knowledge 28 July 2016 |

Building Innovatively on Recovery: 2015 in the Irish Courts

The establishment of the Court of Appeal in October 2014 in particular was heralded as one of the most significant reforms of the Irish legal framework since the foundation of the Irish Free State almost 100 years ago. The Court was officially opened by President Michael D. Higgins on 26 November 2015. Following the transitional period after its inception, the Court of Appeal has, in its first full year in operation, disposed of 750 appeals.

In conjunction with the Commercial Court, whose judges share similar case management powers, the Court of Appeal has proven to be an effective weapon in accelerating litigation. Stronger case management powers, explained in our recent briefing, are also being rolled out in other areas of the High Court from October 2016. The Court of Appeal is expected to continue to alleviate the backlog of appeals from the High Court which had built up. The Supreme Court is also clearing the backlog of appeals it retained following the establishment of the Court of Appeal; it dealt with 447 of those in 2015.

Statistics in the Courts Service Annual Report 2015 on civil and commercial matters before the Irish courts paint a picture of continued growth in the efficiency of disposal of litigation. While the total number of civil and commercial litigious cases received by the Irish courts in 2015 decreased slightly from 2014 (from 143,993 to 138,540), the number of such cases resolved increased by 8% (80,827 to 87,505). The numbers of incoming nonlitigious civil and commercial cases, including probate, wards of court, and personal insolvency cases concerning applications by debtors in person, remained similar to the 2014 figures. However the number of such cases resolved by the courts increased by a whopping 114% (38,508 to 82,339) without material increases in the cost of running the courts.

What the profile of litigation says about economic activity

In recent years, court statistics have reflected a decline in the deal-driven litigation which was so prominent in the years prior to the financial crisis. The dominant variety of litigation instead has trended towards corporate and personal insolvency, enforcement and partnership dissolution disputes. However 2014 statistics showed signs of change from this recessionary litigation to a more normalised litigation landscape in tandem with continuing Irish economic recovery. This is similarly reflected in the 2015 statistics.

The prevalence of actions to recover debt continued to decrease in 2015 following a significant decrease in 2014. In total there were 25,862 actions for recovery of debt before the courts, representing a 14% decrease overall, comprised of 2,748 High Court actions (25% decrease), 4,241 Circuit Court actions (32% decrease) and 18,873 actions in the District Court (8% decrease). The jurisdictional division of debt recovery matters reflects what might be expected, with the volume of larger scale claims, proportionately more prevalent immediately following the economic crisis, experiencing a significantly greater reduction than those litigated in the District Court. The overall decrease suggests a trend towards greater engagement with the various debt resolution mechanisms introduced in recent years, and this is indeed borne out by statistics which show that there were more than twice as many debt settlement and personal insolvency arrangements in 2015 than in 2014 (328 debt settlement arrangements, up from 160 in 2014 and 1,059 personal insolvency arrangements, up from 518 in 2014).

In the same period, actions for the repossession of property fell by 66% (8,293 in 2014 to 2,851 in 2015) while the 2015 statistics also reveal a discernible decrease in new corporate insolvency. Incoming High Court liquidations fell from 155 in 2014 to 109 in 2015, a 30% decrease, whilst incoming examinerships fell from 29 in the previous year to 14 (52% decrease). As a result, proceedings for director restrictions also fell considerably, from 95 in 2014, to 47 (51%).  

2015 saw a significant increase in the volume of small claims (43%), in keeping with reported increases in consumer spending, and court statistics also reflected increasing levels of employment: both applications relating to dismissals (95%) and the regulation of professions (31%) were up on the previous year’s figures.

The total number of personal injury actions rose by 7% (from 17,763 to 18,992), an increase which was also recently attributed to growth in economic activity by the Injuries Board¹. The increase gives some credence to the suggestion that there is an growing trend to litigate injury claims and, in particular, minor injuries given that the largest jump occurred in the District Court (up 32% on 2014). Overall however the statistics do not appear to bear out the extent of some of the claims made about a litigation culture in the recent discourse on rapidly rising insurance premiums.

Despite these indications of resumption of a more normalised litigation landscape, as Chief Justice Susan Denham noted in her foreword to the Courts Service Annual Report 2015, the fallout of the economic crisis has yet to be consigned to history. Overall new personal insolvency cases increased, accounted for by an increase in the number of self-adjudicated bankruptcies, and a much greater uptake of the personal insolvency options introduced by the Personal Insolvency Act 2012: the 1,735 applications received under the debt resolution mechanisms marked an 84% increase on 2014.

 The Commercial Court experience

148 new cases were admitted to the Commercial Court in 2015, a 13% decrease on the 171 admitted in 2014. This continues the recent trend of a reduced number of cases being admitted to the Commercial Court, which had on average 199 new cases each year for the decade following its inception in 2004. Of these the Court disposed of the same number as in 2014.

We noted in last year’s review that a factor which might account for this sharp decline in new cases is that a large part of the Court’s caseload in the immediate aftermath of the financial crisis comprised of applications for summary judgment, which are often uncontested and dealt with quickly.

Our research reveals that, in keeping with the 2014 figures, the substantive content of the Commercial Court’s caseload has now levelled out, with the majority of the list comprising full plenary actions (the most prevalent proceedings), applications under the Companies Acts (including inversions of US corporates into Ireland) and judicial review as well as debt recovery actions. Another aspect of the 2015 caseload which is indicative of renewed business activity following a period dominated by recessionary, debt-related litigation is the number of applications under the European Communities (Cross Border Mergers) Regulations before the Court. There were a total of nine Cross Border Merger applications in 2015, an increase from the six applications in 2014. Many of these cases reflect the merger by corporate groups of companies established in other EU Member States into an Irish hub (with operations in those other Member States conducted through a branch of the Irish company rather than a separate subsidiary). This is an attractive option where EU passporting rights are available, and especially in regulated sectors, where having a single regulator creates significant business advantages. Cross Border Mergers and inversions of US corporations are part of the explanation of the significant spike in Irish GDP in 2015.

In light of the United Kingdom’s planned exit from the European Union and Ireland’s continued economic growth, it might be anticipated that proceedings concerning corporate reorganisations, as well as intellectual property matters, will continue to rise. A continuing reduction in corporate insolvency matters will also likely be a key indicator of Ireland’s continued economic recovery going forward.