Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Brightman: I remain unrepentant. I am very grateful for the one friend whom I have. However, in the circumstances, I think it right for me to seek leave to withdraw the amendment and in the meantime I will reconsider the position.

Amendment, by leave, withdrawn.

28 Feb 1996 : Column CWH8

On Question, Whether Clause 29 shall stand part of the Bill?

Lord Hacking: My noble and learned friend the Minister very kindly said that if an amendment did not appear in the Marshalled List of amendments, but had nonetheless been recommended by the DAC report, we were not to take it that the amendment had been rejected. I should therefore be grateful if my noble friend could help the Committee over paragraph 361 of the report, which refers to Clauses 24 and 25 and the clause that we are now considering.

That paragraph points out that if the arbitrator resigns and is sued for his fees, he is not protected from a breach of contract action under the immunity clause, Clause 29; but, on the other hand, if he is removed by the court he has the benefit of immunity under Clause 29.

That is an anomaly and I wonder whether my noble and learned friend is able to help us with his consideration of that paragraph in the report?

Lord Fraser of Carmyllie: Having made an opening set of observations about those recommendations which do not appear as amendments, I was hoping to avoid being probed at this stage as to whether we are accepting or rejecting them on an individual basis. I can shortly say to the noble Lord that the proposal to be found in that paragraph is one that we are still considering. At this stage I hope that he will not press me further.

Lord Hacking: I certainly shall not do that. It seemed to me that that was rather an important recommendation in the report and for that reason I drew it to the attention of the Committee. I do not intend to go through all the other amendments as they appear in chapter 6 of the report, which I hope is of some comfort to my noble and learned friend the Minister.

Clause 29 agreed to.

Clauses 30 and 31 agreed to.

Clause 32 [Determination of preliminary point of jurisdiction]:

Lord Fraser of Carmyllie moved Amendment No. 8:

Page 12, line 35, leave out ("unless the court certifies") and insert ("which shall not be given unless the court considers").

The noble Lord said: In speaking to Amendment No. 8, I shall speak also to Amendments Nos. 12 and 15. While the purpose of the amendments is probably well known to those of your Lordships attending the Committee, I shall spell out shortly the reasoning behind them for those who are not present.

Clause 32 empowers the court in certain limited circumstances to determine a question as to the substantive jurisdiction of the parties put to it by a party. Clause 45 empowers the court to determine a preliminary point of law and Clause 69 a point of law arising out of the award.

The amendments relate to the provisions for appeal from a decision of the court. In each case the leave of the court for an appeal from a decision of the court is required. Each clause also restricts the possibility of an appeal by requiring leave of the court or a certificate by

28 Feb 1996 : Column CWH9

the court that the question involves a point of law which is of general importance or which for some other special reason should be considered by the Court of Appeal.

As drafted, these appeal provisions look as though they are alternatives. That is not our intention. We want to ensure that the leave of the court is obtained only in cases which are of general importance or which for some other special reason should be considered by the Court of Appeal. In that way, appeals that are made simply to waste time will be deterred. That is in line with the general philosophy of the Bill. Indeed, in the case of determination of points of law, that is the current law under the Arbitration Act 1979. It is certainly not the intention to make appeals easier than they are now. I beg to move.

On Question, amendment agreed to.

Clause 32, as amended, agreed to.

Clauses 33 to 37 agreed to.

Clause 38 [General powers exercisable by the tribunal]:

Lord Hacking moved Amendment No. 9:

Page 14, leave out lines 17 to 20.

The noble Lord said: In moving Amendment No. 9, I shall speak also to Amendment No. 10, which is the amendment of my noble and learned friend the Minister, and to Amendment No. 11, which is in my name.

These amendments are directed to the issue of security for costs. As the Committee will be aware, the notable change between the present law, under the Arbitration Act 1950, and the proposed law in the Bill is that the right to make an order for security for costs moves from the court to the arbitrator. I welcome that.

