ENEMY PROPERTY BILL [Lords]

HC Deb 24 July 1953 vol 518 cc789-815

Order for Second Reading read.

12.45 p.m.

The President of the Board of Trade (Mr. Peter Thorneycroft)

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

This is a Bill of 18 rather complex Clauses, but though some of the Clauses are complex the purpose of the Bill is clear. I shall seek to expound its purpose as briefly as I can and make some reference to the detailed provisions in it. The Bill is really an essential step in winding up one part of the consequences of war. Its object is to confer an indemnity on certain persons—private individuals or commercial or financial institutions or even Government Departments—who took action with regard to the property or rights of persons who were enemies or who were believed to be enemies, as a result of which action those persons or institutions may now be liable to legal proceedings.

The purpose of the Bill is that those people or institutions who took those actions should be indemnified and protected. To summarise the rather complex provisions of the Bill in a sentence is not easy. Clearly one cannot be comprehensive, but if I might state the general effect, it is that, provided that what was done was done in good faith and in furtherance of legislation or the authority of Government, the person concerned is not liable to action in the courts.

It might be useful if I said a few words about the background to this matter. When these events happened we were of course at war; we were in the middle of a desperate emergency. The national interest at that time dominated any private interest. Certain obligations had been laid on the public, who co-operated wholeheartedly in carrying them out. Men at that time were compelled to take action quickly, quite regardless of the private rights of enemies, and there would have been—and rightly been—very serious criticism had they taken any other course.

There is nothing novel about the principle of an indemnity in circumstances of this kind. Peace treaties in general include provisions for indemnity, and normally in a peace treaty an ex-enemy Government agrees to waive claims on behalf of its nationals. Such waivers were given, for example, after the 1914–18 war. They were included in the Peace Treaties with the satellite Powers in 1947, and more recently, as I expect many hon. Members will recollect, they were included in the Peace Treaty with Japan which was signed in 1951.

Parliament is normally invited to enact legislation enabling effect to be given by Order in Council to the provisions of a peace treaty, and by that Order in Council the terms of such treaty are translated into the legal protection which is given in the courts. The situation with which we are dealing in this Bill does not differ in its main essentials from the type of situation about which I have been speaking, which was dealt with by these other methods. It does differ, however, to the extent that it is one of almost unparalleled complexity—of such complexity that the normal procedure is neither possible nor applicable.

I should like to outline some of the difficulties that we are up against. Take the question of Germany, which is divided, that is to say, there is no one authority which can speak for the whole. Then, there is no peace treaty with Germany in the way that there is a peace treaty in those other cases which can be dealt with on the basis of single Orders in Council. There are also various problems of time and place. The length of the period of hostilities; the occupation of large parts of Europe and the Far East by former enemies; the continual migration of peoples which took place during the whole period—all these have resulted in a situation of very considerable complexity.

With it opportunities have arisen for many claims to be put forward, some of which seem of very doubtful validity. The British companies or individuals, or even Government Departments, who may be the object of these claims may now find it impossible at this distance in time to accumulate the evidence with which to put forward any defence.

I will now turn to what the types of claim might be. There are two categories of claim. The first is the trading with the enemy type of claim, and the second deals with other rights in property. I should like to deal with this matter in those two separate categories. Trading with the enemy is, of course, illegal in common law, but it has been the practice to embody the terms and conditions of the law into statutes in recent times. In the last war there was the Trading with the Enemy Act, 1939. The purpose of that Act was to deny property to the enemy and prevent dealings for his benefit. It was an important weapon of economic warfare. All holders of enemy property were required to report such property. They were not allowed to deal with it, except with permission.

May I here say something about the word "enemy" which was defined on a territorial basis, that is to say, it included anybody resident in enemy territory, no matter what was his race. "Enemy territory" included the territory occupied by the enemy, that is to say, when Germany advanced into France that became enemy territory. So the House will see that the definition is wide. Moreover, during the course of the war it was constantly changed, and it was extremely difficult, if not impossible, to know where an individual was resident at any particular point in time, as successive countries were overrun and occupied. Because of that, the area of trade affected by this legislation was constantly altering and enlarging throughout the whole of those years.

