§ Any contract which has been entered into by any British person, firm, company, or corporation with an enemy may be determined or suspended by a written order by a Secretary of State or the Board of Trade, which order a Secretary of State or the Board of Trade are hereby empowered to make, so far as any act, thing, or obligation remains to be done or performed under such contract, and any contract for the supply of goods imported from any State for the time being at war with His Majesty, or for goods which are 1233 manufactured or partly manufactured in any such State may also be determined or suspended in like manner: Provided that such determination or suspension under this Section shall not determine or suspend any act or thing which has been performed or done under such contract prior to the passing of this Act.
§ Clause brought up, and read the first time.
§ Mr. MORTONI beg to move, "That the Clause be read a second time."
We want to get rid of a real difficulty in dealing with running contracts made for a series of years. Most of our contracts for paving in the City of London are running contracts. We make contracts for perhaps fifteen years at so much a square yard over the whole street. We have one in particular running at the present moment under which we owe the company £700 or £800, and we have contracts with that company for seven years' ahead, amounting, it is estimated, to about £1,400 a year. As we understand the matter, we cannot pay them any money until the end of the War. The question is, how are we to get the work done? The streets in the City of London are the best paved in the world. If we cannot pay the contractor or get rid of him, how are we to get our streets repaired? On behalf of the corporation, I propose a Clause which, I think, is very moderate, and will protect anybody who might otherwise be damaged: I know that there are other contracts even more serious than ours. We have no feeling whatever against the particular company involved. We have every desire to pay our debts, and we have an equal desire to make the streets safe and to keep them in good order. There is no other way of doing it than that we should be able to determine the contract and employ somebody who is not an enemy company. I am not bound by the particular words on the Paper. If better words can be suggested I shall be glad to accept them. Under my proposal I do not think that the contractor will be hurt, because he cannot get the money now, and it might be said that as long as the contract is running he is bound to do the work. Before this Bill becomes law I think the matter ought to be settled so that we know what to do.
Mr. RUTHERFORDWe all realise the difficulty in which the City Corporation 1234 finds itself in regard to its paving, there are all kinds of other contracts between German enemies and British subjects. There are, for instance, a number of Englishmen engaged in various capacities in German and Austrian undertakings. Some of them are actually on the spot, others are not. They have contracts for personal services of various descriptions, covering three, four, or more years to come. There are contracts for the sale of goods; in fact, there are contracts of all kinds and descriptions. Some of these Clauses contemplate the making of application to the Board of Trade, or to one of the Secretaries of State. In thousands of cases it is impracticable to go to any official at all. I have felt the very serious difficulty in connection with this matter ever since the original Act was passed, and I have made inquiries as to what has been done in Germany. According to my information, which is only second-hand, they have passed the necessary Proclamation or Act, the equivalent to which I have embodied in a Clause lower on the Paper, giving to every German subject the option of saying whether such contract should be cancelled or postponed until after the War without prejudice to the British subject's right to recover damages for non-fulfilment or delay. None of these contracts can be carried out at present, and everybody wants to know how they stand with regard to them. The Clause under discussion relates to only a very small portion of the subject, and involves considerable technical and departmental difficulties. I have no prejudice in favour of the words of my own Clause, but the idea there embodied is, I am informed, the exact counterpart of what the Germans have done to us in similar cases. I am sure that the Attorney-General has given this subject his very earnest consideration. I do not know what determination the Law Officers of the Crown have come to, because so far as I can see there is no new Clause or Amendment down in their name. I am not sure that I have worded my Amendment in the proper manner, but I do think that the proper way to dispose of the whole subject of these contracts is to give British subjects the right or option either to say that they must be carried out at the end of the War, or to be put a stop to now; the British subject not to be deprived of a claim for damages if he has got one.
§ Mr. BOOTHOn a point of Order. Are we to be free to discuss the Amendment of the hon. Member who has just spoken? We do not want two or three discussions upon it. If the hon. Member for Sutherlandshire sees his way to withdraw this Clause, and take the discussion upon the Amendment of the hon. Member for Liverpool, which is all that my hon. Friend wants to enable us to put the point more definitely, I think it would be convenient. I wish to raise the question of reinsurance treaties, and I much prefer to do it on the hon. Member's Clause than on the combined Clause.
§ The DEPUTY-CHAIRMANWe will take the question before the Committee on the present Clause, and I shall consider when we come to the other new Clause whether the discussion on this has covered it or not?
