It is difficult to know where to begin to decry what is happening in the Commission of the European Union. I am referring to the review of the National Asset Management Agency (“NAMA”) by the Commission. A good point of departure is that we do not know what is happening there. The Commission makes no (perceptible) effort to tell us and our Government likewise tells us nothing [useful].

The missing information is of economics [and consequent policies] following the disastrous property bubble here in Ireland. That bubble has caused havoc with the economy; it has driven unemployment upwards; it has destroyed pension plans; it has blighted the work prospects or careers of many young people.

Let’s start with something most people did not know; at least two of Ireland’s banks were and are too big to fail. That innocent phrase implies that we the citizens are to those banks as one conjoined twin is to another. We risk death if the bank expires, it is implied.

If true, how did we permit such a relationship with a private institution?

Leave all that aside. What should we do to “save” the banks?

The Government’s plan is NAMA. That plan is flawed. It has been changed more than once. We know that it has been mis-sold to the citizens of Ireland by the Government; it claimed the purpose of NAMA was to facilitate lending by the Banks to businesses. That is not true and never was, to the knowledge of the Government.

Now the plan is under consideration by the EU Commission. Specifically it is being considered by Joaquin Almunia the new Commissioner for Competition. He is in fact not all that new; he used to be Commissioner for Economics and Monetary policy. The bad news is, he is not good at his job. He failed to spot the Greek crisis that has hit the EU with the force of a runaway train; it was his job to see that problem. Instead he was in Dublin, cheerleading for the Government where he publicly endorsed NAMA. We learned his communication skills tend to emulation of an Electromagnetic Pulse.

Of course, no skills are needed if the EU “review” is just for the “optics” of the process. The heart of NAMA dictates that the citizens of Ireland will pay [consciously] way over the odds for the “impaired assets” of the banks. The pseudo words of justification for this are, “long–term economic value”. There is no such thing.

It’s voodoo economics.

Hints have been given by the Government as to the high price they intend to saddle the citizens of Ireland with. If the hints are correct, we are about to agree to pay €54 billion for these “assets”. We know for sure that this is not the value of these assets. What is the value of the assets? We must look to the cases coming before the Commercial Court. On 19th February 2010, in one case alone the asset had fallen in value from €31 million to €600,000 in a period of just over 3 years. The judge remarked that in his opinion, assets had fallen by 70% to 80% in value. He had previously guessed a fall of 50%. In short, the values are still falling. Let’s take the price of €54 billion; assume that is the book value of these bank assets. A fall of 80% would mean they are worth [now] €10.8 billion. If the case of 19th February 2010 represents the full general fall in value, the €54 billion is worth “just” €1.08 billion.

One sometimes thinks that the true home and centre of he European Union is on the heights above Prague and its poet is Franz Kafka, but a better perspective is to realize that some human capacities are not as general as might be thought. Why do we think that Mr. Almunia must be capable? What if the genius of Keynes is like visuospatial ability? People without the capacity do not know of what they are bereft, and those with the capacity cannot conceive of a person who lacks it.

Wake up Joaquin Almunia!

There is a perception in the public that our corruption index is high. Only full and open investigation and punishment of offenses will reduce this perception.

It is not helped by the fact that the law relating to corruption in Ireland is controversial. It is strewn over several pieces of legislation and has been criticized on a regular basis by the OECD expressly for that reason.

Two weapons in the State’s armoury were brought in by Britain (still in force in the UK), (The Public Bodies Corrupt Practices Act 1889 and the Prevention of Corruption Act 1916) and are old. They are also inadequate. (The 1916 Act does not apply to employers: who, but employers, will fund the bribery?).

Ireland ratified the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions but, like many others, has dragged its heels in actually acting on its obligations.

In 2008 the OECD reported:

“In particular, the Working Group is disappointed that Ireland did not seize the opportunity of the Prevention of Corruption (Amendment) Bill 2008 to act upon the Phase 2 recommendations to consolidate and harmonise the two separate foreign bribery offences in the Prevention of Corruption (Amendment) Act 2001 and the Criminal Justice (Theft and Fraud Offences) Act 2001. The Group therefore recommends, as it did in 2007, that Ireland act on this issue as a matter of priority. It urges Ireland to pursue its declared intent to make changes to the 2008 Bill in order to achieve greater consistency between the two statutes, and consolidate at the first possible opportunity the corruption offences into a single piece of legislation. In addition, the Group continues to recommend that Ireland adopt on a high priority basis appropriate legislation to achieve effective corporate liability for foreign bribery.”