Patriotic citizens loyally co-operated in carrying out the statutory requirements which took the place of the pre-war relationships. Goods were no longer dealt with under contract, but were reported to the Custodian of Enemy Property. Money normally held by a bank, at the disposal of the customer, was paid to the Custodian. Securities were reported as enemy property. All those actions were perfectly right and proper, and above all perfectly legal, provided always that the owner of the goods or securities or the money, was in fact an enemy. Sometimes he was found subsequently not to be. The information available at the time the action was taken was not always complete and accurate.

For example, the customer of a bank might have left enemy territory, or have died and left the deposit or securities, or whatever it was, to someone who at no time was an enemy. Not only the banks or individuals are affected. The Custodians of Enemy Property are also open to action. Under the legislation they were only allowed to deal with enemy property, but of course they could only act upon the information available to them in the circumstances of those times, which were circumstances of war. Often they had no means of verifying the facts.

I would emphasise again the background to this matter. Action had to be taken quickly. There was no means of communication with the territories concerned. Very often goods had to be cleared from ports which were subject to air raids, and I will say quite frankly that there were times when the goods were sold before the necessary machinery for vesting had been complied with. So much, therefore, for the first category of cases.

Apart from the types which I have been talking about, there are other kinds of property which have been prejudiced or infringed at the instance of Governments and persons and firms, who may therefore be liable to action. During the years immediately after the end of hostilities, much technical and scientific information about German industrial processes was collected. Indeed, teams of scientists and industrialists went to Germany under Government auspices for the purpose, both from this and other countries. The results of their inquiries were issued under the authority of this Government, or the previous Government, and under that authority manufacturers are using them. Inevitably there has been an infringement of German copyright.

Finally, there is the question of reparations. Holders of property allocated as reparations might be liable to action in the courts. Though it has all been done under proper international arrangements and the like, there is no formal Act, no formal treaty which has vested the title to those goods in the present holders who purchased them in good faith, and they may be liable to action.

It may be asked why we cannot deal with this problem as we have dealt with other problems of the same kind—by the process of peace treaty and Order in Council. I wish it were possible to do so, because that would be much simpler than this Bill. We have conventions with the German Federal Republic which, though ratified by Her Majesty's Government, are not yet in force. Those conventions contain certain waivers on behalf of the German nationals under their control. But the Federal Republic is not able to bind all Germans. No settlement based on those waivers can, for example, commit residents in the Soviet zone.

There is another difficulty, that those waivers are not relevant to cases of formerly occupied countries, and the Government have decided, therefore, that the only course open to us is a comprehensive Measure, which this is, and of which the detailed provisions are necessarily a little complex.

Before turning to those provisions, let me say again that the general effect is the same throughout. It is that, provided the original action was taken in good faith, in furtherance of the legislation about trading with the enemy, or under the authority of the Government, such action shall not be the subject of proceedings in our courts. That does not mean that persons who were allies or British subjects cannot get their property back. It does mean that they cannot bring an action for damages.

May I now turn to the provisions of the Bill? Part I deals with the general provisions as to enemy property and property treated as such, Part II with certain special provisions regarding Germany, and Part III contains a number of supplementary provisions. First, as to Part I. The general effect of Part I is to validate various transactions relating to enemy property or property treated as such in excess of the powers conferred by law. Clause 1 defines the circumstances in which the indemnity can be given, and lays down certain conditions to which transactions, if they are to qualify for the indemnity, must apply. First of all, the action must have taken place between 3rd September, 1939, and the passing of the Bill; secondly, it must have been done in good faith; and thirdly, it must purport to be taken under or for the purpose of the Trading with the Enemy Act.

The next two Clauses really apply the principles laid down in Clause 1, in the case of Clause 2 to cases where money is either paid or withheld from payment, and, in the case of Clause 3, to dealings with other types of property. I want to make plain the scope of the indemnity. Where a man never was an enemy, he can recover property and be repaid the money, though in neither case can he pursue an action for damages for the action taken at the time.