§ Sir J. SIMONOn a point of Order, and with great respect to you, may I say that we have already had this matter up this afternoon. The hon. and learned Member who sits below the Gangway had an Amendment which raised it, and I rather understood then that Mr. Whitley, gathering the general sense of the Committee, was disposed to suggest to my hon. Friend that one and only one discussion would suffice. I am sure that was your view.
§ The DEPUTY-CHAIRMANThat was in my mind.
§ Sir J. SIMONIt is nothing to me whether we have the Debate on one or the other Amendment; but it would be too much to have it over again in a different form.
§ The DEPUTY-CHAIRMANIf we take it here on this Amendment we cannot have it over again.
§ Mr. HUME-WILLIAMSI recognise, as I am sure everbody does, the very complex nature of the subject which is exercising a great number of traders in the City, who desire to know whether in fact existing contracts with Germans are put an end to by the War or are only suspended. There are those who think that the issue of the War ipso facto puts an end to a contract with the enemy. There are others who think that the rights of the parties to the contract are only suspended and consequently that at the termination of the War one may sue the other. The 1236 kind of case that is in my mind, and which makes it so essential that we should deal with this proposition now if we can, is a case brought before me the other day of a very large firm in England producing goods which require to be finished. They have a contract with a German firm to send all their output for treatment, and this contract is for a period of ten years. The English firm is sure that that contract is put an end to, or can be put an end to, at their option. They are prepared to carry out that treatment in England, and to spend very large sums in England upon the erection of the plant required. Thereby they will give a great deal of employment to English people both in the erection of the factory and in the ultimate treatment of the product. Very rightly, however, they want to be told that if they do that, that if they treat the contract as broken, and make these extensive arrangements to deal with their product themselves in the future, they will be doing the right thing. All I suggest to the House is that any contract for the future supply of goods to enemies which was in existence on 4th August or which may be entered into during the currency of the War is hereby declared to be null and void.
I put it in that somewhat drastic form because I think the commercial community wants to know plainly one way or the other whether such contracts are absolutely at an end. I confine it to contracts for the future supply of goods because it seems to me to be the simplest, though the most important, form of contract which is likely to be effected by the War. I think I ought to have added an option to the English contractor to either determine the contract or not as he pleases, because there may be contracts which the English contractor entered into which he would like to revise at the expiration of the War and does not want to cancel. I should therefore like a Clause to be inserted in the Act giving that option. I know it is a difficult subject and, as has been said several times in this House, we want to deal fairly even with an enemy's contract. In the meantime, the commercial community is, I know, very much disturbed. I have received several representations upon the matter, and know that the commercial community is very much disturbed as to what is the present position. I cannot support the proposed new Clause which is now before the House—because I do not 1237 think the Board of Trade is the proper authority to determine the matter—and because I am not sure I can go quite so far as the adoption of the German system advocated by the hon. Friend on my right. I should like, reposing complete trust in the Attorney-General—and the whole House has that complete confidence in the right hon. and learned Gentleman—to press him to see if he can—taking the crux of the various Amendments before the House—as far as possible to introduce into this Bill a Clause which will set at rest the doubt at the present time existing; and shall declare—because this is what people want—whether at option running contracts may be terminated.
§ Mr. BOOTHWhen the Attorney-General speaks I would like him, if he can, to give some pronouncement which will settle the difficulty in which Insurance companies find themselves who have reinsurance treaties. Those treaties operate in both ways. Sometimes they are treaties by which risks are given to German companies, and sometimes they are treaties by which they accept risks from German companies.
§ Mr. MORTONI am not wedded to my own Clause, and if the Attorney-General or anybody else can see a better way out of this difficulty, I shall only be too pleased to withdraw my Amendment.
§ Sir J. SIMONI, indeed, wish I could do all those things which hon. Members are so kind as to say they will be much gratified if I will do. Let us remember what is the dimension of the problem which I have been asked to solve. Our exports to Germany run into something like one hundred millions in times of peace. Trade both ways between the two countries in times of peace is considerable. Even if we confine ourselves to commercial contracts, though none of these Amendments seem to do so—for there are contracts of marriage and others—what is involved in dealing with this matter? In any of those ways, or anything like them, it is dealing with a stupendous commercial proposition. Of course, that is no reason why it should not be dealt with.
§ Sir J. SIMONIt is no reason, but very much the contrary. But the 1238 complication of this problem is such that it really almost baffles the most active imagination. I have noticed very much in all those suggestions—and I have had a great number of them, there are a number of them on the Paper—that they have this common feature, and really it is only an illustration of the defect of the human mind. It does not matter who it is who makes a suggestion in order to deal with this subject; he has always a Clause that will suit the case that he has in mind. My hon. Friend below the Gangway comes from Scotland and he talks about the City of London.