The Minister for Justice etc. welcomed this report, congratulating some civil servants, in effect, for meeting regularly to keep under review Ireland’s continuing default.

This is not academic stuff. See HERE.

And what of the, inadequate and insufficient, Prevention of Corruption (Amendment) Bill 2008?

It’s not even in sight.

Cloud computing is rapidly becoming a buzzphrase in IT-reliant businesses. Its proponents include some of the largest technology companies in the world. But while enterprises may be able to save money by moving into the cloud it is difficult to see how they can do so with their customer’s personal information without breaching EU data protection law.

Household names like Google, Amazon and Microsoft are racing each other to create rival global platforms for the storage and manipulation of data. They have sent their marketers out amongst us to proclaim the Good News- Cloud Computing will reduce costs and improve service when compared to the traditional self-built and run server rooms most significant organisations are used to.

McKinsey Consulting helpfully offered a definition of Cloud Computing in a recent report on the topic : “Clouds are hardware based services offering compute, network and storage capacity where; hardware management is highly abstracted from the buyer, buyers incur infrastructure costs as variable OPEX, and infrastructure capacity is highly elastic”.

Or, as the rest of us might understand it, that you get to sub-contract out part, some or most of your storage and information processing requirements to an already vastly tooled up company and you access it as you need it across the internet.

Clouds, being amorphous, fuzzy and everywhere, were chosen as the perfect metaphor for this kind of service. But a metaphor can obscure the reality of what’s being offered- to send data out to external companies and store it in their datacentres across the world, without any transparency as to what jurisdictions the data now resides.

Ireland has a particular interest in the development of cloud computing. Google, Microsoft and Amazon have all located major data centres around Dublin. It has been mooted that having these services available will enable Ireland’s entrepreneurs launch global web-based businesses without having to make enormous capital investment.

The difficulty arises when we apply the cloud computing model, developed in the US, to data relating to people in the EU. There is a gap in privacy standards between the two jurisdictions, with the EU protecting its citizens’ personal data in legislation.

Personal Data is defined by Directive 95/46 as “any information relating to an identified or identifiable natural person” and processing same as “collection, recording, organization, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction”.

Ireland’s Data Protection Acts implement this European law into local legislation. The Irish Data Protection Commissioner helpfully defines a Data Controller so that you might more readily recognise if you are one; “A data controller is the individual or the legal person who controls and is responsible for the keeping and use of personal information.” So, the controllers are the people who have the responsibility for the data as it is being processed, no matter where or by whom. The entities they pass the data on to to be dealt with in a specific way are defined as data processors. Cloud computing providers would fall into this class.

But though Irish enterprises work under these European-wide legislative protections of our personal data, the cloud computing model is less sympathetic to our data controllers’ responsibilities.

The FAQ for Amazon’s Cloud offering, called S3, baldly announces that “Amazon S3 allows customers of Amazon S3 to store their data in the EU; however, it is up to the customers of Amazon S3 to ensure that they comply with EU privacy laws.” Furthermore, their Terms of Service states, in all caps for emphasis, that they do not warrant “THAT THE DATA YOU STORE WITHIN THE SERVICE OFFERINGS WILL BE SECURE OR NOT OTHERWISE LOST OR DAMAGED.”

This ‘as-is’ approach clashes fundamentally with the responsibility of a Data Controller to ensure the security of the data they pass on to a data processor. There is the additional complication that, unlike Amazon, not all the cloud computing service providers will promise to keep the data uploaded from the EU in the EU. The result is the possibility of breaching the laws which prevent EU citizen’s personal data being exported to jurisdictions with less stringent protections.

The Irish Data Protection Commissioner’s office is under-resourced, having only a handful of investigations officers for the entire country. It is hardly likely that he will prioritise clamping down on cloud computing providers who are creating high-value employment in Ireland. Nonetheless, for Irish entrepreneurs and IT professionals who are considering taking the cloud computing route , it is important that they do so with an awareness of the difficulties it could throw up later in a due diligence situation.

Buying or selling a company is like a house purchase. Before the buyer closes the deal, they’re going to want to be reassured that the last owner didn’t do anything that might see them inheriting a legal headache. It may only be when the first wave of early-adopter companies start to be acquired that we will get a clear picture of the full cost of moving to cloud computing.

