HC Deb 25 July 1952 vol 504 cc1045-51

Order for Second Reading read.

3.4 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss)

I beg to move, "That the Bill be now read a Second time."

This short Bill enables Her Majesty's Government to give legal effect to agreements made between them and foreign countries relating to contracts of insurance and re-insurance between persons who became enemies as a result of the recent war. An agreement of this kind has already been made with Finland, in December, 1949, and it is expected that others will soon be made with Italy and with other countries.

In the treaties of peace after the First World War—for instance, the Treaty of Versailles—special provisions were inserted dealing with insurance contracts, and legal effect was given to those provisions by Order in Council under the Treaty of Peace Act, 1919. Similar provision was made in the recent Japanese Treaty. After the Second World War, however, a different method was adopted in other treaties, with Finland, Italy, and some other countries. In those treaties ordinary pre-war contracts were dealt with in the treaty itself, but the treaty contained a special provision in regard to insurance contracts.

Perhaps for the convenience of the House I might give the wording of one of those provisions. I take it from the Treaty with Italy: Notwithstanding the foregoing provisions, contracts of insurance and re-insurance shall be subject to separate agreements between the Government of the Allied or Associated Power concerned and the Government of Italy. That is the type of provision in the treaties to which I have referred.

In pursuance of this provision agreements have been discussed between representatives of the insurers in the countries concerned. When the representatives of the insurers come to an agreement, an inter-Governmental agreement follows. That has already been done in the case of Finland, and it is expected that it will be done soon in the case of other countries. The conclusion, however, of the inter-Governmental agreement is not sufficient of itself to make the agreement effective. It is necessary by this Bill, and by the Order in Council that will be made under it, to bring about the required change in the municipal law of the country.

Now, the agreements between the insurers, which broadly follow the principle that has been adopted in previous treaties, observe this main principle: Direct contracts of insurance between an insurer and an assured are maintained, but contracts of re-insurance are terminated at the beginning of the war. The first class covers contracts between an individual and an insurer. The second category covers contracts between two insurers.

The House will observe that, if a reinsurance contract is cancelled or terminated, the original insurer may, indeed, remain answerable for larger risks than would ordinarily be prudent, but he can generally effect another re-insurance. An individual, on the other hand, if his contract of insurance were suddenly broken, might be subjected to ruinous loss or hardship. That is the general principle, therefore, why one type of contract is terminated and the other type maintained.

The law in regard to the effect of war on insurance is by no means clear and may differ from country to country. It is obviously, therefore, desirable that legal doubts should be removed as quickly as possible and without unnecessary recourse to litigation. This, of course, is particularly important for this country.

The United Kingdom, as the House is aware, is the world's foremost international insurance market. We do an immense overseas business, the premiums amounting to about £500 million a year. It is true that a great part of that volume of business is with America and with the Commonwealth and Empire, but an important part is with Europe. It is of great importance to our invisible exports that our insurers should hold their own on the Continent. The speedy enactment of this legislation, carrying out agreements reached between Governments as a result of negotiations between insurers, is the best step to this end which Parliament can take.

I should perhaps add this. For the protection of our insurers we shall make it clear to the other Government concerned that an agreement will not be made enforceable by Order in Council unless we are satisfied that corresponding action is being taken to make the agreement legally effective in the other country too.

The Clauses of the Bill speak, I think, for themselves. It is virtually a one-Clause Measure. Clause 1 (1) enables effect to be given to the agreement already made with Finland and similar agreements soon to be made with other countries. Subsection (2) provides a convenient way of dealing with these facts. Under Orders made under the Trading with the Enemy Act, the interests of Germans in insurance contracts were vested in the Custodian of Enemy Property. This subsection enables those interests to be transferred back and that can be effected by a general revesting provision. Subsection (3) provide for a positive resolution by each House of Parliament approving the draft before Her Majesty can be advised to make an Order.

The Bill is fully supported by the British insurance companies and by Lloyd's. In the interest of our invisible exports, and on the other grounds which I have stated, I commend it to the House.

3.14 p.m.

Mr. Glenvil Hall (Colne Valley)

The hon. and learned Gentleman has been commendably brief and I will be even briefer. This is a very short Bill—little more than a one-Clause Measure. It deals, however, with a very complicated and technical subject, and I admire the hon. and learned Gentleman's temerity in giving us some idea of what these complications are and what the Bill proposes to do. It does, as he said, enable Her Majesty, by Order in Council, to ratify the agreement which has been come to with Finland and also to ratify such other agreements as may be made with ex-enemy countries in the same direction.

As he reminded us, London is the great insurance centre of the world. It is essential not only that the integrity of those who deal in insurance business should be maintained but that the contracts made by them should be observed, and the Government and, indeed, Parliament as a whole should be zealous to see they are enabled to fulfil any obligations into which they enter.

There are one or two questions which I should like to ask the hon. and learned Member. I had hoped that he might have dealt with them in what he said. Realising as we do that although the volume of business may be less than it used to be, London even now does some £500 million of premium business in the course of a year, we feel that this Measure should reach the Statute Book at the earliest possible moment.