Sir Lynn Ungoed-Thomas (Leicester, North-East)

How does he get it, if he cannot pursue by action?

Mr. Thorneycroft

He can get the property back. The situation differs slightly in the case of Clause 2, which deals with money arrangements, from Clause 3, which deals with property. In the case of Clause 3, as I understand it—and these provisions are somewhat complex—he can take proceedings to recover the property, but he cannot bring an action for damages for the action taken at the time. In the case of Clause 2, where money is concerned, he cannot bring an action for the money, but there is power to repay the money, and it is not the intention not to exercise that power in normal circumstances, but in neither case can he bring an action for damages. There is a distinction here, the details of which I would rather leave to more detailed consideration of the Bill, between dealings with money and with other property.

Clause 4 deals with the problem of investment. The Custodian of Enemy Property derives income from the investment of funds in his hands. Mostly, they are invested in Treasury bills and Ways and Means advances, and the policy is that this income should be paid to the Treasury. There is some doubt as to the legality of this course. In cases of capital held for a period by the Custodian and released to claimants, there is some doubt whether or not the interest earned during that period should be paid as well.

These are cases mainly of repayments to Allies, generally in agreement with various Allied Governments, and there are, in fact, over 100,000 such cases where money has been paid back. To pay the income on the investment in these cases would require a very considerable administrative undertaking and a considerable accounting staff, and in any case to calculate the precise share of the income attributable to each portion of capital would be by no means easy. I might say that the amounts involved in some individual cases would be trivial.

The Government have given careful consideration to this point, and we propose to modify the existing practice, which I may say is based on the precedent of the last war, of paying interest to the Treasury in one case. That case is the interest of a person who was never an enemy, even in the technical sense which I have been describing. If his money was wrongly paid to the Custodian, he can claim interest at the rate of three-quarters of one per cent., which represents the interest in general earned by the Custodian.

I now turn to Part II of the Bill. The object of Clause 6 is to protect people against claims by German owners of copyright. It deals with that type of property to which I referred earlier, namely, the collection of information, plans, drawings, specifications and the like at the end of the war, and making all such property available to manufacturers here. The same kind of thing was done by the Americans. British industrialists were encouraged to take full advantage of these combined operations, but these industrialists, and, for that matter, the Crown, are or may be open to action for infringement of copyright, and it is essential that they should be protected. The purpose of Clause 6 is to give protection in these cases.

Clause 7 deals with the using of German patents. There were at the outbreak of war many German patents on the register here, and, in fact, some remained on the register until they were vested in the hands of the Custodian quite late on. During that period, if they were used, action might lie for breach of patent, and to allow such claims would be not only intolerable but illogical, having regard to our international obligations in the International Accord on the Treatment of German-owned Patents. Clause 7 deals with that situation, and provides the necessary indemnity.

Another aspect of the same problem is raised in Clause 9, which deals with the case where a manufacturer has passed on secret information. The passing on of secret information in war may be, and probably often was, a breach of contract, but it would, of course, be an intolerable thing that information which was in the national interest should not be passed on at the time just because some contract existed to prevent it, and protection is to be given to manufacturers who acted in that way in the national interest.

Clause 10 deals with reparations, and most of the equipment allocated here was, in fact, disposed of by the Ministry of Supply to firms who needed it for post-war reconstruction, and the object of the Clause is to protect the present owner against proceedings and to confirm his title, because there is no clear confirmation of his title at the present time.

Clause 11 deals with property which was physically taken away from Germany. We have dealt with the question of documents, and this Clause deals with the physical problem. Just as in the cases of patents, documents and technical information, so with some of the property removed, such as prototypes of machinery or something of that kind, actions might lie, and protection is given in these cases, too.

The only Clause in Part III of the Bill to which I need refer is Clause 17, which deals with the date of the operation of the Bill. It dates from its introduction. Actions taken earlier than its introduction are not affected, but protection is afforded against claims made after that date.

