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Lord Haskel: The Government agree entirely with the noble Lord, Lord Lester. He described exactly how those officers are appointed. In relation to the envisioned work of the legal officers, that might include the disposing of settled or withdrawn cases, granting of postponements, extending time limits and making orders. I listed the various things that they may do.

Lord Renton: Will the noble Lord be so good as to at least comment on the points made by the noble Lord, Lord Lester, and supported by me in regard to the uncertainty of the powers which the chairman or the legal officer--or both--will be able to exercise without consultation with other members of the tribunal? We do not know to what extent those powers will be limited to administration, minor and interlocutory matters.

Lord Hope of Craighead: Perhaps I can intervene briefly in this debate against the background of my experience. I was the Lord President in Scotland until recently and, as an administrator, had to deal with a similar problem; that is, the delegation to clerks of court--to use the Scottish language--of precisely the kind of powers discussed in this clause.

My experience indicated that there is a great range of issues, some of which are simple and can safely be delegated. In practice they were delegated without a need for consultation back to the judge on whose authority the order was ultimately being pronounced. Other issues, such as discovery, were much more complicated. In practice it was left and still is left to the clerk of court to exercise a measure of commonsense, subject also to a degree of supervision, as to whether consultation was required. In my experience--I say this

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with the greatest respect to all those who have spoken--it would be unwise to attempt to define too precisely in the clause what is to be covered. A great deal will depend on whatever regulations or instructions are given once the clause is put into effect.

One further point in relation to what the noble Lord, Lord Lester, said in regard to appointments may also be relevant, though I appreciate the force of what he said against the background of the European Convention. The clerks of court to whom I delegated the power to grant this kind of order in my capacity as Lord President were officials appointed through the court service. Unlike the judges, they were not the subject of independent appointment. For my part, I was content to delegate those functions to them against that background.

Lord Lester of Herne Hill: As I am the only person who is formally opposing the question on Clause 5, and having listened especially to the noble and learned Lord, Lord Hope, I withdraw my opposition. I am reassured by everything he said. I am grateful to the Committee for giving me the opportunity of airing these matters, which seemed to me to be of some importance.

Clause 5 agreed to.

Clause 6 agreed to.

Clause 7 [ACAS arbitration scheme]:

Lord Wedderburn of Charlton moved Amendment No. 13:

Page 5, leave out line 44 and insert--
("(a) setting out--
(i) an arbitration scheme for the resolution of disputes concerned with a contravention or alleged contravention of Part X of the Employment Rights Act 1996 under subsection (1)(a), under which an arbitrator or arbitrators may decide whether there has been such a contravention, or
(ii) an arbitration scheme for the resolution of disputes under any other enactment specified under subsection (1)(b), and").

The noble Lord said: On Second Reading, my noble friend and I made it clear that we wished to try to find greater protection for the arbitration system which is being inserted into the procedures of unfair dismissal in this Bill. The amendments which follow are meant to move in that direction.

We feel that the Bill, as it stands, contains various risks which are unnecessary. To plunge in medias res, let us take an arbitrator who goes way outside his remit; he is someone who depends upon the statute for his position. Some lawyers will think immediately of judicial review. I say at once that I understand judicial review to be extremely unusual in arbitration matters. When one looks at the learned and authoritative tome of the noble and learned Lord, Lord Mustill, and Mr. Boyd--thinking back to the old rule of becoming an authority after one is dead, I am happy to say that they are both still with us--one sees that they make it clear that judicial review is rare. However, if one reads the whole of their book it makes it clear that that is

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concerned with commercial arbitration. It is also usually concerned with arbitrators who do not have a statutory face such as those arbitrators in the ACAS scheme.

In our view, if the situation were left unchanged, then the prospect of disaster for the arbitration system would be just as great as the Grunwick case disaster for recognition procedures under the Act of 1975. Indeed, the two professors who have been extremely influential and led this wing of the alternative disputes movement--it is a much more general movement in academic and intellectual circles--wrote in 1995 after the Green Paper put the question on the map, that perverse decisions of arbitrators,

    "could be challenged through the process of judicial review".
They went on to quote from the well-known judgment of the noble and learned Lord, Lord Diplock, in Council of Civil Service Unions v. Minister for the Civil Service (1985) setting out the three headings of illegality, irrationality and procedural impropriety as the modern basis of judicial review. My noble and learned friend Lord Archer will always prefer that we do not call it "irrationality", but Wednesbury "unreasonableness". I do not believe that there is any ground for disagreement among the lawyers that those are the possibilities and that they must rate pretty high for the arbitrator who goes outside his powers or in some way is bitten by irrationality of the Wednesbury kind.

