Draft Civil Jurisdiction and Judgments Act 1982 (Amandment) Order 2000

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Mr. John Burnett (Torridge and West Devon): I welcome you to the Committee, Mrs Adams. I think that this might be your first Standing Committee considering legal matters. If it is, or even if it is not, it is rather a good thing that you are here. I believe that you represent a Scottish seat, so when sometimes we are inclined to talk about English and Welsh law, you stand as a reminder that two systems of law prevail in our country.

We agree with provisions that facilitate economic trade, commerce and business within the European Union. We know that more and more business is being done on an international scale. Most practitioners of law-there are one or two eminent ones in the Room; I see one on the Government Benches-realise the difficulties that can arise with conflict of laws. I ask the Minister to enlighten us on one or two points arising out of these two perhaps not controversial but nevertheless important orders.

I hope that the Minister can assure the Committee that there will be no discrimination between English and Welsh, or for that matter, Scottish law, in relation to the orders, and that there will be no difficulty or inhibition between parties stipulating at contract stage that, say, English and Welsh law is the law of the contract and that that cannot be altered by the provisions that we are discussing. I do not think so, but it is an important point for us to clarify.

I understand that both the Brussels and the Rome conventions are being revised and updated. I am anxious to know what the Government are doing about that updating, and whether they are party to those negotiations. They are important negotiations. I should also be grateful if the Minister would tell the Committee what underlying principles the Government bring to those negotiations. In other words, what do the Government foresee as a satisfactory outcome? The Committee would like to know what the underlying principles are.

I understand that the Commission recently proposed a draft regulation. I hope that the hon. Member for Hexham (Mr. Atkinson) will draw that to the attention of the hon. Member for Surrey Heath (Mr. Hawkins) because at present, those revised regulations are available only in French. That would normally bring on the ire of the hon. Member for Surrey Heath. The regulations are on the law applicable to non-contractual obligations, where there is a choice of laws. I wonder whether the Minister has any knowledge of that point. It is an interesting point. If so, perhaps he could enlighten us on that. The parties under those new regulations would be free to choose the applicable law, but in the absence of such a choice, the law will be that of the country that has the strongest links with the act creating the obligation.

Both the Brussels and Rome conventions impact directly on the countries that are signatories to them and have accepted them. Obviously, trade within the EU is covered by those conventions, but I am interested to know what impact the conventions have on non-EU countries trading within the EU, and where there is a conflict of laws, can the EU party pray in aid that convention in seeking assistance with the conflict of laws?

4.44 pm

Mr. Lock: I shall do my best to answer the questions. The hon. Member for Hexham raised some interesting points. The Lugano convention is a multilateral convention. Poland has applied before the other applicant countries to be a party to that convention. As I explained in my opening speech, the Lugano convention is very similar to the final rules which are required under the Brussels convention to apply to all EU states. Therefore, Poland is moving in the direction of accession.

It is for contracting states to decide whether they are satisfied that the domestic courts and the domestic enforcement of an applicant state are sufficiently robust and accessible that they are prepared to enforce in their own country-in our case, in Britain-judgments that have been given in Poland and in turn, that they are prepared to agree that where there is a contract under Polish law, Poland is a suitable place to litigate that dispute. So it is both enforcement in Britain of judgments given in Poland and contracts which are then determined in Poland. Poland is slightly ahead of the game compared to the other applicant countries and the work that the Government have done has satisfied us that Poland's legal system is sufficiently independent, robust and accountable that we can rely on it and allow Poland to accede to the convention.

I turn now to the points made by the hon. Member for Torridge and West Devon (Mr. Burnett). The Contracts (Applicable Law) Act 1990 starts from the principle that it is open to the parties to choose the law of the contract. If parties choose the law of Scotland or the law of England and Wales, that is the law of the contract. I think that I am the only member of the Committee who has appeared before the Court of Appeal and argued that point. It is an area that I know extremely well. The problems arise either where the contract is in dispute and two versions of the contract have different applicable law clauses or where the contract is silent. That is where the rebuttable presumptions and the most close connection comes in.

