Ireland

A return to growth in 2024

The Irish economy slowed in 2023 and GDP was forecast to fall to around 1.5% That said, it is still around 30% higher than the 2019 level, driven by the continued strong presence of multinational enterprises. While the contraction in GDP in 2023 was prompted by the slowdown in activity and investments of multinationals, the rebalancing of their activity is expected to drive much of the growth in 2024, and their presence in pharmaceuticals, IT and medical equipment sectors is expected to remain strong in the coming year. Lower interest rates from the Federal Reserve and the European Central Bank will also improve multinationals’ investments in 2024.

Despite the GDP slowdown in 2023, Ireland's domestic consumption proved robust, buoyed by an increasing population and a growing labour market, which is fostering economic resilience. Ireland’s steadily growing population is fuelling domestic demand, while a strong job market and rising real wages is empowering consumers. Despite potential challenges, the strength of Ireland's demographic and economic factors is positioning domestic consumption as a growth driver and is thus overshadowing concerns over unemployment.

Ireland witnessed a substantial 25% spike in corporate insolvencies in 2023, surpassing pre-pandemic 2019 levels, after government interventions helped suppress insolvencies between 2020 and 2023. The upswing, though widespread across sectors, notably affected the hospitality industry. As 2024 unfolds, there are growing apprehensions tied to the end of pivotal Covid-related measures. The Covid Act, which raised the threshold conditions for creditors filing winding-up petitions, and the conclusion of debt warehousing that allowed companies extended debt repayments, are poised to cease. The end of these measures raises concerns about the potential for a continued sharp rise in insolvencies in 2024, posing significant challenges for businesses navigating the post-pandemic economic landscape.

Fiscally stable and generous public finances

2023 saw another year of positive public balance and a decline in public debt, even if it was smaller than preceding years. The economic trajectory appears promising in 2024, with a continuation of favourable fiscal conditions. This surplus is underpinned by robust tax revenues stemming from taxes on labour and the recent adjustment of the corporate tax rate from 12.5% to 15%, in compliance with OECD agreements which was enacted from January 2024. Despite the government's commitment to substantial expenditure growth, the strong tax revenue growth positions Ireland to sustain its financial health. The government continues to benefit from the strong domestic tax situation and can promise popular (and economically important) measures while still showing a good public balance.

The current account balance in Ireland remains volatile, largely influenced by the activities and investments of multinational enterprises in the country. Projections indicate that the balance will stay positive in both 2023 and 2024, primarily driven by a robust balance of goods. However, the balance of services tends to hover around breakeven and is heavily contingent on imports of research and development services, particularly the transfer of intellectual property assets from foreign subsidiaries to Irish counterparts. Despite an overall positive trend, the structural deficit in the income balance persists due to substantial dividend repatriation by multinational corporations, accounting for around 30% of GDP. Excluding these multinational-related effects, Ireland has maintained a current account surplus since 2015, reaching approximately 3% of GDP in 2022.

2024 could be an election year

Ireland's political landscape is relatively stable most of the time but is also navigating stubborn challenges, primarily driven by intense public pressure on housing. Insufficient construction and rising property prices is exacerbating the crisis, which is unfortunately offset by "not in my backyard" sentiment among current homeowners. The housing predicament is intertwined with the immigration issue, as rising legal immigration and asylum seekers further strain the already limited housing resources. The repercussions of this volatile mix were evident in the November riots in Dublin. What began as a stabbing incident in North Dublin escalated into a riot, fuelled in part by far-right elements.

The next Irish general elections do not have to be held until March 2025, but a snap election is nonetheless on the cards in 2024. The political landscape is marked by significant shifts. Pro-united Ireland party Sinn Féin has seen a notable rise in polls, reaching around 30% from their 25% standing in the last general election. Meanwhile, the current coalition government comprising of Fianna Fáil, Fine Gael, and the Green Party is collectively polling at approximately 40%, which falls short of a majority. If the trends persist, Sinn Féin could emerge as the largest party in both the Republic of Ireland and Northern Ireland, possibly challenging the political dynamics on the island. Additionally, the upcoming European Parliament election is scheduled for June 2024.

Payment

Cheques are still used for both domestic and international commercial transactions, however for international transactions, the use of bills of exchange is preferred, together with letters of credit. Bank transfers are common, with SWIFT transfers being utilised regularly. Direct Debits and standing orders are also becoming more recognised as an effective payment method, and are particularly useful for domestic transactions. Assignment of invoice is accepted both pre- and post-supply of goods and/or services.

Debt Collection

Where there is no specific interest clause, the rate applicable to commercial contracts concluded after August 7, 2002 (Regulation number 388 of 2002) is the benchmark rate (the European Central Bank’s refinancing rate, in force before January 1 or July 1 of the relevant year) marked up by seven percentage points and applied to the contracts via a percentage calculated per day past due date. For claims exceeding €1,270, debtors may be threatened with a “statutory demand” for the winding-up (closure) of their business if they fail to make payment or come to acceptable terms within three weeks after they receive a statutory demand for payment (a “21-day notice”).

Amicable phase

The debt collection process usually begins with the debtor being sent a demand for payment, followed by a series of further written correspondence, telephone calls, personal visits, and debtor meetings. If the two parties are unable to reach an amicable settlement, the creditor may begin legal proceedings.

