The IMF memorandum is a declaration, not a treaty. It probably does not invoke constitutional need for Dáil approval
QUESTIONS HAVE been raised regarding the applicability of Article 29.5.2 of the Constitution to the emerging agreement between Ireland and the International Monetary Fund (IMF). The article provides that “the State shall not be bound by any international agreement involving a charge upon public funds unless the terms of the agreement shall have been approved by Dáil Éireann”.
To the non-international lawyer, this looks to require a Dáil vote on the memorandum of understanding which was published in draft form yesterday evening.
There is, however, strong evidence to suggest that IMF standby arrangements consisting of letters of intent and memoranda of understanding do not constitute binding international agreements under the provision. The Supreme Court in Boland v An Taoiseach held in reference to the Sunningdale Agreement that a political declaration or assurance falls outside it, while binding international treaties require a Dáil vote.
We measure what is an international treaty by reference to, among other things, the intention of the parties and the actual terms of the agreement.
The IMF has traditionally been quite clear that it does not regard memoranda of understanding as binding international agreements, and has required its staff to avoid binding or contractual language in their drafting. Furthermore, memoranda are not lodged with the United Nations as formal treaties are.
The IMF is, in essence, relying on its market influence and reality of our economic dependency to enforce its conditions. If we breach conditions it will not be legal power that is mobilised, but the fund may suspend payments, with severe consequences for our bond yields.
This position has important consequences.
If Ireland fails to meet a memorandum target, it is not in violation of international law.
More adversely, however, the non-legal status of memoranda means that their contents cannot be interpreted in the light of international law rules and, should we end up in dispute with the IMF over the meaning of the terms, our recourse to international courts and arbitration is limited. Although the fund claims the agreements are general and macroeconomic, what can emerge is an unequal debate around what constitutes sufficient compliance with the terms of the standby arrangement to justify disbursing the next tranche of the funds.
To conclude, there are three demands I would make of our Government if it is, indeed, committed to avoiding a Dáil vote.
First, it is vital that the terms are published in full, with time for national debate. Yesterday’s publication makes this possible.
Second, there are circumstances under international law where even supposedly political and declaratory statements can become binding. It is essential that the Government include express and exact disclaimers within the final draft of the memoranda which rule this out.
We need immediate detail on how the European Union and the European Central Bank are approaching these memoranda. While the IMF has traditions in this area, however unsatisfactory, the European Stabilisation Fund is newly established and must be closely supervised.
In terms of delivering certainty of funding to the State, we must also note the fact that the fund’s establishment is being challenged as a breach of Article 122 of the Treaty of the European Union within the German constitutional courts.
Under this provision, the court will examine whether there exist “extreme circumstances beyond the control of states”, justifying the creation of a bailout mechanism.
Finally, I would signal to all concerned that rhetoric claiming we are obliged by the IMF refers to obligations at the political or economic levels.
The Latvian constitutional court last December struck down pension reform recommended by the IMF, stating that these conditions “cannot replace the rights established by the constitution”.
While the judiciary will no doubt show deference to the predicament that the Government now finds itself in, legislators are nevertheless required to act in accordance with Irish constitutional order in passing laws which are proportionate and based on an adequate assessment of the choices in front of us.
The Labour Party’s questioning of the legality of the use of the National Pension Reserve Fund is an example of such legal contestation which will no doubt continue in the coming months.
Darren O’Donovan is lecturer in public international law at University College Cork