Committee Reports::Report No. 08 - Statutory Instruments [14]::14 December, 1988::Report



1.Since it made its 2nd Report to the Houses of the Oireachtas the Joint Committee examined a further 14 statutory instruments which implement secondary legislation of the EC. These instruments are listed in Appendix 1 to this Report. In the case of six instruments the Joint Committee has the following observations to make following on correspondence with the Government Departments concerned. This correspondence is reproduced in Appendices 11 to VII of this Report.


European Communities (Mergers and Divisions of Companies) Regulations [S.I. No. 137 of 1987]

2.These Regulations implement the Third (78/855/EEC) and Sixth (82/891/EEC) Council Directives on company law which deal respectively with mergers and divisions of public companies. They will apply only to operations where assets and liabilities of a company are transferred to another company and where the shareholders of the company being acquired become shareholders in the acquiring company and the company being acquired is dissolved. As will be seen from Appendix 11 this type of operation is virtually unknown in Ireland.

Two points of detail which seemed to the Joint Committee to call for elucidation were raised with the Department of Industry and Commerce.

3.In defining the mergers and divisions which are to be regulated the Directives allow for a cash consideration to be included in the consideration for acquisition of shares in the company being acquired if it does not exceed 10 per cent of nominal value. The Irish regulations will apply where the shares are acquired “with or without any cash payment”. The Joint Committee accepts that in so providing the Minister exercised an option permitted to him by Article 30 of the Third Directive and Article 24 of the Sixth Directive and the Joint Committee has no objection to his doing so.

4.Articles 18 and 34 of the Irish regulations deal with the protection of “special rights” which may be enjoyed by “holders of securities, other than shares”, in a company being acquired and in so doing are seeking to discharge the obligations imposed by Article 15 of the Third Directive and Article 13 of the Sixth Directive. The Joint Committee asked the Department what was intended to be covered by this provision. It will be seen from the Department’s reply that it is expected that in construing the provision a court will be guided by the definition of “securities” in the Central Bank Act, 1971.

5.Even if the Department is justified in thinking that the court will look to legislation dealing with the licensing and supervision of banks for an interpretation of an instrument dealing with companies the Joint Committee does not accept that that is good enough. In implementing a Directive the obligation is to ensure that the domestic legislation brings about “the result to be achieved” by the Directive and in this connection a Department has available not merely the text of the Directive but the result of the deliberations of the Council working group on which it was represented. It does not seem to the Joint Committee necessary to follow the precise wording of the Directive if it is not considered appropriate or if that wording is followed to refrain from elucidating its meaning if such is required. In this case if, as appears to be the case, the definition in the Central Bank Act, 1971 is regarded as elucidating the meaning of Articles 18 and 37 of the regulations then in the Joint Committee’s view that definition should be included in the regulations. It recommends that the regulations be amended accordingly.

European Communities (Non-Life Insurance) (Amendment) Regulations, 1986 [S.I. No. 309 of 1986]

6.These regulations implement Council Directive 84/641/EEC which introduces a new class of non-life insurance involving “assistance for persons who get into difficulties while travelling, while away from home or while away from their permanent residence”. It appears (see Appendix 111) that in Ireland this type of insurance was formerly written by insurers under authorisations granted for accident or motor insurance. In future separate authorisation will be required for the new class.

7.It seems to the Joint Committee that Irish citizens might easily be induced to effect this class of insurance with a foreign insurer who does not hold the relevant authorisation in this country. As the Department points out section 9 of the Insurance Act, 1936, as applied by Article 4 (5) of the European Communities (Non-Life Insurance) Regulations, 1976 makes it illegal “to effect or to endeavour to effect” any contract of insurance with an insurer who does not hold the relevant authorisation. Apart from committing an offence if he does so an Irish citizen is most unlikely to be unable to enforce a contract with an unauthorised insurer in an Irish court. In the context of tourist assistance insurance as well as in others section 9 of the Insurance Act, 1936 seems to the Joint Committee at first impression to constitute an unjustifiable trap for the unwary. It is pursuing this matter in another connection with the Department of Industry and Commerce and will report further to the Houses.

European Communities (Life Assurance Accounts, Statements and Valuations) Regulations, 1986 [S.I. No. 437 of 1986]

8.Council Directive 79/267/EEC which deals with the establishment and regulation of life assurance companies was implemented by the European Communities (Life Assurance) Regulations, 1984. The 1984 Regulations specifically provided that further regulations would be made dealing with technical reserves and assets of life assurance undertakings. The regulations envisaged are those now under consideration but as they seem to go further than the 1984 Regulations contemplated the Joint Committee addressed some queries to the Department of Industry and Commerce. The correspondence with the Department is reproduced in Appendix IV to this Report.