If that is so why is it that this Measure was introduced in another place as far back as 6th March, was through all its various stages there within a few weeks of its introduction and yet here we are almost at the fag end of the Session before it is introduced today in this House? If it is essential, as I believe it is, and as the hon. and learned Member said, for this Measure to be implemented with the utmost speed why has there been this delay in the progress of the Bill between another place and this House?

Will the hon. and learned Member let the House know whether the Agreement made with the Italian Government follows closely on the Agreement which the last Government made with Finland? If so we believe it to be perfectly in order, and the sooner Her Majesty is able to ratify it by Order in Council the better. I should also like to ask the hon. and learned Gentleman how soon he expects that a similar agreement will be made with Western Germany, and with what other countries, if any, do the Government contemplate making similar agreements in the near future.

I do not think there is any more I need say. This Bill has been through its various stages in another place, where I am glad to note that Labour peers were able to improve it by having inserted an affirmative Resolution procedure for every Order in Council made in place of the negative Resolution, which was proposed in the original Bill. Therefore, not only do we not oppose this Bill but we hope that at long last it may speedily find itself an Act of Parliament.

3.17 p.m.

Sir Herbert Williams (Croydon, East)

I had no intention of taking part in the debate, and am only doing so because of some remarks made by the right hon. Member for Colne Valley (Mr. Glenvil Hall). He complained, legitimately, that though this Bill reached us on 20th March it is only now receiving its Second Reading. The Bill confirms an agreement made by the Government of which the right hon. Gentleman was a Member; it was signed on 28th December, 1949. Therefore I am inclined to ask why his Government did not introduce a Bill about three years ago to deal with something of which the right hon. Gentleman is apparently very proud.

3.18 p.m.

Mr. H. Strauss

By leave of the House, perhaps I might briefly, in courtesy to the right hon. Member for Colne Valley (Mr. Glenvil Hall), deal with the points which he put. He asked me whether the terms of the Agreement with Italy were generally on the same lines as those of the Agreement concluded between the insurance interests of this country and of Finland. The answer is, yes. There are certain differences but, generally, the provisions are very similar. They are, indeed, as I said in my opening remarks, generally the same provisions as have long been adopted in peace treaty settlements.

He asked me if I could give any idea of the date when it will be possible to make a similar agreement with Western Germany. I should say that would probably be this Autumn. On the question why this Bill has not come before this House earlier, I may say that it has appeared on the Order Paper of the House before and I have come and been prepared to move the Second Reading. But this is the first occasion when the business has, in fact, been reached. I can assure the right hon. Gentleman that no damage has been suffered, and that this Bill will be in time to do what is required to be done.

There was one little slip, I think, on the part of the right hon. Gentleman. An Order in Council is not required for the inter-Governmental agreement embodying what has been negotiated between the insurance interests. The Order in Council is required only to make the required changes in our municipal law. I think I have answered the questions put to me—

Sir H. Williams

Before my hon. and learned Friend sits down perhaps he would explain the reason why not only the former Government was dilatory about this matter but his own Government also was dilatory, because this goes back to 28th December, 1949?

Mr. Strauss

I suppose that, had the volume of insurance business between this country and Finland been very much greater, it might have been more urgent to do something before. But, although the Finnish Agreement was the first, it does not cover a great volume of business.

Mr. Glenvil Hall

I think, with respect, that the hon. and learned Gentleman made a slip, although if he is right and I am wrong perhaps he will correct me.

I understood him to say this was an agreement made between insurance interests here and in Finland. Actually, this is an agreement between the Government of the United Kingdom and the Finnish Government. I hope I did not say, even if he understood me to say, that an Order in Council was necessary for the agreement to be made. All that is done by the Order in Council is to permit a treaty made between the Powers who come together in that treaty to apply it to their individual nationals. Until that happens, as I understand it, the ordinary individual is not subject in law to the agreement made between the Governments.

If I might reply also to the hon. Member for Croydon, East (Sir H. Williams) I would say that it was not our Government which said there was need for speed. It was the Chancellor of the Duchy, in another place, and the Parliamentary Secretary has also emphasised the need for speed.

Mr. H. Strauss

May I, by leave of the House, say that my language may have been loose. I thought the right hon. Gentleman made a slip. I think the stages are these. In the case of Finland, for example, there is, first of all, a treaty between the two countries. That treaty says that the provisions regarding insurance contracts are to be the subject of separate agreements. The second stage is the reaching of agreement on the terms between the insurance interests in the two countries concerned.

The next stage is the making of an inter-Governmental Agreement by an inter-change of Notes. That was done in the case of Finland, and will be done soon in the case of Italy. The last stage will be the Order in Council under this Bill when it becomes an Act of Parliament, and it is that last stage which makes the required changes in the municipal law of this country. That may have been the understanding of the right hon. Gentleman and I think that there is no misunderstanding now.

Question put, and agreed to.

Bill accordingly read a Second time.

Committed to a Committee of the whole House—[Mr. Heath]—for Monday next.