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Baroness Miller of Hendon: I did not rise to my feet before the noble Lord, Lord Wedderburn, replied because we had no exception to anything which the noble Lord, Lord McIntosh, had said on the matter. It is an extraordinarily long list of amendments. I shall only rise to my feet when I have something to say other than at this stage to say that since my noble friend asked for clarification, I ask the noble Lord, Lord Wedderburn, to clarify what he meant by "them"? I presume he meant Members of the Committee opposite. The noble Lord does not have to comment; I merely wanted to say that.

Lord Wedderburn of Charlton: I have not spoken yet.

Baroness Miller of Hendon: I beg the noble Lord's pardon. I meant the noble Lord, Lord McCarthy.

On Question, amendment agreed to.

Lord Wedderburn of Charlton moved Amendment No. 3:

Page 17, line 29, at end insert--
("(8) References to a breach of anything made legally binding on a party by any provision of this Part refer to liability for breach of

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contract (with such limitations as to remedies as are set out) and no other breach of duty or liability is thereby created, whether in the law of tort or otherwise.")

The noble Lord said: In moving this amendment I shall speak also to Amendment No. 58. As in the case of a number of amendments in the name of myself, my noble friend Lady Turner and the noble Lord, Lord McCarthy--just to make clear who is who--this is an amendment which some have described as "legalistic". Of course it is legalistic in the sense that we are making law. It is a legal point in substance. It is very much along the lines of what I take to be the Government's policy in introducing a schedule in this Bill making recognition of collective bargaining in certain circumstances obligatory. That is why I understood that the only remedy offered to one of the bargaining partners for a breach of a legally binding contract, method or agreement--all three are in the schedule--is a very limited one based on the old equitable remedy of specific performance. There must be more to be said about the schedule on that matter since plainly the courts will look for guidance to the legislature on how that old remedy is to be used for new circumstances. That must come later.

Amendments Nos. 3 and 58 will need extension if they are taken on board by the Government since at the moment they apply only to Part I of the schedule. It is easier to do it this way. Both amendments suggest that further limitations on litigation may be needed in the light of judicial developments, of rather uncertain ambit, in the civil law generally and in particular as regards the law of tort. As the Bill stands those developments have possible ramifications as regards recognition and collective bargaining where the CAC specifies that that should occur.

There are moments in the gradual development of labour law at court level which must be looked at carefully in new legislation. A classic moment of this kind occurred when Sir Charles Dilke, on 3rd August 1906, saw that the trade disputes Bill of that year did not cover the liability which had come about in the courts for inducing a breach of employment contracts after the case of Lumley v. Gye of 1853. He persuaded the House to adopt it. He did not need to make a formal speech. As Lord Robert Cecil said, he was much too old a parliamentary hand to do that. Dilke pretty well persuaded the House, except for the last-ditchers like Lord Robert Cecil, to adopt a measure of protection in trade disputes without which the entire structure would have fallen like a pack of cards.

This is a similar situation although, unhappily, it lacks Sir Charles Dilke to deal with it. The uncertain extensions in the liability in tort began in the 1960s when a breach of contract came to be regarded as an unlawful means or an unlawful act. Therefore, if one breaks a contract with X knowing that damage is going to occur to Y, that may be actionable by Y. That is a very important proposition because the schedule of the Bill says that only one of the two bargaining partners can bring the action for specific performance of the agreement put in place by the CAC. If that were not so and a third party could sue, what would be the point of limiting the remedy for the first two parties?

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I should substantiate the point. Gradually the view that a breach of contract, inducing it or using a breach of contract of any kind in order to establish liability to a third party--or even one of the two parties if it is induced by someone else--is now pretty clear. There are doubts about its precise formulation. I have to establish, so that the record is clear, that that point is established with a review of the authorities by Lord Justice Stuart-Smith and Dame Elizabeth Butler-Sloss in Associated British Ports v. The Transport and General Workers Union in 1989. In that case Lord Justice Butler-Sloss said that the case of Torquay Hotel Co. Ltd. v. Cousins, 1969, established that a breach of contract which had effectively no remedies left after the operation of a force majeure clause, even though the other party could not sue for damages, had no injunction or similar remedy, was a breach of contract and therefore unlawful. As Lord Denning said on a number of occasions, to make use of it was to use an unlawful means.

I shall cite what Lord Justice Stuart-Smith said in what is sometimes called the "Dock Strike" case, which was Associated British Ports v. The Transport and General Workers Union. He said that in Torquay Hotel Co. Ltd. v. Cousins the remedy was not available in damages since force majeure was pleaded, but the existence of a breach of contract which might be repudiated was recognised.

I detect already a note in the debate that "This will not happen often" or "This is not what it is about". The legal provision is nearly always about the pathological situation and not about the common and normal situation. If one employer and one trade union gains recognition through the CAC one wants to know what happens if the employer or the union actually breaks the CAC-imposed agreement. We know that between the two parties that is a remedy of specific performance, although there may be difficulty in carrying it out. The third party may say, "When you took action in breach of the agreement you knew that it would damage me". For instance, a subsidiary of the employer would always be a standing object for such status. Perhaps an associated body of either party says, "You knew that damage would flow from a possible breach and therefore we can sue you. What is more, we can sue you not merely for specific performance"--that would be absurd; there would be no specific performance rights here because it would be a third party--"but for damages, an injunction and any other remedy that our lawyers can think of on the day".

