NEW European regulations aimed at curbing unfair terms in contracts do not apply to arbitration legislation here, a judge has held.
The decision, by acting Circuit Court president Judge Gerard Buchanan, leaves consumers here tied to no-choice arbitration clauses in contracts.
Judge Buchanan handed down his ruling in an appeal by Falcon Leisure Group (Overseas) Ltd against a District Court decision refusing the company a stay on court proceedings by a group of holidaymakers on the grounds they had committed themselves to arbitration clauses in their contracts.
The holidaymakers had sued the company in the District Court for damages for alleged breach of contract and negligence. Judge Michael O'Leary had refused the defendants' application to have the claims referred to arbitration.
Mr Eoin McCullough, counsel for the holidaymakers, submitted the net effect of the European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995, was to make it difficult in the extreme, if not impossible, for somebody in the position of Falcon Leisure to rely on an arbitration clause.
He said the regulations applied to any term in a contract which had not been individually negotiated, such as an arbitration clause presented in a preprinted fashion to a consumer on a take-it-or-leave-it basis. Regulation 6 stipulated that an unfair term in a contract would not be binding on the consumer.
Mr McCullough said the regulations made it clear that a contractual term would be regarded as unfair if it caused a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer.
Mr McCullough said there was no appeal from an arbitration in this country. Arbitrators set their own terms and regulated their own procedure.
Mr Gerard Charleton, counsel for Falcon Leisure (Overseas) Ltd, said the EU regulations did not state that an arbitration clause in a consumer contract was automatically unfair and therefore void. They specifically qualified the terms which could fall foul of the Directive one which excluded or hindered the consumer's right to take legal action . . . or which was not covered by legal provisions.
Mr Charleton said, while there was no appeal on the facts of an arbitration, an appeal could be made to the High Court on a point of law. The High Court was given powers to stay a determination at arbitration and review the decision-making process. The Arbitration Act gave a supervisory role to the High Courts
Judge Buchanan said he could not hold that the EU regulations applied to arbitrations under the control of the High Court and, accordingly. he must reverse the decision of the District Court Judge and grant a stay.
The actions of the holidaymakers must now go to arbitration.