9.The 1986 Regulations prescribe the particular forms of account to be kept by life assurance companies and as this requirement seems to go beyond what Council Directive 79/267/EEC requires the Joint Committee asked the Department to justify including such a provision in a statutory instrument made under section 3 of the European Communities Act, 1972. In reply the Department refers to the Minister’s power under section 88 of the Insurance Act, 1936 to direct companies as to the form and manner of such statistics and returns as he may require them to furnish to him but the Joint Committee cannot accept that this is relevant since the 1986 Regulations were not made pursuant to the 1936 Act. However the Joint Committee considers it reasonable that the Minister should be able to require accounts of life assurance companies to be kept in a particular form as he is obliged by Article 23 of Directive 79/267/EEC to require every such company “to produce an annual account, covering all types of operations, of its financial situation and solvency” and “to render periodically the returns, together with statistical documents, which are necessary for the purposes of supervision”.

The Joint Committee is therefore of opinion that in prescribing the form of accounts the Minister is making a reasonable use of powers conferred on him by section 3 (2) of the 1972 Act.

10.The second point raised with the Department was in relation to Article 4 of the 1986 Regulations which reads as follows:-

“1.The Minister may, on the application or with with the consent of any undertaking, issue a direction in writing that specified provisions of these Regulations shall not apply to the undertaking or shall apply to it with such modification as may be specified in the direction.

2.A direction may be subject to conditions.

3.A direction may be revoked at any time by the Minister and the Minister may at any time vary the direction on the application or with the consent of the undertaking to which it applies.

4.A direction shall, subject to paragraph (3), apply for such period of time as shall be stated in the direction.”

The Department contends that this provision gives a limited flexibility which is necessary for the administration of the regulations. That flexibility, it claims, would “allow, for example, for a situation where a particular undertaking might not be in a position to comply fully with the Regulations on the commencement date or where, given the extent of the information which must be provided under the Regulations, there might be justification for exempting a particular undertaking from a particular requirement for a specified time”. The Joint Committee considers in terms Article 4 goes beyond the limited flexibility contended for by the Department but even if it had not the Committee cannot accpet that the Minister may assume such powers in a statutory instrument made under section 3 of the European Communities Act, 1972. A power conferred on a Minister by statute to make a statutory instrument ought not, in the Joint Committee’s view, to be regarded as enabling the Minister to assume a power therein to grant administratively a dispensation from an obligation to comply with it.

11.In the context of the furnishing accounts by insurance companies it may not be unreasonable to allow for a limited flexibility in the circumstances described by the Department and permitting the Minister to give appropriate directions may be the right way to achieve that flexibility. Section 88 of the Insurance Act, 1936 already allows for the issue of ministerial direction as to the accounts that should be furnished. Nevertheless, the Joint Committee cannot accept that a Minister may assume power in regulations to give directions relieving persons from complying with those regulations. Such a power must be given in the parent statute. An unwarranted assumption of such power in regulations would in the Joint Committee’s view justify recommending annulment of the regulations. However as more than a year has elapsed since S.I. No. 437 of 1986 was made the Joint Committee is no longer empowered to recommend its annulment. Nevertheless it considers that the matter should be rectified at the earliest opportunity. Specific authority for the retention of Article 4 of the 1986 Regulations should be sought when next appropriate proposals for legislation are before the Oireachtas.

12.In considering this instrument the Joint Committee has adverted to the fact that the main provisions regulating insurance companies are contained in regulations made under the European Communities Act, 1972 and so have never been considered by the Houses of the Oireachtas. In the Committee’s view this is unsatisfactory and it considers that there is a clear need for a consolidation statute in this area. The Committee is pursuing this aspect with the Department of Industry and Commerce.

European Communities (Quality of Water Intended for Human Consumption) Regulations, 1988 [S.I. No. 81 of 1988]

13.These regulations impose certain duties and responsibilities on sanitary authorities in order to implement Council Directive 80/778/EEC relating to the quality of water intended for human consumption. An earlier Directive 75/440/EEC dealt with the quality of surface water intended for the abstraction of drinking water and Directive 80/778/EEC allows for the departure in certain circumstances from the standards laid down in that Directive.

14.In seeking elucidation from the Department of the Environment (see Appendix V) on certain provisions of these regulations the Joint Committee was proceeding on the assumption that the earlier Directive 75/440/EEC was already binding on sanitary authorities. As to the particular points raised the Joint Committee accepts the views of the Department that by virtue of Council Directive 80/778/EEC it is permissible to authorise the departure from the requirements of Directive 75/440/EEC provided for in Article 6 (2) and Article 6 (3) of the Regulations and that the “emergency” envisaged by Article 6 (1) is not to be equated with “floods or other natural disasters” referred to in Article 8 of Council Directive 75/440/EEC. The Joint Committee has been concerned to learn, however, that the latter Directive was implemented administratively by sending a circular to sanitary authorities and not by a statutory instrument binding those authorities. The Committee cannot accept that a matter of this kind should be dealt with administratively by circular. A Directive is binding on the State as to the objectives to be achieved but is not binding on local authorities though it would open to such authorities to observe its terms if existing Irish legislation empowered them to do so. It is understood that a further statutory instrument is to be made which will deal with the technical problems arising from one Directive being implemented by a statutory instrument and a related Directive being merely the subject of a Departmental circular.