Unless a barrier to the range of legal remedies in Schedule 1 is put in place there is a risk of many situations arising in which there is quite unnecessary litigation. At any rate, if there is to be litigation we should know what we are doing. I suggest that in principle a limit should be placed on legal action of this kind. Where the parties can sue each other for whatever is a limited liability or right third parties should not be allowed to extend legal proceedings on a different base of the law of tort just because a breach of contract is regarded as unlawful in the law generally.

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I put the point in a final and rather important way. In the course of the Bill we are learning to live with principles that are the opposite of those which have applied since 1969, or possibly before that in the literature. For a very long time the presumption has been that collective agreements are not legally binding at the collective level, to say nothing about their incorporation into individual employment contracts, because that is the way that they are made legally enforceable in Britain. But at the collective level for many decades they have not been regarded as legally enforceable agreements. That presumption is abandoned in the schedule. (I thought that the noble Baroness, Lady Miller of Hendon, wanted to interject. I am glad to see that she shakes her head vigorously.)

The presumption laid down in Ford Motor Company v. AUEW in 1969 that collective agreements are not enforceable between the parties is to be set aside in the relatively limited but nevertheless real territory of Schedule 1. If we change the basic legal rule we have an obligation to see how far we are going and to say, "Not that far because it will do great damage to the social fabric of collective bargaining between employers and trade unions".

If we do not impose a limitation it will be on our heads and not the responsibility of the courts, whom I have been known to criticise, because the fact that the principle goes beyond the normal rules of the law of tort will be there for all to see. It will be our fault if we do not stop at this point and say that we do not want a lot of litigation, especially by third parties, because it will ruin the entire scheme and that we may as well scrap Schedule 1 and go back to collective bargaining that is nothing more than voluntary and includes all the legal obligations that we can think of. I beg to move.

4 p.m.

Lord McIntosh of Haringey: I am sure that my noble friend and I are in agreement about the importance of ensuring that any procedure which is enforced in the way set out in the schedule should be as rare as possible. I am also sure that my noble friend and I are at one in wishing to ensure that any proposed enforcement procedure in this Bill should not be broadened by the courts in a way that is not intended. I hope I am right in my understanding that that is what lies behind my noble friend's amendment.

My noble friend raises historical parallels which I am certainly not qualified to match or cap. He does himself an injustice if he thinks that he is not the Sir Charles Dilke of the end of the 20th century. I believe that over many years he has enjoyed a reputation for finding defects in trade union and employment relations legislation and ensuring that, given the political will, they are put right. But I hope to persuade him in the first instance that he is right to say that the occasions on which these issues will arise will be relatively limited.

I accept that in the past the courts have been ingenious in finding new obstacles to trade union activity, but we do not believe that the Bill creates other potential liabilities, for example breach of a statutory duty. We believe it is completely clear that the imposed

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method for collective bargaining under paragraph 27--which is when the CAC comes in--is legally binding only between the parties. Indeed, sub-paragraph (4) makes clear that,

    "Any method specified under sub-paragraph (3) is to have effect as if it were contained in a legally enforceable contract made by the parties". Sub-paragraph (6) provides that,

    "Specific performance shall be the only remedy available". We have constructed this carefully to exclude any breach of statutory duty, for example.

Perhaps I may take the opportunity to clear up any misunderstanding about what the imposed method in paragraph 27 will involve. The model method which the Government intend to provide under paragraph 127 of the schedule will be purely procedural. It will specify the matters for collective bargaining, namely pay, hours and holidays, and when talks are to take place, who is to attend and what further steps are to be taken in the event of a failure to agree. In other words, it will be a typical basic procedure agreement. It will not require the parties to agree; it will not require arbitration if talks fail; it will not impose additional legal constraints on industrial action. That is an important point which my noble friend should consider when he suggests that there will be an extension into the courts.

The parties can, if they agree, vary the method imposed on them by the CAC to do all these things and more, if they wish, but the method will not impose them. We hope and believe that the method will be invoked only rarely. I know that my noble friend anticipated that; indeed, he said so. We believe that almost all employers and unions will prefer to reach a negotiated agreement on a bargaining procedure which offers far more flexibility.

My noble friend believes that the exception will arise where there is a pathological condition, as he put it. I am not sure whether he was referring to a pathological disagreement involving both employer and union or a pathological condition in one party alone. But we believe that the restrictions set out in paragraph 27 mean that the kind of extension that he anticipates and fears is unlikely to take place.

The legal advice that I have received is that these amendments are unnecessary. However, I recognise his expertise in this area. I assure him that the Government will study very carefully what he has said today and reflect further on whether a provision on these lines is desirable. We shall be very happy to talk to him about it between now and Report stage. On that basis, I hope that he will feel able to withdraw the amendment.

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