In Ireland, a special regime has been provided for quarries under section 261 of the Planning and Development Act 2000.

The section requires that information on a quarry be registered with the relevant local authority. The deadline for registering the information was 28th April 2005.

Section 261 10 (a) provides;

A quarry to which this section applies in respect of which the owner or operator fails to provide information in relation to the operations of the quarry in accordance with subsection (1) or in accordance with a requirement under subsection (3) shall be unauthorised development.”

The operation of a quarry clearly falls within the definition of “development”.

In this Act, “development” means, except where the context otherwise requires, the carrying out of any works on, in, over or under land or the making of any material change in the use of any structures or other land.”

Under Section 32 of the Planning and Development Act 2000 there is an obligation to obtain a planning permission for development.

32.—(1) Subject to the other provisions of this Act, permission shall be required under this Part—

(a) in respect of any development of land, not being exempted development, and

(b) in the case of development which is unauthorised, for the retention of that unauthorised development.

(2) A person shall not carry out any development in respect of which permission is required by subsection (1), except under and in accordance with a permission granted under this Part.”

Taken with the definition of “unauthorised use”:-

“unauthorised use” means, in relation to land, use commenced on or after 1 October 1964, being a use which is a material change in use of any structure or other land and being development other than—

(a) exempted development (within the meaning of section 4 of the Act of 1963 or section 4 of this Act), or

(b) development which is the subject of a permission granted under Part IV of the Act of 1963 or under section 34 of this Act, being a permission which has not been revoked, and which is carried out in compliance with that permission or any condition to which that permission is subject;”

a quarry requires to have a planning permission or established pre-1964 use AND be “registered” under Section 261 before 28th April 2005.

(Quarries are not “registered” under Section 261; the required information furnished to the local authority is entered on the relevant register.)

There is a canard abroad that “registration” of a quarry has the effect of making it lawful in the way the grant of a planning permission would. This, by definition, is wrong.

Quarries, no less than any other development, are subject to control by application to the High Court under Section 160 of the Planning and Development Act 2000.

Any person may make the application for an injunction under that section.

What Bernie Madoff did has relevance to Ireland. Ireland is part of the globalised financial services industry through the Irish Financial Services Centre.

Some of the entities operating there have lost money by Bernie’s activities.

Significantly, Bernie had a British subsidiary in London to transact European business, presumably.

Assuming Bernie’s guilt; (he has, allegedly, confessed to running a pyramid, or “Ponzi” scheme), liability for these losses may fall not only on Bernie and/or his corporate creatures but on others also, under the following heads of claim;

A Breach of Contract;
B Negligence and Deceit;
C Breach of Fiduciary Duty;
D Conversion;
E Restitution;
F Statute:

BREACH OF CONTRACT

Bernie (“Bernie” includes any of his complicit corporate entities) received money under, in each individual instance, a contract. The place of the making of the contract will have varied from case to case. Each contract included express and, usually, implied terms. It was, undoubtedly, an express and, if not express, then implied term that he was to invest received money in asset backed securities. (For the purposes of this post, a definition of “securities” is not necessary; it is sufficient to know that Bernie’s appropriation of the money was not within contemplation).

Many contracts with Bernie were made by agents holding, apparently, discretionary investment powers. Agents are agents under a contract. Those contracts also would contain express and, usually, implied terms. The principal of those agents would have rights under the contract made by the agent with Bernie and also under the contract made with the agent by the principal. That principal might well be a “consumer” under Irish law (assuming that Irish law is the proper law of the relevant contract). Irish law could be the proper law of an agency agreement made by a foreign principal with an Irish resident agent.

There is an obligation on a person who undertakes duties under a contract, to deliver on those duties, irrespective of the level of skill and care actually exercised. If the contract contains an express or an implied term (as found by a court) that an agent, say, will invest, or cause to be invested, money in asset backed securities, there will be a breach of contract if he/she/it does not do this. Bernie, of course, is guilty of that breach. Any agent, from whom Bernie received the money of the agent’s principal, whose contract imposed such a duty will also be in breach.

NEGLIGENCE/DECEIT

Bernie was guilty of deceit. The evidence for this, currently, is his (alleged) confession. Presumably his financial records will corroborate this. Normally the heavy burden of proof to prove fraud militates against a finding of deceit in a civil action. Assuming access to the evidence against Bernie, that burden can be discharged and it would thereafter be otiose to consider allegations of negligence against him. More importantly, Bernie’s possession of the money delivered to him was never lawful; it was obtained fraudulently. Therefore he could not pass a good title to that money to any person to whom he, in turn, passed it. The money, in principle, may, therefore, be traced and, when traced, recovered from its subsequent holder/s.

