Supreme Court dismisses TD’s appeal over €31 billion promissory notes

About this case:

• Judgment:
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The six-judge court was unanimous in their ruling that the Credit Institutions (Financial Support) Act 2008 under which the Minister for Finance granted the €31 billion was not unconstitutional – and emphasised that it was not the Court’s function to “consider the wisdom of decisions taken by other branches of government”.

Background

At issue in the appeal was:

Ms Collins challenged the lawfulness of procedures by which the Minister agreed to issue promissory notes in excess of €30 billion to IBRC and EBS; and also challenged the validity of payments made under those procedures.

Ms Collins grounded her challenge on the inability of Dáil Éireann to cede to the Minister for Finance wide powers to enter into these financial commitments and to pay monies under the said procedures.

Ms Collins did not contend that either the statutory formalities such as they were under s. 6 of the Credit Institutions (Financial Support) Act 2008 or the constitutional procedural requirements under article 17, were not complied with – but contended that s. 6, insomuch as it permitted the Minister for Finance to incur a liability on the part of the State without any limit set in the legislation itself, constituted an abdication of key parliamentary functions by the Dáil to the Minister, and effectively subverted the constitutional scheme which provides that both raising of revenue and expenditure of funds be approved of, and therefore controlled by, the Dáil.

The Constitution

The articles of the Constitution centrally relevant to the appeal were articles 11, 17.2 and 28.

Article 11 of the Constitution creates a central fund and provides that “all revenues of the State from whatever source arising shall, subject to such exception as may be provided by law, form one fund, and shall be appropriated for the purposes and in the manner and subject to the charges and liabilities determined and imposed by law.”

Article 17 of the Constitution provides routes for the Dáil to address financial matters through the estimates process, the appropriation Acts and under specific legislation. It provides that “Dáil Éireann shall not pass any vote or resolution, and no law shall be enacted, for the appropriation of revenue or other public moneys unless the purpose of the appropriation shall have been recommended to Dáil Éireann by a message from the Government signed by the Taoiseach.”

Article 28.4.4° is the corresponding provision in the section of the Constitution dealing with the Executive, providing that “the Government shall prepare Estimates of the Receipts and Estimates of the Expenditure of the State for each financial year, and shall present them to Dáil Éireann for consideration.”

The Supreme Court

The expenditure undoubtedly had Government approval, nut the question was whether it was authorised “by law”, thus protecting and acknowledging the separate and independent role of the Oireachtas in the process, and the particular function of the Dáil in financial matters.

The Court was satisfied that the technical requirements of the 2008 Act had been met, and the issuance of the promissory notes was within the powers conferred by the Act.

However, for any law to be valid under article 11, it must not merely have been enacted by the Oireachtas, but it must be consistent itself with the dictates of the Constitution, and the order and structure it contemplates.

The Credit Institutions (Financial Support) Act 2008 does not itself provide for the issuance of the promissory notes or the provision of financial support in this case - however under s. 6, the Minister is authorised to do so.

It followed that the appeal turned on whether that section involves an impermissible delegation or transfer by the Oireachtas to the Government of the power of expenditure and consequently an impermissible abdication by the Oireachtas of a role which the Constitution requires should be performed by it.

Laurentiu v. Minister for Justice Equality and Law Reform & ors 4 I.R. 26 considered, there are no permissible grounds on which an organ of State can abdicate its powers under the Constitution. The Court emphasised that this is a fundamental principle which applies to every institution established under the Constitution.

The Court said that there was “no doubt” that the measures provided for under the Act were extraordinary, and the sums involved enormous - however, it was apparent from the terms of the 2008 Act that it was enacted in response to the extraordinary events posing a substantial threat to the economy of the State.

The Supreme Court was satisfied that the powers of the Minister to provide financial support were significantly constrained by the legislation, and that it could not be said that the Minister had been given free rein by the Act.

While the “potential exposure was enormous”, and the legislation “exceptional” - “these factors, whatever their merit in public discourse”, did not render the Act unconstitutional, “if it was designed and tailored to meet a situation which was in itself exceptional; addressing an extraordinary risk to the State’s economy which could itself be said to represent a systemic economic danger”.

Further, the Court noted that it was “difficult to understand how the absence of a financial limit could render the provision unconstitutional”.

Unanimously dismissing the appeal, the Court emphasised that it was not a function of the Courts to consider the wisdom of decisions taken by the other branches of government.