HL Deb 13 February 1969 vol 299 cc581-90

3.30 p.m.

THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD CHALFONT)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Chalfont.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 1 [Extension of power to deal with property of Baltic States and ceded territories]:

VISCOUNT DILHORNE moved Amendment No. 1: Page 2, line 1, leave out ("or ceded territory").

The noble Viscount said: In the absence of my noble friend Lord Lansdowne, as I think this Committee stage has come on a little earlier than was expected, I beg to move the Amendment standing in his name and mine. This Amendment raises the question of whether the powers given to the Board of Trade and to the Custodian, about which I shall have something to say, should extend to the disposal or other dealing with "former property of" a ceded territory. I ask your Lordships to note that the words in the Bill are "former property" of such a territory, and the words "former property" are defined in Clause 3 as meaning: any property which on any of the relevant dates belonged to or was held or managed on behalf of an individual resident or carrying on business in any ceded territory; any property which, within a specified period, belonged to a body corporate or unincorporate; and also any gold, securities, or credit balance at a bank with respect to which a direction was given under the Defence (Finance) Regulations.

We are thus dealing with what was—and I do not think there can be any dispute about this—the property of individuals and bodies corporate and unincorporate, not with the property belonging to any State. This was, I think, frankly admitted by the Under-Secretary in another place when he spoke on November 19. So this clause purports to deal with the former property of these persons, and the first question to which I hope to get a clear and specific answer—and I am very glad to see that the noble and learned Lord the Lord Chancellor is here—is: when did it cease to be their property?

Your Lordships will note that there is a discrepancy between the Explanatory Memorandum and subsection (1). The Explanatory Memorandum says: This Bill makes provision…for the disposal of…property…of persons formerly resident or carrying on business in one of the Baltic States or a ceded territory. It does not say, "for the disposal of property which was formerly the property of persons" so resident, and so on, but specifically treats the property as still belonging to those persons. Indeed, the Government appear to recognise that this is the position, for I put down a Question for Written Answer asking Her Majesty's Government: The appropriate value of the property of persons formerly resident or carrying on business in these territories now vested in the Custodian of Enemy Property".—[OFFICIAL REPORT, 11 /2/69, col. 411.] Your Lordships will notice that the language of that Question was in accordance with that of the Explanatory Memorandum.

In his Written Answer the noble Lord, Lord Chalfont, did not say that such persons no longer had any such property; he did not say that their "former property" was worth so much; he apparently accepted that the property in the hands of the Custodian was still their property. Really, before we proceed much further with this Bill I suggest that we ought to be told in clear terms whether those persons have any rights at all to what was admittedly their property originally. If they still have some rights, then is the effect of the Bill to deprive them of those rights, and so is the Bill itself confiscatory? If, on the other hand, they have ceased to have any rights in respect of these assets, as the language of the Bill itself suggests, we ought to be told how and in what manner that came about. Of course, while this Amendment deals only with the property of people who were resident in the ceded territories, the same question arises with regard to the Baltic assets.

I assume that the assets in relation to the residents of the ceded territories, which the noble Lord, Lord Chalfont, stated amounted to about £35,000, reached the hands of the Custodian of Enemy Property as a result of an Order under the Trading with the Enemy Act 1939. Section 7 of that Act gave the Board of Trade power: With a view to preventing payment of money to enemies and of preserving enemy property in contemplation of arrangements to be made at the conclusion of peace… to appoint Custodians and by Order to require the payment of money to them, and power to vest in the Custodian any such enemy property as might be prescribed. It also gave the Board of Trade power by Order to confer…such rights, powers, duties and liabilities as may be prescribed as respects…property…so vested,… But I can find nothing in that Act which explicitly deprives, or gives power to deprive, the owners of such property of all their rights. It would seem that vesting in the Custodian operated merely to suspend until the termination of the war what were their clear rights.

Under that Act, the Trading with the Enemy (Custodian) Order 1939 was made, and under that Order certain powers were given to the Custodian with regard to the property which became vested in him. Paragraph 2(iii) of the Order says that a vesting Order made by the Board of Trade: shall be of the like purport and effect as a vesting order…made by the High Court under the Trustee Act 1925… But there is nothing explicit in that Order, so far as I can see, to deprive the owners of the property of all their rights with regard to it. Their right to have their property under their control is clearly suspended; the property has to go to the Custodian, and he has to hold it subject to any directions from the Board of Trade. Paragraph 3(i) of the Order says that, subject to such directions, he shall hold the property vested in him until the termination of the war, and shall thereafter deal with the same in such manner as the Board of Trade shall direct".

