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Mr. Loughton: I rise to support my hon. Friend the Member for Arundel and South Downs (Mr. Flight). We do not dispute Government amendment No. 115, which enhances the rights of the applicant.

My concern focuses on the practical workings of the tribunal. Having spent so much effort during the sittings of the Burns committee on the key proposal that there should be an independent tribunal, we think it essential that the tribunal's workings be absolutely right and that it be seen to do its job properly and efficiently. We believe that further improvements are possible--hence our amendments on the appointments to be made to the tribunal.

A submission has been received from the law reform committee of the General Council of the Bar, in which the learned people who produced a report on the Bill express the view that the qualification requirements for those who preside over the tribunal are "not very demanding". On that basis, we tabled our amendments to give the tribunal greater status by beefing up the standards and the service requirements of those who are to be

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members of it. My hon. Friend is right to say that, even with those additional provisions, the requirements do not equal those of the employment appeals tribunal. On that tribunal, all the permanent legal appointees must be High Court judges or judges of the Court of Session.

If the tribunal is to work properly, those who serve on it should be properly remunerated--hence our tabling of amendment No. 63. Putting the matter in the hands of the Secretary of State would provide a better guarantee of funding, to ensure that the tribunal works properly.

With amendment No. 64, we come again to our old friend "reasonableness"--a term that featured heavily in the Committee debates. This time, the Opposition argue that reasonableness is not enough and that we must improve on it if we are to preserve the checks and balances surrounding submissions to the tribunal--a complex matter, as my hon. Friend rightly said.

Our amendment is designed to respond to criticism that those who are prosecuted by the FSA would be put off appealing to the tribunal for fear of costs being awarded against them. If the tribunal is to be a proper adjudicator of the workings of the FSA and if those who have had action taken against them by the FSA are to be given equality of arms, individuals must not be deterred from taking a case to the tribunal for fear of excessive costs being awarded against them.

That is why we wanted to add to the conditions of action taken "vexatiously, frivolously or unreasonably" that of action taken without justification. My hon. Friend has acknowledged that we have phrased it slightly awkwardly, by referring to cases

It is essential that we make it clear when the intent of the FSA in prosecuting someone is a wrong intent. I support the amendments and hope that they will find sympathy with the Minister.

Mr. David Ruffley (Bury St. Edmunds): I rise to support my colleagues' remarks about the amendments. I shall focus on amendment No. 56.

The schedule as drafted provides that the Lord Chancellor shall appoint as president or deputy president of the tribunal only persons who are qualified lawyers of 10 years' standing in one of the jurisdictions of Northern Ireland, England and Wales and Scotland.

We have tabled amendment No. 56 because we do not believe that someone with the great responsibility of being president or deputy president should merely be a lawyer of 10 years' standing. That is why the amendment suggests that the individual should be a High Court judge or a judge of the Court of Session.

I have a particular reason for considering this matter important, and it turns on the nature of the appeal process. Decisions on points of law that are taken by the tribunal are appealable. That is not on interlocutory matters that the tribunal may decide, but a final decision on points of law is appealable to the Court of Appeal. Leave is given either by the tribunal or by the Court of Appeal. That is fair enough.

We run a real risk in saying, "Well, points of law can be appealed." We do not want mistakes to be made in the first place by possibly under-qualified members of the tribunal. If we are to stop unnecessary litigation and unnecessary time-consuming appeals on points of law to

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the Court of Appeal, and perhaps upwards to the House of Lords, we need the very best legally qualified individuals on the panel following the most rigorous legal strictures. For that to happen, we need a High Court judge or a judge of the Court of Session to be the top man who runs the tribunal.

As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) has observed, it is not enough to be a lawyer of 10 years' standing to run the employment appeals tribunal. If the Bill is designed to make the tribunal independent and efficient and to reduce the necessity for appeals on points of law to the Court of Appeal, we need to ensure that it gets things right the first time. The purpose behind amendment No. 56 is to achieve that.

I understand that the president or deputy president will not be deciding points of law. A chairman in any particular case will be doing that. However, a High Court judge or a judge of the Court of Session would be of such eminence and of such legal stature that he or she would be able to set the tone for the way in which the tribunal carried out its business, especially in cases where points of law were disputed or potentially appealable. Chairmen would not be particularly well qualified. They would have to be lawyers of only seven years' standing. Amendments Nos. 59 and 60 address that point; we suggest that they should be of 10 years' standing.