We therefore suggest that where there is a need for a reference--I stress that it is a question of a reference--Members of the Committee will see later that we use the Employment Appeal Tribunal. However, in Amendment No. 13 we are pointing out that two things are needed for the arbitration to stand up, apart from the agreement of the parties: first, the threshold; and, secondly, the substantive remit.

The Bill sets out the threshold. It is clear in Clause 7 that the threshold in subsection (1) of the new Section 212A will be a claim which could be the subject of proceedings arising out of a contravention or alleged contravention of Part X of the Employment Rights Act 1996. Part X deals with unfair dismissal. Once the arbitrator has in his hands a complaint of that kind, he can go ahead. But then one asks, "How wide can he go?"

There is an assumption in the Bill and an assumption in the ACAS document, kindly produced for us in draft, that one always knows what kind of case one has in one's hands. I suspect that it is not unusual in litigation or arbitration begun on one footing--a complaint, perhaps, of unfair dismissal--to find that on the second day or when the documents or evidence are in that the central point becomes something quite different. Perhaps it is a point on sex discrimination or a point on equal pay. What is the arbitrator to do in such a case? The Bill does not tell us and the ACAS document is uncertain. The ACAS document says that if either party is unhappy with the non-legalistic nature or lack of appeal on a point of law it need not opt to go to arbitration. But one does not know whether one wants an appeal on a point of law or on a point of anything else when one has not yet opened the case. That comes only when one is beginning to see what the answer is.

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It is, with respect, a necessary part of this scheme, if it is not to founder very quickly under judicial review or similar proceedings, that the arbitrator is clearly told that the central thrust of the project is unfair dismissal and not anything else.

I am not suggesting that arbitrators will, out of some malevolence, seek other grounds for their competence; merely that when other points arise they need to be told what to do. Our amendment, in sub-paragraph (i), goes to what I call the substantive remit. It refers to a scheme,

    "under which an arbitrator or arbitrators may decide whether there has been such a contravention".
That will very often merely be a matter of discretion on reasonableness and the like. That is what people have in mind. But the arbitrator must surely not go outside that. There is nothing anywhere to give him notice that it is dangerous to go outside the contravention which is his basic issue.

Perhaps I may make one further point. It is often said, and it is said by ACAS, that what is needed among the arbitrators is what it calls "experience of the world at work" and "the possession of analytical and social skills". Those are highly desirable. But it also adds:

    "Legal experience is not considered necessary".
That is part of the approach which fails to designate the arbitrator's position in a proper way. Let us consider, for example, the case of the arbitrator who wants to indicate an award of compensation. It is a matter of discretion, but a matter of discretion within Part X of the Employment Rights Act 1996. Let us suppose he sees a case where there has been agreed arbitration. There is an agreed unfair dismissal but it is an unfair dismissal where only some of those who were dismissed who have come to him as a party were taking industrial action at the time. The employer says, "Well, fine, but we must reduce this compensation by a proper amount." They say, "You cannot reduce our compensation merely because we were taking industrial action. That is to be put aside."

That is, in a very short compass, what your Lordships' Judicial Committee decided just a week or so back in the case of Tracy v. Crosville Wales Limited. I defy anyone to read the extraordinarily interesting judgment of the noble and learned Lord, Lord Nolan, without some legal experience. What is the arbitrator to do if he has no legal experience or does not know where to turn? It is not the proper approach to legalism to believe that it is only lawyers who bring in legalisms. We all know plenty of people who can be very legalistic but who do not happen to be lawyers. We also know some lawyers who are fairly legalistic. But the identical nature of the two groups is not proven and is not clear.

To come back to Amendment No. 13, what would I say? I would say to the arbitrator, "It will be difficult for you. It may be that you need legal advice. But you must at least remember"--under the last two lines of sub-paragraph (i)--that you are an arbitrator who must decide whether there has been such a contravention and work to that standard--the standard of Part X of the Act--and not go elsewhere". I do not suggest that our amendment solves all the difficulties. It may be that it would have been a good idea to have had some

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regulations made to spell out the problems. However, I do submit that without something further than is in the Bill many arbitrators will get into a difficult position very early on. It is the experience of the arbitration system in the first three or four years which matters most to this important experiment in our employment jurisprudence. I beg to move.