Paragraph 3(ii) is not unimportant. It gives the Custodian power, under directions of the Board of Trade, to transfer property vested in him to or for the benefit of the person who would have been entitled thereto but for the operation of the Act or any Order… The noble Lord, Lord Brown, has told us, in answer to a Question, that assets have been returned to technical enemies of this country since the termination of the war (and of course, in considering this Bill, and the assets which are the subject of this Bill, we are considering the assets of those who were technical enemies of this country), but he was unable to give a single instance where this Government had taken hold of those technical assets, had not endeavoured to return them to their former owners and had distributed them to meet British claims. The noble Lord, Lord Brown—I asked him only a few moments ago, as Members of the Committee will recollect—was unable to give a single instance of that; but that is what this Bill proposes to do.

I mention that Order in some detail because it appears to me that under this Order the Board of Trade have the power to direct the Custodian to dispose of the property vested in him, and indeed to return it to those who would have been entitled to it but for the operation of the Act. I put this question. If those are the existing powers, why then do we have Clause 1(1) in this Bill at all? If, as would appear, the Board of Trade under the Order can direct the Custodian to dispose of property vested in him to any person, why is it necessary to have this legislation with this provision? I must confess that I do not understand it. It is true to say that there is a positive jungle of Orders made under the Act of 1939, and I may have missed something—I should not be in the least surprised if that were so. But as I see it, in the light of such investigations as I have been able to make, all this subsection seeks to do in relation to property vested in the Custodian which belongs or belonged to individuals or bodies corporate or unincorporate, resident or carrying on business in the ceded territories, can be done under existing powers.

I therefore suspect that the real object of this Part of the Bill is to get Parliament to agree to the permanent extinction of the rights of the owners of this property and to agree to its being used to give to other persons; or, alternatively, that the Foreign Office are uncertain as to the position. There is not one word that I can see in the Act of 1939 or the Orders made under it to which I have referred which permanently extinguishes the rights of the owners. The Foreign Office and the Government may feel that if this Bill is enacted in its present form confiscatory though its effect may be, they are safe from criticism.

As I have said, Paragraph 3(2) of the Order obviously contemplates that property vested in the Custodian may be returned to the persons who would have been entitled to it but for the vesting Order. Here I want to ask this question. Have the Board of Trade given any directions in relation to these assets under the Order? If so, could we see them or be told what they are? The assets that we are dealing with in this particular Amendment are valued at only £35,000; but has any consideration been given to the return of any part of that sum to those technical enemies who would have been entitled to it but for the vesting in the Custodian? May there not be persons who were not in fact enemies of this country and who were treated as enemies only by virtue of the definition in the Act of 1939, as a result of these territories being overrun by the Germans, and who would now be in a position to establish their entitlement to some part of that £35,000?

If that is the case—and I shall be interested to know whether it has been found that it is not—if they can establish entitlement to any part of the £35,000, should not their claims be met first, before any of the money is used to meet in some part the claims of those who lost as a result of expropriation by the Soviet Union? I ask this question: ought not an opportunity to be given to persons to come forward to claim the property which formerly at least belonged to them? Perhaps such an opportunity has been given. If it has, nothing has been said about it in the debate on the Second Reading in this House or in the debates in another place.

If within a stipulated time no claims are preferred, then I myself can see no objection to the distribution of the unclaimed assets, or the assets to which no claim is established, to meet British creditors, British persons who have suffered as a result of Soviet expropriation. It may be that there will be no claims; that there are no persons or heirs who can prove entitlement to any of the assets. But surely, before disposing of them to meet claims arising out of the actions of the U.S.S.R., the original owners or their heirs should be given the opportunity of claiming. This Amendment deals only with the property of former residents and persons carrying on business in the ceded territories, but what I have said seems to me to apply, with at least equal force, in relation to the Baltic assets.

The next question that I should like to raise is about the distribution of the unclaimed assets. I myself would not object to the unclaimed part of the £35,000 being used to meet claims by those who lost in consequence of Soviet action in the ceded territories; but I cannot see that it is equitable or fair that those who lost on account of Soviet action in the Baltic States should have their prospects of compensation diminished because those who had chosen to invest in other countries under different conditions had also lost money. I have put a number of questions to the noble Lord. I hope that he or the noble and learned Lord the Lord Chancellor will be able to give me clear and satisfactory answers to them. I beg to move.

3.47 p.m.

LORD CHALFONT

The noble and learned Viscount referred to the "jungle" of Orders. I have spent a great deal of my time in the jungle and I must confess that I should infinitely prefer to be there than to argue points of law with the noble and learned Viscount. Indeed, I shall make no attempt to do so. The points of law that he has mentioned will in due course be dealt with by my noble and learned friend the Lord Chancellor, either in the debate on this particular Amendment or at some later stage. That will be for the noble and learned Viscount to influence to a very large extent. What I should like to do is to deal with the specific point of this Amendment, which is to leave out the words "or ceded territory". As the noble and learned Viscount has said, that is really the effect of this particular Amendment. I think he will agree that there are further Amendments on the Marshalled List which are consequential upon it. They are Amendments Nos. 3, 5, 7, 8, 12, 13 and 14: and if the noble and learned Viscount agrees I propose to suggest that the arguments that I shall deploy in answering the moving of this Amendment should apply to those as well.