The hon. Gentleman also asked what the position was on the revision of the Brussels convention. The proposal is to turn the convention essentially into a regulation. The draft regulation proposed by the European Commission in September 1999 is under negotiation. In general terms, its purpose is to restate the present provisions of the 1968 Brussels convention. Subject to the incorporation of a package of amendments to the convention, which were agreed by the Council of Ministers in May 1999 following a detailed review of its operation by member states and, pursuant to its protocol on the measures under title four of the treaty of Rome, the United Kingdom has decided to opt into those negotiations. I hope that the hon. Gentleman welcomes that. The Government will decide whether to adopt the regulation when it goes to the Council of Ministers for adoption in its final form. It is not yet possible to predict precisely when that will happen.

Mr. Burnett: I am grateful to the Minister for what he has said so far. He may be coming to this, but I asked what was the Government's underlying position in those negotiations.

Mr. Lock: That was to be my next point. The Government's approach is that we should promote confidence, certainty and the mutual enforcement of judgments with as limited administrative burdens as are reasonably necessary in the circumstances. It is a matter of trying to make sure that if one gets a judgment in England one can enforce it in another member state with the minimum bureaucracy and additional legal costs and with the same efficacy as if that judgment was granted in that member state. Of course, it means that judgments granted in other member states can be likewise enforced in this country. We believe that that is essential to build the confidence necessary for international trade because investment will occur only if companies can be confident that the obligations into which they enter in contracts will be honoured and that if they are not honoured, means are available of enforcing those obligations in the courts of the country in which that investment is made. Those are the principles.

The hon. Member for Torridge and West Devon referred to the non-contractual relations. I seek your guidance, Mrs Adams. The Committee is purely concerned with the law of contract. I wonder whether non-contractual relations are outside the Committee's remit.

Mr. Burnett: Perhaps I can clarify the point. I did not ask about non-contractual relations. What I hope that I asked about was the impact of the conventions on non-signatory parties-non-EU parties-when there is a conflict of laws.

Mr. Lock: That clearly is within the remit of the Committee. The answer is that the Contracts (Applicable Law) Act 1990 will apply in the British courts in determining the law of the contract between a signatory state and a non-signatory state if the case is decided in the British courts. What it cannot do is to apply in the courts of the non-signatory state because that court is not a signatory and therefore is not bound by the terms of the convention. Inasmuch as there is trade between a signatory state such as Britain and a non-signatory state, within the British courts the 1990 Act applies. The orders do not affect that one way or the other.

Mr. Burnett: I should have been slightly more clear. What I really envisaged is where there is a tripartite difficulty between a non-signatory country and two signatory countries.

Mr. Lock: Again, inasmuch as that issue was determined within the courts of a signatory country, the Contracts (Applicable Law) Act 1990 would apply. If the hon. Gentleman were to get into any more detail, I would have to refer him to, not my hon. Friends but my learned friends and the legal taxi meter would start turning.

Question put and agreed to.


    That the Committee has considered the draft Civil Jurisdiction and Judgments Act 1982 (Amendment) Order 2000.

Draft Contracts (Applicable Law) Act 1990 (Amendment) Order 2000


    That the Committee has considered the draft Contracts (Applicable Law) Act 1990 (Amendment) Order 2000.-[Mr. Lock.]

Committee rose at seven minutes to Five o'clock.

The following Members attended the Committee:
Adams, Mrs Irene (Chairman)
Atkinson, Mr. Peter
Benn, Mr. Hilary
Brinton, Mrs
Burnett, Mr.
Caton, Mr.
Clark, Mr. Paul
Edwards, Mr.
Lewis, Mr. Terry
Lock, Mr.
McGuire, Mrs
Rowe, Mr.
Sedgemore, Mr.

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