§ Mr. MORTONWhy not?
§ Sir J. SIMONQuite right, of course, but he is speaking of a case that affects the City of London.
§ Mr. MORTONMy case affects the whole of the big towns and cities of the United Kingdom.
§ Sir J. SIMONI wonder whether my hon. Friend was speaking of contracts on the Liverpool Cotton Exchange or the London Stock Exchange and contracts of insurance and reinsurance. There are all sorts of cases. I am not complaining. I am pointing out that this is a terrific business and it is very difficult for anybody, I do not care how active and wide his imagination might be, even to devise a form of words which would apply. There is this second thing I want to point out. I confess for my part I should conceive there was a rooted objection to enacting that settled contracts made between two parties should in case of the outbreak of war be voidable at the option of one of the parties. That would be reducing the commercial law of this country to the level of the most disreputable republic in South America. I have heard what the hon. Gentleman opposite said, but his information, as he told us, is not first-hand, and I would be grateful if he would show me the original of that about which he says he has information. I have got to deal with information from the Board of Trade which is quite accurate, and I am bound to say that the information we have does not go to show that the German Government is the tremendous menace in this and other directions in our trade contracts as sometimes supposed. If they have done what is suggested it was very wrong and very foolish.
1239 Nothing could destroy the reputation of a country in its trade so rapidly as jerrymandering commercial contracts to which its subjects are parties. Therefore whatever we do I do not think I could contemplate a change which says that contracts which may be binding on two sides are in the case of something that has happened, to be voidable at the option of one side. It means that an Englishman who thought he had got a good bargain would stick to it, and if he had got a bad bargain he would repudiate it, and that a man who, because of the War, finds the price he is going to pay is bigger than the price he likes to pay should be allowed to repudiate it, but if because of the War the price he is going to pay is lower than the price now he would stick to it. That is not a doctrine to which anybody concerned in our commercial interests would ever subscribe.
Putting that on one side, and I understand the suggestion was only thrown out for the purpose of consideration, you are faced with this: You cannot deal with this matter by giving people an option to declare whether they are going to be bound by their contracts or not. You are dealing with problems of almost infinite complexity and variation. It would not be of any service to anybody if I were to express my own view upon the subject, and of course it would not bind anybody. But just to explain my own difficulty I would say this: I think most persons who are qualified to form an opinion on this matter would say, that there are some contracts which had not been completed before the War broke out which properly are voided and brought to an end by the War. I think most persons would say there are other contracts about which it would be very rash to affirm that they were absolutely destroyed because the War broke out. There may be, and I have no doubt there are contracts, the performance of which during the War, are entirely suspended. But it would be a very strong proposition to say that every contract, as a matter of fact, is brought to a summary conclusion because of the War.
Hon. Members may say that is a most unsatisfactory state of affairs. Here is a situation in which some contracts fall into one class, and others into another class, and nobody seems able to draw the line. The line would be drawn under other circumstances by a judicial 1240 authority, and I do not know any other way in which such a line could be drawn. There is only one alternative and that is that it should appear on investigation, which it would be a very laborious and extremely difficult to conduct, that there actually is a consensus of opinion that the true rule—and when I say the true rule I mean a rule that commends itself to commercial persons and those acquainted with our legal institutions—that the true rule is so-an-so, and if you were able as a result of some consideration and consultation to say whether it is pretty clear that this formula or proposition is right and commends itself to the good sense of our people and does not confer any illegitimate advantage on one man as against the other, and if what you are doing is simply to enact that which has been found upon investigation by common consent to be the true view, then not only would you be doing no harm but you would be doing immense good. I am bound to say I am not very hopeful of arriving at any such conclusion, even in consultation with those who are best able to advise. I think what you would find, if you made such investigation, is that the only rule you could lay down would be a rule so hedged round with exceptions or, at any rate, expressed in such vague terms and raising questions as to whether the outbreak of the War went to the root of the contract, which is only solving one question by asking another. I doubt whether, at the end, the commercial interests of the country would consider they were getting anything worth having. It is perfectly possible to try.