VISCOUNT DILHORNE

May I interrupt the noble Lord? I agree that the other Amendments are entirely consequential upon the fate of this one. If this Amendment is carried I apprehend that the Government will accept all the other consequential Amendments; if it is not carried or not accepted then those other Amendments will fall.

LORD CHALFONT

I am indebted to the noble and learned Viscount for that very clear exposition of the situation. This Amendment, then, would have the effect, as the noble and learned Viscount has said, of omitting the assets of persons formerly resident or carrying on business in the ceded territories from the assets to be distributed. I assume that the intention of the Amendment is also that the Order in Council to be made under Clause 2(2) of this Bill should, in consequence, be drawn (if the Bill becomes law) correspondingly so as to exclude claims in respect of the ceded territories.

I should like to address myself simply to this suggestion that the ceded territories should be left out in the distribution of these assets. I must confess that I cannot see any justification at all for the departure from the principle of a common pool which the Government have proposed, throughout this procedure, to follow. The assets, as the noble and learned Viscount has said, have separate territorial origins, but those origins are not now represented by separate Sovereign States. We recognise the Soviet Government as the de facto Government of the former Baltic States and the de jure Government of all the other territories with which we are concerned.

As I explained on the Second Reading of this Bill, we agreed in 1959 to negotiate with the Soviet Union simultaneously on all the claims, together with the Soviet Union's counter-claims on the Soviet assets held in this country, whatever their origin. The Registration Order of 1959 provided for the registration of claims in respect of the ceded territories, and registered ceded territories claims were formally presented to the Soviet Government. The settlement that we reached with the Soviet Union was, as I said on Second Reading, a global one. The essence of it was that each side agreed not to pursue its claims against the other, although neither side recognised the title of the other to any of the assets which it held. The important point I have to make to the Committee is that any agreement on a narrower territorial basis would have been unobtainable.

Her Majesty's Government have now to decide what is the best method of compensating all the different categories of claimants out of the assets which the Soviet Union no longer claims. It is the actions by the Soviet Government, actions not confined to the Baltic States, that we are seeking to redress. I cannot believe that the noble and learned Viscount, Lord Dilhorne, is suggesting that there should be a separate fund for each and every territory. If he is, there is equally, it seems to me, no justification for lumping in all the three Baltic States together. But I cannot really believe that the noble and learned Viscount, or any noble Lord, would suggest that we should have a separate pool for each of the three of them.

The Government's view is that these Amendments are defective, since, as at present drafted, their effect is simply to exclude the ceded territories from the Bill without making any alternative provision for compensation of the ceded territories' claimants. These people registered their claims from 1959 onwards, knowing that they would then be put to the Soviet side in the course of the negotiations—

VISCOUNT DILHORNE

Before the noble Lord gets on to that matter, I wonder whether he will deal with one other thing. He referred to the ceded territories and said that we should have to distinguish between the Baltic States if we treated every fund separately. We recognise that territories have been ceded to Russia, do we not? Do we not recognise that in relation to the ceded territories the Russians are the de jure Government, and not de facto?

LORD CHALFONT

As I said earlier, we recognise the Soviet Union as the de jure Government in the case of the ceded territories and the de facto Government in the case of the Baltic States. As I have suggested, we think that this Amendment is defective because if it were accepted the people from the ceded territories would not be included in the distribution, although they registered their claims from 1959 onwards knowing that they would then be put to the Soviet side in the negotiations that we were having; and expecting, naturally, that they would benefit from any settlement reached as a result of the negotiations. This means that this Amendment, if accepted, would leave these British subjects with no immediate prospect of any compensation whatsoever, and I cannot believe that that is what noble Lords wish to achieve.

It has also been suggested that we ought to give an opportunity for people to come forward and claim their assets within a stipulated time; I think that that was the drift of one of the suggestions made by the noble and learned Viscount. The Soviet Union has put forward such claims as it considered it had in respect of Soviet nationals and has now, as part of the settlement which I mentioned on Second Reading, the settlement which we reached in February, 1967, undertaken not to pursue those claims against the United Kingdom. But individuals who apply for the release of property would have the benefit of this Bill. In fact, they would benefit from Clause 1(3)(b) and (c), and since the Agreement of January 5, 1968, applications for releases have been met under existing powers in all cases that were considered to merit it. I realise that in this reply I have not dealt with the legal points that the noble and learned Viscount raised. I think it would be wrong of me to attempt to do so. I have merely put to the Committee why I believe that this particular Amendment and those that flow from it are defective, and I must ask the Committee to reject the Amendment.

LORD BESWICK

For the purpose of hearing the Statement on bacon I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.