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Lord Hacking: Shipping.

Lord Donaldson of Lymington: Shipping law. The Secretary of State had power to amend that; I do not believe he did but they disappeared from this Bill, and I would not quarrel with that for one moment. I see that the process is being carried on, because in Clause 88 there is power again for the Secretary of State to amend these provisions in the light of experience.

For all those reasons this has not been written in stone, unlike most of the rest of the Act, and I personally would very much doubt whether it would be wise to give an unfettered right of exclusion to all concerned in arbitration. I would oppose this amendment.

Lord Fraser of Carmyllie: It has been helpful that my noble friend has indicated that he speaks not only to Clause 85 but the succeeding clauses through to Clause 88. The clauses reflect only minor changes to the law as they are set out in the current Arbitration Acts.

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Domestic users of arbitration have been able to rely on them for some time and we must consider carefully the effect on them of any changes in the current provision. That is why it was decided to restate the current law in the Bill and to propose an order-making power in Clause 88 which would give us the opportunity of removing or amending the provisions at a later date.

Having said that, I recognise that the provisions as they stand are not free of difficulties. The definition of a domestic arbitration agreement has certain consequences which may have been unforeseen at the time the provision was first drafted. In particular, as the noble Lord, Lord Hacking, indicated, it has the effect that nationals from other EC countries are treated differently from United Kingdom nationals. I do not think I need to elaborate on the difficulties that that may bring forward.

I have listened carefully to what my noble friend has said and, following on the contributions made to the debate by the noble and learned Lords, Lord Mustill and Lord Donaldson, I should like to take time to reflect further on the case for removing these provisions now rather than later. It is not an issue that is without difficulties but I will return to the question on Report. I hope that that is acceptable to the Committee.

Lord Hacking: That is certainly acceptable and I am grateful to my noble and learned friend the Minister for agreeing to consider this further. I would only make the observation that there have been continuing discussions on this issue and while it may not have formed part of the formal consultation process of the DAC committee chaired by Lord Justice Saville, it is something that Lord Justice Saville and his colleagues have closely considered, as can be seen from Chapter 3 of the report. As the noble and learned Lord, Lord Donaldson, rightly reminded the Committee, there was a power in the 1979 Act by statutory instrument to remove the special category cases. It is nice to remember Lord Diplock. Special category cases were very much the children of his creation, and of the noble and learned Lord, Lord Donaldson, when he was chairman of the Commercial Court Committee.

As I recall, it was envisaged that we would see for two or three years how it all went along in the special category cases and then have another look at it. After all, the statute gave power for a statutory instrument to remove the special categories altogether. The fact is that they were not moved on statutory instrument. Special category cases have remained in existence right up to the present time. That seems to be an unsatisfactory state of affairs . If there is an issue as to whether there should be a separate treatment for domestic and international arbitration, that is an issue that should be addressed by Parliament during the passage of this Bill and we should not leave it over to statutory instrument. We should not leave it over to an unfortunate--and I say "unfortunate" not in any way critical of the European Court but unfortunate for us that the European Court should make a ruling on it and declare our law as inconsistent with European law. It seems to me that we are left in an embarrassing and silly position. In any event, we should be addressing this now during the passage of the Bill through Parliament and not leave it to a statutory instrument.

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Clause 85 agreed to.

Clauses 86 to 97 agreed to.

Clause 98 [Specific adaptations of provisions in relation to statutory arbitrations]:

Lord Lester of Herne Hill moved Amendment No. 28:

Page 37, line 40, at end insert--
("( ) In section 1 (general principles) the reference in paragraph (a) to an impartial tribunal shall be construed, for the avoidance of doubt, as requiring the tribunal to be independent of the executive.").

The noble Lord said: This amendment arises from a problem that I mentioned during the Second Reading debate. I am extremely grateful to the noble and learned Lord the Minister for having considered it carefully and corresponded with me upon it.

The problem of which I would like shortly to remind noble Lords arises in this way. The general principles in Clause 1 refer in subsection (1)(a) to the need for the fair resolution of dispute by an impartial tribunal. There is no reference to an independent and impartial tribunal. In Clause 33 the duty on the arbitrator is to act fairly and impartially between the parties, and the Committee may think that there is nothing wrong with that. I respectfully agree with that when one is dealing with private consensual arbitrations. There is no requirement of independence.

The problem that arises is in the part of the Bill with which we are now concerned dealing with statutory arbitration, because obviously statutory arbitrations are not voluntary, but are imposed. The particular problem is where the Executive is party to a statutory arbitration. The case law of the European Court of Human Rights to which the European Court of Justice also looks as regards Article VI of the convention is what gives rise to the difficulty. Article VI of the European convention provides that everyone is entitled, in the determination of his civil rights obligation, to an independent as well as an impartial tribunal established by law. It is clear from the case law that the requirement of independence does not apply to a private voluntary consensual arbitration. But it is also clear from the case law that, where there is a compulsory arbitration and where the state is a party to the arbitration, it is essential for the arbitrators to be independent of the Executive as well as impartial.

The last thing that I wish to do is to inflict an amendment which would have the effect of causing confusion in the main part of the Bill dealing with consensual arbitration. I have drafted this amendment in order that the issue can be raised and essentially to hear the views of the noble Lords, and I especially ask the noble and learned Lord the Minister to clarify the position. This why I put the amendment before your Lordships.

Lord Donaldson of Lymington: I am not clear, if this became part of the Bill, how anybody would be certain that a particular tribunal was independent of the Executive. I say that because of the devolution of power down to Executive agencies and quangoes of one kind or another. I take as a recent example the Marine Accident Investigations Branch which claims to be

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independent of the Executive, and in the other place the Secretary of State said that it was. It is an integral part of the Department of Transport. How would this be applied?

Lord Preston: When the noble Lord, Lord Lester, raised this subject I was very puzzled, and I remain puzzled. I take it that the word "impartial" has a meaning. It seems to me that its meaning does not change depending on which part of the Bill you are considering. If it has a meaning and it is what we want, then its meaning remains in the clause of the Bill, which is what we want. My question is to ask the point of what he is saying. I am not sure whether the Minister feels he should reply or whether the noble Lord, Lord Lester, should, but one runs into a fundamental logical difficulty. I would have thought the amendment otiose.

Lord Lester of Herne Hill: I shall endeavour to answer those two questions before the Minister replies. So far as the question raised by the noble and learned Lord, Lord Donaldson, is concerned, I cannot give a very satisfactory answer. Whether a court or tribunal is independent is very much rooted in the facts of a particular case--the nature of the subject matter, the method of appointment, the relationship between the members of the tribunal and the subject matter. There is case law, but it is obviously a difficult problem. I respectfully agree that if that is the criterion which must be satisfied under European law it gives rise to difficulties of interpretation which at present the European Court of Human Rights, if not our own courts, would be concerned with under the convention.

As to the question raised by the noble Lord, Lord Peston, the difficulty is that it is not correct that the word "impartial" in subsection (1)(a) or Clause 32 should be construed to include independence in the way that word is used in Article 6 of the European Convention on Human Rights. Were it to be so construed it would give rise to very great difficulties in practice in commercial arbitration. The problem is: what is one to do when one is dealing not with an ordinary, private, consensual arbitration but with a statutory arbitration to which the executive is party? I draw attention to the problem because it is necessary for us to be satisfied that we are complying with our obligations when we enact legislation of this kind. My amendment may be inept but it attempts at least to raise the point so that it can be dealt with in some fashion.

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