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Lord Moynihan: I am sorry that the noble Lord has not followed my argument. I was looking specifically at the proposals within the Amsterdam Treaty which go further than the measures to which he referred. For example, I focused upon Article K.7 where, to date, the Home Secretary and the British courts have the ultimate word over policing matters and judicial co-operation. We are seeking clarification from the Government. That is my purpose this evening in what I hope the noble Lord will accept is a complex area of law. I am seeking clarification that that has not changed and that it is not the case that the ECJ's decisions--not least, for example, in police and judicial co-operation--will now override those of the Home Secretary and the British courts.

On the question of reform of the ECJ, I should like to draw the Committee's attention to new Clause 48 which calls for a resolution on a motion relating to the reform of the enforcement of Community laws--

The Earl of Onslow: Perhaps my noble friend will give way for a moment. I am trying to follow this argument, which I accept is extremely complicated. If police and judicial affairs come in any way under the Treaty of Rome, will they be subject to the ECJ? Do we want that to happen or not?

Lord Moynihan: I have a great deal of sympathy with the point raised by my noble friend. That is precisely why I raised with the Minister tonight the question of whether he is in accordance with your Lordships' view on the issue. I believe that the extensions go much further than he has considered. The Government's position is that these are merely marginal changes, but I would argue that they are fundamental and far reaching. With the limited powers at my disposal, I was trying gently to encourage the Government to be clear about how they see the extension of the powers and the implications for the jurisdiction of the European Court of Justice. I have a great deal of sympathy with the point raised by my noble friend.

One of the difficulties of grouping together so many vitally important issues is trying to cover as many as

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possible as briefly as possible and to lay out the Opposition's concerns. Perhaps I may attempt to make progress by moving to new Clause 48 and the reform of the European Court of Justice. It calls for a resolution on a Motion relating to the reform of the enforcement of Community laws before the Act can enter into force. The amendment refers in particular to four areas: the limitation of the retrospective application of judgments of the European Court of Justice; an internal appeals procedure; national time limits on the implication of directives; and limitation of damages payable by Member states.

Suffice it to say, those were all eminently sensible proposals for a reform of the European Court of Justice tabled for discussion by the previous government at the inter-governmental negotiations. However, the opportunity to examine the role of the European Court of Justice at Amsterdam was completely lost. These extremely important areas required a detailed consideration and review. That opportunity was lost at Amsterdam. Tonight I am seeking to obtain an explanation from the Minister of why that was the case.

The debate on the reform of the European Court of Justice should have nothing to do with divisions of principle over the European Union of the future and with arguments and beliefs for and against a federal Europe or a Europe of nations. Clearly, common rules require a supreme authority to interpret them and it is clearly in the interests of the European Union in certain areas to have a strong, effective and independent court to ensure the even application of Community laws and to prevent the abuse of power by Community institutions. For example, it would be impossible in British law to have a single market in the European Union without trading taking place on a fair basis and without the nations being subject to the same obligations and specifications, including open access to markets and freedom from state subsidy, if there were no means of enforcing the rules.

It is for that reason that the European Court should remain a guarantor of the single market. In the UK, we bind ourselves by the rule of law and our treaty obligations and we are entitled to expect that others will do likewise. That is why we in this country go to the European Court often with persistence and why we win most of our cases when we do so. We would have no redress against claims of unfair trading, breach of treaty obligations and so forth if the status of the European Court of Justice were diminished.

There were important reasons why the European Court of Justice was set up in 1952 and I do not need to rehearse for your Lordships the importance of the Court. My concern tonight with the Bill and the treaty is that the European Court of Justice should remain within the remit given to it by member states and not exceed it. There is increasing concern that the ECJ's interpretation of laws sometimes seems to go beyond what the participating governments intended in framing those laws, that the ECJ has on occasion exceeded its

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competence and has started to adopt its own political agenda. In recent years, there have been judgments which have given cause--

Lord Lester of Herne Hill: I am sorry to interrupt and I am grateful to the noble Lord for giving way. Can he quote a single example so that the Committee knows to what he is referring? The IGC Select Committee examined all the examples that were given and found that not one justified that kind of criticism of the Court. Is there a particular judgment to which the noble Lord would wish to draw the attention of the Committee where in his view the court exceeded its jurisdiction?