6.30 p.m.

Lord Archer of Sandwell: I am grateful to my noble friend both for the way he introduced the amendment and for his courtesy in having discussed it with me prior to these debates. I wonder whether it would assist our debates if, like my noble friend, I made one or two general comments first on what we are seeking to achieve in introducing the arbitration option.

The intention is that the ACAS arbitration scheme should be final and binding. That is precisely its advantage. That is the inducement to people to use it--in appropriate cases. We are not attempting to set out an alternative tribunal system. We are providing an alternative means for the parties to resolve their disputes. By definition, the arbitration scheme will be different and I do not believe we should seek to replicate the features of the tribunal system. Nevertheless, I wholly agree with my noble friend that it is important for the scheme to have safeguards and to ensure that the remedy for unfair dismissal, whether it is received from the tribunal or as a result of arbitration, should be comparable in the two cases. The remedies, too, will be set out in the scheme itself. We shall be debating the remedies later.

On the question of serious errors, I agree with my noble friend that if there is a serious irregularity in the way the arbitrator has performed his role we need some kind of safety valve. Whether that should be through the Employment Appeal Tribunal, as is suggested in a subsequent amendment, is something we can discuss when it arises. The tribunal's primary function is to consider appeals on points of law arising out of the decisions of industrial tribunals, whereas I suspect that what we may be considering is cases where there has been an irregularity in the procedure. Some may argue that the High Court has more experience of dealing with that kind of situation.

There have been discussions as to whether the Arbitration Act 1996 should apply automatically. Members of the Committee will have observed that there is a power in the Bill for the Secretary of State to apply provisions of it and to modify those provisions. I think my noble friend and I would agree that that was designed for commercial arbitrations and is not wholly appropriate to fit into the industrial relations field. However, having considered it further, I am persuaded that it contains a number of useful provisions of which an ACAS arbitration scheme might sensibly take account. The enforcement provisions are an obvious example. They would permit the exclusion of appeals on points of law but give the courts powers to intervene in proceedings where it is absolutely necessary to prevent substantial injustice.

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The difficulty we are all in at this stage is that these discussions have taken place at a comparatively late point prior to our debates. My understanding--I shall be corrected by my noble friend Lord Haskel if I am wrong--is that the Government are minded that at least both the enforcement proceedings and the serious irregularity appeal provisions should apply but they wish to discuss with ACAS what is the best way of doing that and whether any modifications will be necessary. The serious irregularity provisions appear to be ideally suited to cover what happens if the arbitration goes wrong in that way. It would allow a court to consider a complaint that there were procedural irregularities and other sources of injustice.

I turn to Amendment No. 13 specifically, but we are again in difficulty with the grouping because we are dealing with principles which apply to more than one amendment. As I understand what my noble friend has just said, he is seeking in his amendment to ensure that the arbitrator shall be told clearly, "You will deal with unfair dismissal issues. You won't deal with other issues which are later discovered to have crept into the dispute". I have every sympathy with that. I hope that my noble friend will confirm that it is intended that ACAS will prepare a scheme for arbitration relating to unfair dismissal disputes--that is, a scheme arising out of contravention of Part X of the Employment Rights Act. It is self-evident that any scheme which the Secretary of State approves for the arbitration of disputes about unfair dismissal will attempt to make it clear that the jurisdiction relates to disputes arising out of an infringement of Part X. Therefore, I hope that the difficulty which I think that my noble friend has envisaged is not likely to arise.

On the question of what test of fairness is to be applied, I understand that discussions are taking place with ACAS to determine whether it is possible for the scheme to build on the existing test to take account of an industrial relations standard based on the ACAS code of practice. It might be considered desirable to allow the parties to ask the arbitrator to have regard to the ACAS handbook on discipline at work. As I understand it, the minimum will be the standard of fairness which is set out in Part X.

I fear that we have a difficulty in all these debates, but I think that we all agree on the objective. I hope that at this stage my noble friend will not seek to tie the hands of the Secretary of State by including provisions which can be addressed at a later stage when considering what is to be in the order (when the Secretary of State makes the order) or when ACAS puts forward a scheme. If we attempt at this stage of the Bill to circumscribe those powers too closely, particularly since we are all in the kind of difficulty which my noble friend has mentioned, we may later live to regret it.

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