Costello v Government of Ireland & Ors (Approved)

Factual and Procedural Background

The Plaintiff, a member of the national parliament elected for a political party, initiated proceedings challenging the constitutional validity of the proposed ratification method of an international trade agreement (the Agreement) between Canada and the European Union (EU), including the State. The Agreement, signed in October 2016 after seven years of negotiation, applies provisionally subject to certain reservations while the ratification process is underway. The Plaintiff’s concerns focus on specific provisions of the Agreement, particularly those related to investment protection and dispute resolution mechanisms, which have been excluded from provisional application pending full ratification by all Member States in accordance with their constitutional procedures. The Plaintiff contends that ratification must be subject to a constitutional referendum due to the transfer of sovereign powers to international institutions created by the Agreement.

The Agreement was laid before the national parliament in December 2020 for ratification, but instead of a vote, it was referred to parliamentary committees for scrutiny. At the time of the hearing, committee deliberations were ongoing. The Plaintiff expressed concerns about the potential chilling effect the Agreement’s dispute resolution provisions could have on the State’s regulatory autonomy, particularly in environmental matters, and questioned the constitutionality of establishing an international investment tribunal without a referendum.

Legal Issues Presented

1. Whether ratification of the Agreement by the State through parliamentary resolution without a constitutional referendum is constitutionally valid.
2. Whether the Agreement constitutes a transfer of the State’s sovereign legislative and judicial powers in breach of Articles 15.2 and 34.1 of the Constitution.
3. Whether the dispute resolution mechanism established by the Agreement involves an unconstitutional exercise of judicial power by an international tribunal.
4. Whether ratification of the Agreement is necessitated by the State’s obligations as a Member of the European Union under Article 29.4.6 of the Constitution.
5. The extent to which the Agreement’s provisions have direct effect in domestic law and the constitutional implications thereof.
6. The Plaintiff’s locus standi to challenge the proposed ratification method and to raise certain arguments.

Arguments of the Parties

Plaintiff's Arguments

• The Agreement entails a permanent transfer of sovereign powers, including legislative powers vested exclusively in the national parliament and judicial powers vested exclusively in domestic courts, to international institutions and tribunals established under the Agreement.
• The dispute resolution mechanism grants Canadian investors substantive rights and enforceable remedies not available to domestic investors, creating unequal treatment and impacting the State’s regulatory autonomy.
• The Joint Committee established by the Agreement possesses law-making powers that are binding and not subject to domestic legislative approval, thereby infringing the constitutional legislative authority.
• Ratification without a referendum violates constitutional provisions as it involves ceding sovereignty to international bodies without direct approval by the people.
• Concerns that the establishment of a multilateral investment tribunal (MIT), foreseen by the Agreement, would be binding on the State without further consent or referendum.
• The Plaintiff asserts locus standi to challenge the ratification method, including raising hypothetical future claims and potential inequalities between Canadian and domestic investors.

Defendants' Arguments

• The Agreement is an international treaty that operates solely at the level of international law and does not have direct effect in domestic law unless incorporated by legislation.
• Ratification by parliamentary resolution in accordance with constitutional procedures is appropriate and constitutionally compliant.
• The Agreement does not transfer legislative or judicial powers within the meaning of the Constitution, as the Agreement’s provisions do not constitute “laws for the State” with direct domestic effect.
• The dispute resolution mechanism functions as an international arbitration process, separate from the domestic judicial system, and does not usurp the jurisdiction of domestic courts.
• Enforcement of tribunal awards in the State is subject to judicial oversight, including the requirement of leave of the High Court, preserving constitutional safeguards.
• The subject matter of the Agreement falls within the exclusive or shared competence of the EU, and ratification is necessitated by EU membership obligations under Article 29.4.6.
• The Plaintiff lacks locus standi to raise arguments based on speculative or hypothetical future scenarios and on behalf of third parties such as hypothetical domestic investors.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court commenced with the principle that the Agreement is an international treaty binding the State under international law but, by its own terms and constitutional provisions, does not have direct effect in domestic law without legislative implementation. The Court emphasized the dualist constitutional framework which requires domestic legislative action for international agreements to have domestic legal effect.

The Court examined the Agreement’s provisions, particularly those in Chapter 8 concerning investment protection and dispute resolution. It found that the Agreement explicitly limits the domestic legal impact of its provisions, precluding direct invocation in domestic courts and excluding the tribunal’s jurisdiction to interpret or invalidate domestic law. The Court noted that the Joint Committee’s powers to make binding decisions and interpretations are subject to the completion of internal procedures, indicating these are not autonomous domestic law-making powers.

On the issue of sovereignty, the Court distinguished the Agreement from treaties involving broad foreign policy coordination as in Crotty, noting that the Agreement’s terms are clear, technical, and limited to trade matters falling within EU exclusive or shared competence. The Court accepted that ratification through parliamentary approval is constitutionally permissible and does not constitute an unlawful ceding of sovereignty requiring a referendum.

Regarding the dispute resolution mechanism, the Court applied the McDonald criteria for administration of justice and found that while the tribunal’s jurisdiction has characteristics of judicial function, it operates exclusively at the international law level. The disputes are non-justiciable under domestic law because they arise under international law and the tribunal is separate from the domestic judicial system. The Court concluded that the establishment of the tribunal does not subtract jurisdiction from domestic courts.

The Court also considered the enforceability of tribunal awards, noting that enforcement in the State requires leave of the High Court, which retains constitutional oversight and may refuse enforcement on limited grounds. The Court found that this enforcement mechanism preserves constitutional safeguards and does not amount to an unconstitutional transfer of judicial power.

On the issue of EU competence, the Court analyzed the division between exclusive and shared competences, referencing the CJEU’s Opinion 2/15 and other case law. It concluded that while the Agreement requires ratification by both the EU and Member States due to shared competence, ratification is not “necessitated” by EU membership obligations in a manner that would override constitutional requirements for referendum approval.

Lastly, the Court addressed locus standi, allowing the Plaintiff to raise speculative arguments about future effects of the Agreement but disallowing arguments premised on rights of third parties who could themselves bring proceedings after ratification.

Holding and Implications

The Court’s final ruling is that the Plaintiff has FAILED TO ESTABLISH that ratification of the Agreement by parliamentary resolution without a referendum is unconstitutional.

The Court held that the Agreement is an international treaty operating at the international law level without direct domestic legal effect, and that its ratification in the proposed manner does not unlawfully cede the State’s sovereign legislative or judicial powers. The dispute resolution mechanism, while possessing characteristics of judicial function, does not constitute an unconstitutional exercise of judicial power within the domestic legal system.

Accordingly, ratification through parliamentary approval under Article 29.5.2 of the Constitution is constitutionally appropriate and permissible. The decision leaves the political question of whether to ratify to the parliament. No new constitutional precedent regarding the limits of sovereignty transfer or judicial power exercise was established beyond the application of existing principles.