Different strokes

Failure to recognise the differences between Northern Irish and English law can be very costly. Leeanne Whaley and Emma Cooper report on some key areas of separation


When faced with the job of getting the UK end of the deal done, most UK counsel appreciate that significant differences exist between the law of England and Wales and that of Scotland. In order to deal with the Scottish aspects of the transaction, advice from Scottish lawyers is required.

There is, however, a less defined impression as to what differences exist between the law of Northern Ireland (NI) and that of England and Wales. There is a general feeling that NI law follows that of England and Wales. That is undoubtedly true. For years NI law has emanated from Westminster, and it is undeniably the case that much NI legislation mirrors its English counterpart substantially, particularly in the corporate and commercial sphere.

To assume, however, that the laws overlap would be a mistake. Differences arise variously as a consequence of history, NI’s political and social circumstances and the time gap between the enactment of legislation in Great Britain (GB) and the enactment of equivalent legislation in NI. The latter factor is likely to become more prominent due to the suspension of the NI legislative body (the NI Assembly), which shows no signs of being resumed.

The major differences in legislation are detailed below:

Insolvency

The insolvency reforms introduced by the Enterprise Act 2002 do not yet apply to NI, although parallel legislation is in the pipeline. English practitioners should be aware that until the proposed legislation comes into force, the rights and remedies of a secured creditor will be significantly different in NI. This has caused confusion in relation to group insolvencies where the GB-based entities have invoked the new Enterprise Act’s ‘out of court’ administration procedures only to find that no equivalent procedures exist for the NI group members.

Public-private partnerships

In addition to being subject to the Human Rights Act 1998, NI has a layer of legislation designed to prevent discrimination. Section 75 of the Northern Ireland Act 1998 places a statutory obligation on public authorities to carry out their functions with due regard to the need to promote equality of opportunity between, among others, persons of different religious belief, political opinion, racial group, age, marital status or sexual orientation. While this legislation imposes a statutory duty on the public sector only, the public awarding authority must ensure that a contractor performs its duties in such a way as to ensure that the awarding authority is not in breach of its statutory duty. It is now accepted that a public-private partnership (PPP) project must be regarded as a ‘policy’ by a public authority in order to determine whether a full equality impact assessment is required, and it is recommended that equality screening be carried out on every PPP project.

Property

NI property law is comprised of both English and Irish common law and statute together with a developing body of NI statute and common law. The key distinction is that NI has no direct equivalent of the Law of Property Act 1925. Since early in the 20th century, NI has developed a body of law distinct from that in GB. Noteworthy characteristics include the Business Tenancies (NI) Order 1996, which confers upon business tenants security of tenure which, unlike in GB, cannot be contracted out of. Significant differences also exist on issues of assignment of leasehold interests and liability on leasehold covenants. Subtle nuances are prevalent, such as different quarter days, distinct dilapidation law and additional classification of estates.

Environmental and planning

NI has yet to enact legislation equivalent to the Environmental Protection Act 1995, although there are proposals to do so imminently. The NI planning system also has a distinct processes and appeal system and, although this has similarities with GB, the disparity between the jurisdictions is enough to require specific local advice.

Litigation

The damages awarded are significantly greater in NI, particularly for personal injury. This manifests itself particularly in insurance-related matters, and many insurers in GB do not extend policy coverage to NI. A greater percentage of cases in NI tend to progress to hearing. Significantly, the Woolf reforms do not extend to NI, which leaves it with substantially different court procedures. Coupled with an entirely different court system, this makes litigating in NI a potential minefield for the unwary GB lawyer. Questions have been raised as to whether a GB-admitted lawyer is qualified to litigate in NI and therefore whether they have the ability to recover costs incurred there. There has also been judicial comment as to the reasonableness (in terms of costs recovery) of instructing GB lawyers to litigate on a NI matter given the disparity in charge-out rates between the jurisdictions.

Employment

Historically, the employment tribunals procedure in NI was different to that in GB. NI had legislation concerning discrimination on the grounds of religion and/or political opinion and Fair Employment Tribunals assigned to deal with such matters. These remain, although the recent implementation of the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (NI) 2005 and the Fair Employment Tribunal (Rules of Procedure) Regulations (NI) 2005 have brought NI and GB closer together. But it remains to be seen how the NI tribunals implement these regulations – implementation in NI may not be as stringent as elsewhere, particularly in relation to costs. NI tribunals are often more reluctant to award costs and when they do it is at a substantially reduced level to GB.

General

A GB-registered company which has a physical presence in NI is required to register as a Part 23 company. That is, it is viewed in the same way as an overseas company establishing an NI presence. It is then under an obligation to file certain documents with the NI Registrar of Companies and to nominate a person, based in NI, who is authorised to accept service of documents. Many GB-registered companies with a place of business in NI ignore this obligation. As well as being in breach of NI company law it gives rise, in banking transactions, to a healthy increase in Slavenburg registrations.

Leeanne Whaley (left) is a corporate solicitor and Emma Cooper a commercial property solicitor at Carson McDowell