The first question that should be considered is whether there should be at all the right to order security for costs in an arbitration. The experience in litigation is that security for costs is used as a weapon to discomfit another party in that litigation, particularly in the application of Order 23, Rule 1 under the rules of the Supreme Court when the plaintiff is ordinarily resident out of the jurisdiction. The noble and learned Lord, Lord Mustill, makes some interesting observations on security for costs in the Ken-Ren case. I read from the speech of the noble and learned Lord, who says this on page 468:

    "Finally, there is the argument that security for costs is an English idiosyncrasy which should be excluded from the cosmopolitan world of institutional arbitration. This is correct to the extent that most national arbitration laws do not offer such a procedure, which is not surprising since only the common law systems ... enable a tribunal to order the losing party to pay its opponent's costs".

That is the first question, which might be described as the idiosyncratic question. Amendment No. 9 seeks to deal with that by simply removing altogether the power for an order for security for costs.

I now turn to Amendments Nos. 10 and 11. I can do so swiftly and easily because my noble and learned friend the Minister has a much better amendment. If my noble and learned friend moves Amendment No. 10 and it is accepted, then it is not my intention to move Amendment No. 11.

Lord Fraser of Carmyllie: It might be useful to clarify the position. My noble friend ought to have

28 Feb 1996 : Column CWH10

indicated to the Committee, although I stand to be corrected by him, that if my Amendment No. 10 is accepted, and if I indicate to him now that I wish to move it, he would not then seek to move his Amendment No. 9.

Lord Hacking: That is right.

Lord Fraser of Carmyllie: The provision for security for costs is difficult and it is undoubtedly important that we get it right. I am convinced that we are right to give the power to order security for costs to the tribunal. At the moment, parties have to incur the expense and inconvenience of making applications to the court. The philosophy underlying the Bill is to transfer power from the courts to the tribunal wherever appropriate. In our view, this is such a case. Amendment No. 11 would leave parties in limbo, as it removes the power of the tribunal to order security for costs. But there is no provision in the Bill for the court to act. The ability of a party to rely on an order for security of costs is a useful tool in appropriate cases and it is right that the possibility should remain available.

The subsection as it is drafted might be criticised for a lack of user friendliness. One of our objectives has been to make the Bill as user-friendly as possible. While on the whole we have succeeded, there is nevertheless scope for improvement here. The provision is not self-contained in that reference has to be made to the rules of court and to case law to ascertain in what circumstances the court would act, and on what principles. It would be exceptionally difficult to encapsulate court processes and principles in the Bill. We have come to the conclusion that it would be preferable to de-couple the powers available to the tribunal from those of the court. To that extent, Amendment No. 9 has merit. However, turning to my own Amendment No.10, I should additionally like to place a restraint on the tribunal whereby it cannot order security for costs on the grounds that the party concerned is foreign. It will be appreciated that there has been some concern expressed by those who do not live here.

The concept of security for costs is alien to many jurisdictions, and many in foreign business circles think they are being singled out for special and undeserved treatment. One of the main objectives of the Bill is to ensure that foreign business continues to come to London to have disputes arbitrated. The invisible earnings that such business brings are substantial and I am loth to place that business in jeopardy because our security for costs provisions are seen as unacceptable.

I invite my noble friend to withdraw Amendment No.9. I shall propose Amendment No.10 and I hope that he will not move Amendment No. 11.

Lord Hacking: Before my noble and learned friend sits down, can I tell your Lordships I was a little quick in agreeing with my noble friend? In fact Amendment No.9 stands quite separate from Amendments Nos. 10 and 11. The purport of Amendment No.9 is to remove altogether the power to order security for costs. That is a separate issue.

28 Feb 1996 : Column CWH11

When I addressed the Committee on my Amendments Nos.9 and 11 and my noble and learned friend's Amendment No.10, I said that if the Committee was against me on the issue there should not be the power of order for security for costs. My position is that I prefer my noble friend's Amendment No.10 to my own amendment, Amendment No.11.

Next Section Back to Table of Contents Lords Hansard Home Page