There is, it seems, good evidence of negligence on the part of the agents from whom Bernie received much of the funds he allegedly misappropriated. Bernie divulged little of his investment strategy. He failed to reveal the exact securities in which he was, ostensibly, investing. To credit Bernie in those circumstances was a classic case of “buying a pig in a poke”. Furthermore, the return, offered by him, on the money was not, it appears, credible. The agents from whom he often received the funds were themselves professionals in the same field. They could not find investments in the markets returning the result that Bernie claimed for his “investments”. That is why they passed the money to him. That they believed him trustworthy is irrelevant. They knew, or ought to have known, that he was not, in fact, making his “returns” from investments in any known market. They were, in short, negligent.

BREACH OF FIDUCIARY DUTY

Bernie appears to have breached his fiduciary duties. The facts of each case require examination to determine the identities of the beneficiaries of the duty breached.

Currently, there are no publicly known facts showing breach of fiduciary duty by any agent whose principal has lost money, but that may change.

CONVERSION

Conversion is what a thief does when he steals. Essentially, that is what Bernie is reported as having confessed to. The remedy for conversion is the return of the stolen property, or, in default, damages.

RESTITUTION

A claim of restitution arises where, inter alia, a claim for money had and received can be made. Such a claim would lie against Bernie. The remedy for a claim of money had and received is the return of the property, or, in default, damages. Such a claim would also lie against an agent who believed that Bernie’s formula for generating his “returns” was, although effective, illegal. That they believed he was making the “returns” by trading on insider information, if true, is evidence of knowing receipt.

STATUTE

Financial management is, reputedly, a highly regulated field. Whether that is so in Ireland is already in doubt. The Madoff Mess may show the truth of the situation. That aside, Ireland’s financial regulatory laws make provision for claims in civil law for breaches of certain duties imposed by statute. The facts of each case will determine if these are available to investors to recover their losses.

The Courts Service in Ireland is an improvement over previous “arrangements” for the delivery of justice.

Inevitably, it being an infant body, it has and will make mistakes. A relatively small but irritating mistake is the installation of “security” in the Four Courts.

Currently,* access by the public to the Four Courts is through a kind of porta-cabin, at what used to be the Morgan Place entrance on the quays. There, one has to pass through a metal detector and put one’s luggage through a scanner. Harmless enough, but expensive, and ineffective to prevent terrorist Muslim attacks.

What Muslim attacks?

There have been none in Ireland.

Of course, they might be launched. Nobody can say they would not be launched.

However, the history of Ireland is replete with times and periods when very real domestic threats of terrorism existed. Frequently, the Four Courts was the scene of forensic points of conflict between the State and an irregular armed power.

There was, effectively, no permanent “security” in the Four Courts during those times.

In the judgment of this writer, the decision to install the current security arose out of a bomb scare in the building which saw the Supreme Court, as a collective, with every other user of the building, walking about on the pavement outside the building and drinking take-away coffee from the back of an entrepreneurial van parked in a loading bay in Chancery Place.

But the solution, the current “security” is not effective. It does not eliminate bomb threats. It is not a proper source of confidence that any bomb threat is a hoax. (It is too easy to circumvent the “security”).

There is an alternative, chilling, explanation; we are aping the US Supreme court. It, too, has closed the front door of the court and is breaking the architectural integrity of its building.

What if terrorist Muslims really are a threat to the Four Courts?

We should spend our money supporting the programme, of Lord Weidenfeld’s Institure for Strategic Dialogue, for a European Muslim Professionals’ Network. That way, at least, Muslim barristers will find a support group to hand when they encounter the dress code of our Rules Committee of the Superior Courts.

Whatever about dress codes, many people would be glad to see the departure of the “security”, including members of the judiciary and at least one senior barrister who, I understand, refuses to produce his electronic pass to gain access to the courts. (Too much; don’t go there).

*(Note; never “presently”, when you mean “at present”. “Presently” means in a “little while” or “shortly” or “in due course”).

Irish society is suffering from serious failures on the executive side.

The Law Reform Commission, by contrast, is an Irish institution that is functioning well.