I have not been indolent, and I thought it my duty, at the very beginning of the War, to suggest to some distinguished lawyers on the other side of the House, that this might be a good thing to do, and I have consulted many times those best qualified to speak. I am perfectly clear it cannot be done by this new Clause or any other new Clause in this Bill. It is not due to the Attorney-General or the Government, but because of the nature of things. If you have a country that will engage in such variety of contracts, and contracts with Germans in time of peace, and thereby make great profits for themselves and other people, you must accept this difficulty. My hon. Friend behind me referred to the case of insurance and reinsurance. I know the case very well indeed. I should be very sorry I to affirm that I am certain of the answer. 1241 There again I believe it would be possible to have useful conference and discussion, but unless I was satisfied there was a simple rule to be laid down by an Act, which was not only fair and right but a thing which those concerned universally accepted and regarded as what they wished, I do not see what the good would be. The real truth is that there are some people at this moment in this country who believe that their contract will not be terminated at the outbreak of War, and there are others who think the opposite; therefore, if you have to have a rule at all, it must be one that will do justice between those two sets of people. It may be that a man has purchased from Germany and arranged a contract for future deliveries at a certain price, and on the face of that he may have resold to another British subject at a big profit; and it may be that this second person has sold to a third person. How are you going to deal with that case? Is one party to have the opportunity of declaring the contract off, while the other must carry it out? I know that I shall be reproached with not taking a bold course, but I am sorry to say that I have not found the answer to this problem, and I really doubt whether it is to be found. What I do say is that it is quite impossible to legislate upon this problem by putting new Clauses into this Bill.
I have this suggestion to make: If I gather, as the result of a consultation with hon. Members in this House and citizens outside, that it is really desirable to make a trial, I would endeavour to get the help of a limited number of those who would be able to help. Most probably I should get the help of one or two hon. Members of this House, and one or two of great commercial experience and persons capable of accuracy of commercial expression, because it is no good unless you are in a position to say what you want definitely both for yourselves and everybody else. Some of them might be persons of judicial experience, and I would like to see in this way whether it is possible to arrive at any concensus of opinion in regard to the law of contract that applies to these cases. But I warn the Committee, although I shall do my best, that I believe you will be left with a formula which will involve a series of new questions. That is not due to want of enterprise, or want of imagination on the part of this or that man, but it is due to the fact that from the very nature of the case 1242 we are faced with a difficulty which is greatly inconvenient and not well understood by the commercial community and many others, but it is a difficulty which we have done our best to meet on some other lines by the moratorium in the first instance, by the advance of Government credit and assistance embodied in the War Obligations Bill, which may have to be met in other ways. For that reason I am sorry to have to say that I cannot accept this Clause or any Clause which I have yet seen to deal with this matter. I doubt whether the whole topic of this Clause is within the ambit of the Bill. This measure deals with trading with the enemy, and what that has to do with the common law of England upon contracts at the outbreak of war I have difficulty in seeing. I agree that it is a proper discussion to raise, but I regret to have to confess that up to the present I have no solution to offer. If it is desired, I shall try and get further information in the way I have suggested, and I have the authority of the Prime Minister when I say that he would approve of such an attempt being made if it is really desired. Whether it will give us any real assistance or not I am very doubtful.
§ Mr. HUME-WILLIAMSWould you bring in a Bill?
§ Sir J. SIMONYes, if we could agree.
§ Mr. BOOTHWhether the suggestion which has been made will solve all the difficulties or not, at any rate I believe it would solve very quickly the question of reinsurance treaties. I think that could be settled in a few hours, and I do not think it would require much expert knowledge. I think those with a judicial mind could very soon come to a decision. I am very hopeful that even if the larger question was not solved that this question of reinsurance, and perhaps some other very important matters, might be successfully treated. The question of the reinsurance of contracts is a matter of urgency, and cannot be put right at the termination of the War like some other contracts. What we are anxious about is not so much a favourable decision as to have some decision. Suppose a company reinsured half its risk upon hulls with a German company; suppose it had an insurance of £10,000 risk with the White Star Company and £10,000 with a German company when the War broke out, does that contract run 1243 on or does it not? That is what the London company wishes to know. In a certain sense it is not material whether it does or does not, because if the contract terminated when the War broke out an arrangement would be made with another company. At present the English company does not know whether it will have to pay both companies for the same risk, and therefore I suggest that it is highly important that there should be some decision in this matter.