Lord Moynihan: The noble Lord will be delighted to learn that I am about to turn to specific examples for his consideration in this context. Suffice it to say that even my right honourable friend Kenneth Clarke is very much of the view that the court's judgment is often rendered unpredictable because it is usually required to interpret treaties, regulations and directives which have been carelessly drafted and to a large extent--and that is partly in reply to the noble Lord's intervention--my right honourable friend sees that is the cause of the politicisation in some of its determinations.

In order to try to satisfy the noble Lord on this subject, perhaps I may give the example of the fishing quota. Surely it is wrong that there should be fishing quotas designed to guarantee a reasonable return for local fishing communities while at the same time there are treaty provisions on non-discrimination which render such quotas unenforceable. Surely, to give another example, it is wrong that the health and safety policies are often so loosely drafted that they can permit the drafting of social policies by the back door, evading the unanimity requirement. That was the point made by my right honourable friend Kenneth Clarke.

Perhaps I may go into detail on the example of the fishing quota dispute. Recently, the European Court of Justice ruled that Britain could not reserve its fishing quota for its own fishermen. When Britain gave up its exclusive right to fish its waters, it did so in return for a guaranteed quota of the total stocks. For that remaining quota to be fished by foreign vessels flying British flags of convenience undermines the basis of the fishing agreement. But the court ruled--and the court ruling is important in this context--that the Merchant Shipping Act, which was designed to return to the intention of the treaties by requiring British registered vessels to be largely British, was illegal. Do the Government believe that such decisions were wrong? If so, why did they not press for the reform--and this is my central point on the amendment--of the institution which gave rise to them?

It was for those reasons that the previous government placed such emphasis on the reform of the workings of the Court. And it was for those reasons that the previous government tabled a package of measures aimed at improving its effectiveness and curtailing any possibility of political bias at the inter-governmental negotiations. Without such reforms to improve its workings, disproportionate judgments threaten to bring the Court's reputation into disrepute.

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From these Benches, we wanted to strengthen the ability of the Court to limit the retrospective nature of its judgments. For example, constant challenges have been made to the European Court about the scope and incidence of our VAT, because whereas in this country we have imposed limits on how far back in time such claims may extend, in the ECJ judgments might be awarded undoing the imposition of VAT all the way back to the introduction of VAT. Clearly, several countries risk billions of pounds of damages. I would welcome the Minister's view on the assertion of the former Chancellor that, based on his expert knowledge of ECOFIN, the finance ministers were enthusiastic about limiting the scope of the Court's judgments. I have quoted a classic example of that.

We also sought to introduce a principle that a member state should be liable for compensation only in cases of serious and manifest breaches of its obligations. We wanted national time limits to be respected when people brought actions before the European Court. We wanted an internal appeals procedure. We wanted streamlined procedures for the rapid amendment of EC legislation which has been interpreted in a way which was never intended by the Council. And we wanted an accelerated procedure for time sensitive cases.

Those reforms cannot and should not be pigeonholed into Eurosceptic or Europhile boxes. This was not an attempt to reduce the legitimate authority of the European institution. Instead, it was an extremely constructive approach to improving the functioning of that same institution and to ensuring that it avoids disproportionate judgments which threaten to bring its reputation into disrepute. I hope that the Committee will agree that they were comprehensive and sensible proposals which would have streamlined the court and eliminated many of its most glaring flaws without affecting its position as supreme guarantor of the treaties.

That constructive approach was totally abandoned by the Government who signed a treaty which has done much to extend the remit of the court and nothing to reform it. I ask the Minister why the Government did nothing to reform the European Court of Justice at the Amsterdam summit.

Instead, the Government abandoned the previous government's constructive proposals to improve the workings of the court and agreed to an extension of its remit into the third pillar, undermining the intergovernmental pillar system. Does the Minister believe that there is a case for the reform of the European Court, including limiting the retrospective nature of judgments? If the Government believe that there is a case for such a reform, why was nothing done?

In Committee in another place the Minister apparently gave a reason when he said:

    "I assure the Committee that there was no question of our European partners agreeing to the proposals made by the previous government to limit the retrospective effects of the court's jurisdiction".--[Official Report, Commons, 2/12/97; col. 227.]

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