I have referred HERE to its proposal that Ireland implement a system for accommodating “class actions”.

An executive failure (whether in the executive proper or in the administration of the Courts) is all the less forgivable when a good workable proposal is advanced by the Commission and then ignored.

Undoubtedly the failure to have such a system caused considerable loss to the State in the “Army Deafness” cases.

The continuation of that failure is not, therefore, simply a hard-nosed conservative attitude of denial to personal injury claims (which it is), it is a fundamental failure of imagination, and ultimately, of management.

I do not intend to imply that class actions will arise solely in relation to personal injury claims. They will appear there; the pollution of the Galway drinking water supply is a case in point. With a system for making multi-party claims, the injured people of Galway would undoubtedly have made claims for those injuries. They could have done so individually; the fact that they appear not to have done so is some evidence that Ireland is not a litigious society.

Class actions will arise in consumer law cases. It would be wrong, to paraphrase Calvin Coolidge, to conclude that “the business of Ireland is business” and, as a non-sequitur, conclude that the interests of business are paramount over those of the Irish consumer.

I worry I have been sleeping on my rights.

It has been the practice of art galleries in Ireland to keep the very identity of purchasers secret from the artists that the gallery “represents”.

Now as a consequence of Directive 2001/84EC and The European Communities (Artist’s Resale Right) Regulations (SI 312 of 2006), we artists are entitled to information from the gallery which will enable us to enforce our claims for a percentage of any money generated on a resale of our work.

I must urgently write to my gallery for the names and addresses of my buyers.

(For reasons currently unknown to me I am unable to link to SI 312 of 2006 because Statutory Instruments for 2006 are missing from the website of the Attorney General and BAILII).

NOTE for naive artists; terms and conditions apply

Ireland has vetoed the Lisbon Treaty.

Or has it? What is a veto? More particularly, what is a veto in the European Union?

Ireland has previously cast a veto (in the EU Council of Ministers) and it was denied that it had that effect. That is, it was treated as a dissent, not as a block.
See HERE for details.

The defeat of the Referendum on the Lisbon Treaty in Ireland is not a rejection of the European Union. However, the response of the European Union may indeed lead to a rejection of the EU. Only a Union based on law can attract and hold the allegiance of the people of Europe. The legal basis of the European Union lies in the treaties. Under the treaties Ireland’s assent to the Lisbon Treaty is a requirement to bring it into force.

To say that implementing the Lisbon Treaty was “going to be difficult” as Christine Lagarde the French Finance Minister did in Korea is to imply that the European Union is not an entity built on law.

To press ahead as President Sarkozy and Gordon Brown propose is to subscribe to the same implication. To propose a “two-speed” Europe (see HERE) is a proposal to abandon the European Union, a legally questionable idea.

Christine Lagarde, the French finance minister is on record as saying that France will use the presidency of the Council of Ministers in the EU to, effectively, change Ireland’s low corporate tax rate.

The Irish Government says this cannot happen: Ireland has a veto and will use it, therefore the Irish position is safe.

Mr. Barroso has made placatory noises on the same issue. (In fact he has started the process of undermining the Irish “veto”).

What is the reality?

It is to be found in the occasion when Ireland used its veto and was ignored.

This happened on 15th March 2006. The issue was the adoption by the Council of Ministers of what became Directive 2006/24/EC. Ireland voted against its adoption, casting a veto thereby. Ireland’s veto was effective if, as was Ireland’s view, the issue fell within “the 3rd Pillar�?. Otherwise it was not.

The issue was driven by Charles Clarke, the UK minister. His brief in the UK was police and security. He tied the issue to the bombing of London. Issues such as that are 3rd Pillar issues. The Council adopted the proposal as a 1st Pillar issue, basing it on Article 95 of the EC Treaty. Ireland disagrees with this and its opinion is shared by the European Data Protection Supervisor.

Ireland has challenged the legal base for the adoption of Directive 2006/24/EC in the European Court of Justice. The case is pending. If Ireland is successful the Directive will be struck down.

(Mr. Barroso was president of the Commission in 2006).

Surely tax is more important than privacy?

Wrong question.

In 2006 the question was, is Ireland more important than the UK?

Now the question is, is Ireland more important than France?

Words matter.

Mr. Barroso’s definition of a veto is not a veto in Europe. Therefore it is not a veto.

I do not think anyone ever defined “3rd Pillar” and we now see the consequences of allowing woolly speech where precision was required.