The Attorney-General challenged any hon. Member of the House to make a suggestion that offered something like a solution, and I think I can make one. I suggest that where any reinsurance contracts were in existence upon the outbreak of war they should be treated as if both companies had come into voluntary liquidation. There would have to be a settling up of accounts, and the contract would not have to go on beyond a certain date, and a strict account would have to be kept. That seems to me fair on both sides. I should be sorry to suggest a solution of the difficulty of English companies which would be unfair to German companies, and I have in mind contracts made both ways. It does seem to me that if both companies went into voluntary liquidation and made up their accounts to that date, they could leave things in suspense until the Government determined how the money should be appropriated and in the meantime, free the companies on both sides. They must feel they want to be free in order to carry out their business. I therefore suggest that it is important, not merely to consider something which will suit a particular company, but something which will be fair to insurance companies of both countries, and I think the suggestion which I make is equitable. I am quite sure that a short conference of the description outlined by the Attorney-General, if they commenced at this part of their labours, would do some practical good in the course of a few hours, which would be of very great service to the insurance community.
Mr. DENNISSOne thing is perfectly clear, and that is that no satisfactory Clause can be put in this Bill dealing with this enormous question. It is also clear that this House has very little time for a general discussion of questions of only academic interest. I want to see this Bill 1244 go through, but there are other Bills on the Paper which have to be got through. What is the use, therefore, of wasting time on a question which it is only practical for lawyers of great ability to discuss, and in regard to which we can never arrive at any definite conclusion, and can never put anything into this Bill. If we had unlimited time the discussion would be exceedingly interesting, and might lead to some conclusion, such as the appointment of a Committee to consider whether it were advisable to have any legislation on the subject, and then, if they thought it was, to the bringing in of a Bill ad hoc for that purpose. It must be a separate Bill. If you limited it to commercial cases only, you would have to take every possible commercial case, get, sound legal opinions as to the position of the parties to such contracts, and either put these sound opinions in a series of Clauses in a Bill, or else try to draw some general principles or conclusions from them and put them into a Bill. They would be in general terms, and they might be less satisfying to the commercial men of this country than things are as they now stand.
The proper way to settle the question of what ought to be done with regard to insurance and re-insurance is not to ask this House to decide it by Act of Parliament, but to have the legal position of the parties decided by a judge of the High Court in the usual way. To try and get the Attorney-General to give a legal opinion upon the position of all the various contracts at the outbreak of the War is to try and do cheaply that which can be done in the usual course by going to a solicitor, getting counsel's opinion upon it, and, if necessary having test cases tried in a Court of Law. That is the proper way for people to have determined what is the effect of the War upon their contracts. I entirely agree with all the learned Attorney-General has said with regard to the different effects which the War may have upon contracts, and it ought to be sufficient for us to-night to know that it is impossible for us ever to put a Clause in this Bill, and I do appeal to Members—there are so many lawyers present, and it is such a fascinating subject—not to attempt to discuss the matter. If they do, there will not be time to carry the other Bills on the Paper, and even this Bill might be endangered, because the Prime Minister has told us that if the discussion on this Bill were too long it would have to be withdrawn.
Mr. RUTHERFORDWould not the simple course be for the hon. Member proposing this new Clause to withdraw it, having regard to the speech of the Attorney-General, and for other hon. Members who have similar new Clauses down not to move, so that the subject might drop.
§ 9.0 P.M.
§ Mr. MORTONI have no doubt I shall have to withdraw it, but I am exceedingly sorry that the Attorney-General did not see his way to help us in any way in dealing with this question. His position is very inconsistent. He comes to Parliament and asks us to say, "You shall not deal with the enemy," and, further, "You shall not pay him any money," and yet we cannot deal with contracts. Those who know anything about public life know that there are hundreds of ways in which contracts are declared null and void for less reason than a war with Germany and Austria. We want to see this question settled, and it is a most extraordinary thing if my proposal or the proposal of some other hon. Member is not the best way to do it, that the Government do not find out a way. I have no personal feeling whatever in the matter, and I know it refers to many other subjects besides the repair of the streets. I only mention that case because it illustrates the difficulty we are in. The Government say to us, "You shall not repair them any longer," and in the meantime they are asking us to darken all the streets, so that the Zeppelins shall not land here.
§ The DEPUTY-CHAIRMANThat does not seem relative to the Amendment. Does the hon. Member wish to withdraw it?
§ Mr. MORTONYes. I was just finishing my speech. The hon. Member opposite thinks that we should not take up time in discussing the Bill. I am sorry that he took up so much time. I have sat here quietly all the evening, and only intervened when I had Amendments on the Paper. I ask leave to withdraw, but I wish to express my deep regret that the Government have done nothing to assist us in this matter.
§ Amendment, by leave, withdrawn.