15.Article 10 of the Regulations empowers a sanitary authority to “charge for monitoring the quality of private water supplies intended for human consumption”. Although the parent statute does not specifically authorise the imposition of charges the Joint Committee does accept that such charges may be provided for in an appropriate case by virtue of the Minister’s power under section 3(2) to include “incidental, supplementary and consequential provisions” in statutory instruments. It accepts that charges for monitoring water come within this category. However like its predecessors the Joint Committee insists that such charges must remain under parliamentary control and that any attempt at assuming power to fix the amount of charges administratively must be resisted. In the Joint Committee’s view a failure to specify the amount of any charge in the statutory instrument itself is a ground for recommending annulment of the instrument. In the present case the amount of the charge for monitoring is not specified but Article 10(2) provides that it “shall not exceed the cost of such monitoring”. As the charge is recoverable as a simple contract debt a sanitary authority can be put to the proof that it is not charging more than the cost. Accordingly the Joint Committee accepts the provision as reasonable.

European Communities (Materials and Articles in Contact with Foodstuffs) Regulations, 1988. [S.I. No. 60 of 1988]

16.These Regulations are intended to give effect to a number of Community Directives relating to materials and articles intended to come into contact with foodstuffs. Correspondence with the Department of Industry and Commerce relating to the instrument is reproduced in Appendix VI to this report. It appears that there is no existing Irish legislation affected by the making of these Regulations.

17.Article 4 of the Regulations make it an offence to manufacture, sell, import or use in the course of business, materials and articles which are not manufactured in accordance with the Regulations. Breach of these obligations attract the penalties provided for in Article 16. The Joint Committee questioned whether it was necessary to impose the same strict liability on sellers and users as on manufacturers and importers. The Department has replied that such strict liability was required by Council Directive 79/893/EEC implying that the national authorities have no discretion in the matter. The Joint Committee cannot agree. It accepts that the “result” which the Directive seeks to achieve is the prohibition of trade in or use of certain materials and articles but the Member State retains by virtue of Article 189 of the EEC Treaty the right to decide on “the form and methods” by which the result is achieved. In the Joint Committee’s view it remains within the competence of the Oireachtas, and the Minister acting as its delegate, to decide on whom criminal sanctions should be imposed and on the degrees of culpability if any, which should attach to those involved at different stages in the chain of distribution.

18.An offence is committed under article 4 if the materials and articles “transfer their constituents to foodstuffs which could ........ bring about an unacceptable change in the composition of the foodstuffs”. The Joint Committee cannot believe that a statutory offence of such vagueness would be created if it were solely a matter of domestic legislation and it does not accept the Department’s view that it “is necessary in order properly to implement the Directive” to use the phrase “unacceptable change” merely because the Directive does so. In the Committee’s view a definition of “unacceptable” is necessary whether by reference to the provisions of the specific Directives referred to by the Department or otherwise in order to clarify the dimensions of the offence.

19.It will also be noted from the correspondence with the Department that the Joint Committee thought it necessary to enquire whether “foodstuffs” include beverages intended for human consumption. The Department may well be correct in assuming that the Regulations will be interpreted as applying to such beverages but in the Committee’s view the matter could have been put beyond doubt by including in the Regulations an appropriate definition.

20.The Joint Committee’s examination of these Regulations and of other statutory instruments implementing Community Directives has lead it to review the general manner in which Directives are being implemented by delegated legislation. It expects to have this review completed in the near future when it will report on the matter to both Houses.

European Communities (Road Transport) (Exemptions) Regulations, 1987 [S.I. No. 138 of 1987]

21.These Regulations exempt certain categories of vehicles engaged in transport between the State and Northern Ireland from the requirements of Council Regulation (EEC) No. 3820/85 [other than Article 5 (minimum ages for driving)] concerning drivers’ hours and rest periods and Council Regulations (EEC) No. 3821/85 on the introduction of recording equipment (tachographs) in road transport vehicles. This exemption is in accordance with an option permitted to Member States by the Council Regulations and the Joint Committee has no objection to it. Correspondence with the Department of Tourism and Transport in relation to the instrument is reproduced in Appendix VII to this Report.





14 December, 1988.