Legal proceedings

If a defendant fails to respond within the allotted time to a court summons (either a plenary or summary summons before the High Court, a civil bill before the Circuit Court, or a civil summons before the District Court), the creditor may obtain a judgement by default based on the submission of an affidavit of debt without a court hearing. An affidavit of debt is a sworn statement that substantiates the outstanding amount and cause of the claim. It bears a signature attested by a notary or an Irish consular office. The claim amount at stake will determine the competent court: the District Court, then the Circuit Court, and, for claims exceeding €38,092.14, the High Court in Dublin, which has unlimited jurisdiction to hear civil and criminal cases and to assess, in the first instance, the constitutionality of laws enacted by Parliament (Oireachtais).

Fast-track procedure 

In any of the three courts, if the debt is certain and undisputed, it is alternatively possible to request a fast-track summary judgment from the competent court.

District Court: amounts up to €6,348

For contested debts, a civil summons is served on the debtor, with the originating court proceedings setting out the claim and amount alleged owed. The debtor then files a Notice of Intention to Defend, indicating that he intends to contest the case, at which point the court fixes a hearing date. The case is heard before a judge, who decides whether to issue an order for judgment (a Decree).

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Dans ce cas, un effet civil est remis au débiteur, qui dépose une Appearance (document formel indiquant l’intention de comparaître du débiteur). Le débiteur demande ensuite formellement, en soumettant une notice for particulars, des informations sur la réclamation, fournies par le créancier. Le débiteur doit présenter une défense dans le délai imparti. Le créancier adresse ensuite au défendeur une notification formelle l’informant de la date de l’audience. Lors de cette audience, chaque partie défend son dossier et le juge rend une décision.

Haute cour : pour les montants supérieurs à 38 093 EUR

High Court: amounts over €38,093

In front of the High Court, a summary summons is served on the debtor, who then files an Appearance. The creditor makes an application to the Master of the High Court for judgment by way of motion and grounded by sworn affidavit. The debtor can reply to the claim by sworn affidavit. If the Master is satisfied that the debt is due and owing, liberty to enter final judgment is granted. However, if the Master is satisfied that the debtor has a genuine dispute, the case is sent for a plenary hearing. During the plenary hearing, the merits of the case are heard either as oral evidence or affidavit. A High Court hears the case and makes a determination.

The commercial court – a special division of the High Court, created in 2004 – is competent to hear commercial disputes exceeding €1 million, included in a commercial list or cases concerning intellectual property, and is able to provide a suitable and rapid examination of the cases submitted. At the discretion of the commercial judge, proceedings may be adjourned for up to 28 days to enable the parties to refer to alternative dispute resolution practices, such as conciliation or mediation.

Normally, obtaining a decision may take a year. However, this timeframe may be doubled if compulsory enforcement is required. Appeal claims brought before the Supreme Court may take an additional three years.

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Enforcement of a Legal Decision

A judgment is enforceable as soon as it becomes final. If the debtor fails to satisfy the judgment, the creditor can request the competent court to order execution by way of attachment and sale of the debtor’s assets by the Sheriff. There is also the possibility to obtain payment of a debt through a third party owing money to the debtor (garnishee order).

For foreign awards, enforcement depends on whether the decision is issued in an EU member state or a country outside the EU. For the former, Ireland has adopted enforcement mechanisms; such as the EU Payment Order, or the European Enforcement Order when the claim is undisputed.

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Insolvency Proceedings

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OUT-OF-COURT PROCEEDINGS

Informal negotiations may take place, and any agreement must be unanimously adopted by all creditors.

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EXAMINERSHIP

Examinership is an Irish legal process whereby court protection is obtained to assist the survival of a company; The company may then restructure with the High Court’s approval. It provides a maximum 100 day period in which a court appointed official (the examiner) seeks to take control of the company and manage it so that the company may continue to trade. The procedure may be initiated by the company, its directors, or one of its creditors. Once the examiner has been appointed, no proceedings may be commenced against the company. Its functions are to examine the affairs of the company and to formulate proposals for its survival. The examiner must formulate proposals for a compromise or scheme of arrangement to facilitate the survival of the relevant body as a going concern. They can be accepted by the creditors but they must be validated by the court.

RECEIVERSHIP

The procedure arises in the context of secured creditors and provides a framework in which they may act so as to enforce their security interest. A receiver is appointed to a company by either a debenture holder or the court to take control of the assets of a company, with a view to ensure the repayment of the debt owed to the debenture holder, either through receiving income or realising the value of the charged asset.

LIQUIDATION

The terminal process by which a company is wound up and dissolved, this process is conducted by a liquidator who takes possession of assets and distributes the proceeds from their sale in accordance with the priority of repayment. The liquidator is also required to investigate the conduct of the directors of the company and prepare a report for the Office of the Director of Corporate Enforcement (ODCE). Dependent of its view, the liquidator may also be required to bring restriction proceedings against one or more of the directors. The procedure can be started by a competent court (court liquidation), the creditors (creditors’ voluntary liquidation) or the debtors (members’ voluntary liquidation).

Last updated: January 2024