The chairmen may need to be instructed that they can adjourn proceedings of the tribunal, perhaps to seek guidance from the deputy president or president. Who better to do that and to decide points of law so that they do not become justiciable and the subject of litigation further down the road?

If our amendments are not taken on board, we can see individuals and authorised persons mired in the Royal Courts of Justice on the Strand. There will be great expense incurred by businesses and big pay days for lawyers. As a former solicitor, I realise how onerous the burdens that law firms place on clients can be. Such a situation is not one that an efficient and competitive financial services industry needs. For these reasons I urge Ministers to take seriously the points of principle that are raised by the amendments.

6.45 pm

Sir Nicholas Lyell: I support the thrust of what my hon. Friends have said, but the situation is more serious and more dangerous than I realised until very recently. It has come to my notice that the tribunal may be created on the cheap. There is a nasty rumour that the Lord Chancellor's Department, which does not have much money, hopes to roll in the tribunal with the VAT and duties tribunals. That would be a terrible mistake. If anyone in or around government is thinking in that direction, I hope that he will think again.

The tribunal requires a president, whether he be a judge or someone of considerable legal and financial experience, who is of the highest calibre and who can be relied upon to lead a team that will do justice to the enormous powers that are being given to, and that will be exercised by, the Financial Services Authority.

The amendments focus on the requirements for the tribunal. I do not have particular difficulty with the concept of a lawyer of 10 years' standing. I think that that is the same requirement for a High Court judge. Of course

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it is not adequate in itself. There are many lawyers of 10 years' standing who would be entirely unfitted, but it is a long-standing test. So long as it is 10 years' standing and so long as the individual who is chosen has the necessary acumen, background and status, fine. The vital feature is that we set up a tribunal that will command respect nationally and internationally and will do justice in the cases that come forward, which may be very sensitive and difficult.

It would not be fair to load this responsibility on to quasi- judicial and judicial figures in other administrative areas who sit on other tribunals, with the great technicalities with which they have to deal. We should not lump on to them the huge responsibilities that we are creating. I hope to have an assurance from the Minister that that will not happen. If he cannot give such an assurance because thinking is at too embryonic a stage, I hope that he will take to heart the points that have been raised.

Mr. Timms: I welcome the support that has been expressed by Opposition Members for amendment No. 115. There is a consensus that it is a good step forward.

I hope that I can reassure right hon. and hon. Members about the importance that we attach to the tribunal. I entirely agree with what has been said about the importance of its commanding the widest possible respect. That is an objective that we can all share. I think that the steps that we have in hand will lead to it doing so.

There are about 70 tribunals, and tribunal appointments do not normally include judges from the High Court Bench or from the Court of Session. There are a few instances where senior judges sit on tribunals. A tribunal may have a High Court judge when particularly sensitive information is involved or when the cases that come before it are especially sensitive in nature. For example, there are the special immigration appeals commissions. There is also a batch of security tribunals, each of which is headed by a High Court judge or another senior judge.

The employment appeals tribunal has been referred to, as has the Immigration Appeal Tribunal. Both have a High Court judge as president because of their particular circumstances. I think that we are all aware that the Immigration Appeal Tribunal has faced acute work-load pressures. A High Court judge was appointed as president to strengthen its operation.

It is normal practice for other tribunals to appoint people with a seven-year legal qualification to the panel of chairmen--for example, the VAT and duties tribunals and the transport tribunals. The provisions will ensure that the tribunal will command the widest possible respect, as the House rightly seeks.

The hon. Member for Arundel and South Downs (Mr. Flight) suggested that the FSA should pay costs if a case is overturned by the tribunal. Costs are not usually awarded in cases brought before tribunals. There will be scope to award costs, but only if either party has acted unreasonably, vexatiously or frivolously. That is the test supported by the independent Council on Tribunals, and it is in line with the thinking of the Burns committee, which specifically recommended that we should give consideration to the council's views. Those views are reflected in the provision.

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We can certainly agree about the importance of the tribunal and the need to make sure that it commands the widest possible respect. I am confident that our proposals will deliver--

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