately we still retain the power to change that, but at present there is little argument against the doctrine of supremacy, EU law at present is supreme and Irish courts must have regard to provisions of EU law and decisions of the ECJ when deciding an issue.

Scofflaw wrote: »

I've had that directly explained to me as the position being that if the Oireachtas deliberately decided to implement legislation that contradicted EU law, the Irish Courts would strictly speaking have to follow the Irish law, not the EU one, despite the fact that the Irish Courts accept the primacy of EU law. In practice, the government allows the primacy of EU law by always giving way in the event of conflict - it is, however, not required to do so.

Can I ask who explained that to you? As far as I understand the Irish court would be required to refer the matter to the EU courts, who would then give a decision which the Irish court would be obliged to follow. It is not up to the government to give way, it is a matter for the courts. How would you reconcile your view with legislation that impacted upon a fundamental freedom?

Scofflaw

I think you're both arguing the practical and actual situation at me, which I'm not contradicting. The theoretical situation is...theoretically...as per, though. And yes, the theoretical situation would never come to pass, being superseded by the practical and actual situation, but one has to point out that that's an erosion of the theoretical position of a dualist legal system, and that that theoretical position is still recoverable should the will to do so arise. It's just (almost certainly) not going to.

cordially,
Scofflaw

beeftotheheels

Scofflaw wrote: »

I think you're both arguing the practical and actual situation at me, which I'm not contradicting. The theoretical situation is...theoretically...as per, though. And yes, the theoretical situation would never come to pass, being superseded by the practical and actual situation, but one has to point out that that's an erosion of the theoretical position of a dualist legal system, and that that theoretical position is still recoverable should the will to do so arise. It's just (almost certainly) not going to.

cordially,
Scofflaw

Nope. You're relying on Denning dicta over the ratio of very many cases.

One only has to look at the jurisprudence of the Court of Justice in dealing with the numerous British attempts to deprive EU law rights of their protections, to realise that this has been pretty well tested. From Factortame on the British Government has sought to deprive EU law rights of their protections, and lost in its own courts as well as in Luxembourg. Telling that they never in fact argued that they intended to breach EU law!

So enough with the whole "dualist" legal system arguments. They're moot when it comes to EU law, because of the doctrine of EU law being Supreme. Monist or dualist is all the same when dealing with supranational law.

If you're so comfortable with the dualist argument, why do you think that the British government sought a treaty provision allowing EU exit? Why did they never argue that e.g. they intended to deprive M&S of the right to recover overpaid VAT on their tea cakes?

You're postulating one marginal theory, never tested, intentionally never tested because all evidence suggests that it would fail said test.

Tut tut!