In general, the problems with which the Bill deals are complicated and very wide. They are probably too wide and complex to permit of any perfect solution. The circumstances today are very different from those in which the actions were taken, and it may be that some hardship will result from the solution itself. It would be an intolerable hardship if British citizens, acting in good faith, were proceeded against by ex-enemies on the basis of an action taken in furtherance of the national interest.

We are anxious to avoid unnecessary hardship, however, and there is one case to which I should like to make reference. It might happen that a British or Allied national might find that his property had been taken in good faith, in the belief that he was an enemy. Under this Bill, such action would be barred, and in some cases really grave hardship might result, even though the property were recovered. It would be very difficult—indeed, I believe it would be impossible—to write into this Bill provisions dealing with all the complex variations of a situation of that kind. I can, however, give the same assurance as was given by the Lord Chancellor in another place about the attitude of Her Majesty's Government to these cases.

Unlikely though the need may be, Her Majesty's Government do not wish to rule out the possibility of ex gratia payments of compensation being made in exceptional cases to British or Allied subjects where serious wrong has been done, resulting in grave hardship. Should an exceptional case arise, therefore, in which the provisions of the Bill are found to work harshly and to do injustice I am authorised to say that Her Majesty's Government would be prepared to consider making an ex gratia payment of compensation, provided that Parliament agrees to the necessary funds being made available for the purpose.

The Bill serves a useful but limited end. It is designed to protect people, institutions or Government Departments who acted in good faith in the country's interest at the time. Indemnity Bills are never simple, and very seldom popular, but this Bill is necessary in the complex circumstances which we have to face.

1.12 p.m.

Sir Lynn Ungoed-Thomas (Leicester, North-East)

There is one point about this Bill upon which we can all agree, and that is its extraordinary complication. I had the greatest difficulty in following and understanding it, and I should rank it, without hesitation, with those statutory monstrosities, the Workmen's Compensation and Rent Restriction Acts—and they have caused sufficient trouble in their time.

I appreciate that it is extremely difficult to draft a Bill of this kind so as to be precise, obtain exactly the effect required, and, at the same time, make it understandable. I recognise that difficulty immediately, and I am not going to attach any kind of blame to those hard-working Parliamentary draftsmen whom I have found extremely helpful in the past, but it would be of assistance, within a Bill of this kind, if the Government were to adopt the course which was suggested elsewhere, namely, that the Memorandum should be a full explanation—something rather on the lines of a White Paper—of what is included in the Bill and what are its objects.

I am most grateful to the President of the Board of Trade for the very full and fair explanation which he has given, but the Bill requires a little study. It is an advantage to see these things before we reach the Second Reading stage. I am in the fortunate position of having been concerned with this Bill at an earlier stage, elsewhere, but that is merely an incidental advantage, which does not apply to those hon. Members who have not been concerned with the grinding process of preparing Amendments, and so forth.

There are two principles with which this Bill is concerned. I trust that there is no kind of disagreement on either side of the House as to the first principle, which is that there should be no right of action in respect of something which has been done in good faith to prosecute the war or to reap the fruits of victory. It was on that aspect of the case that the President of the Board of Trade insisted throughout his speech, and I shall not reiterate what he has already said, because he justified it up to the hilt.

There is, however, another principle with which we are also concerned, and which is that no non-enemy—nobody friendly to this country—should suffer for what has been done, even though it was done in good faith and in prosecution of the war. I hope that that is a principle which is equally acceptable to all hon. Members. What has been the subject of dispute elsewhere, and what we are concerned about here, is the application of that second principle. The first principle is perfectly clear, but when the second comes into operation it is a different matter.

A partisan, or somebody who comes within the definition of "enemy"—because the definition of "enemy" is a territorial definition and therefore includes people who are friendly to our country and people who are in fact our allies and friends—ought not to suffer individual hurt as a result of the application of the principle that what has been done bona fide in the prosecution of the war should not give rise to a right of action. In other words, where those two principles are in conflict, they should be reconciled in such a way as to safeguard the position of the friendly or non-enemy person who has suffered as a result of what has been done.

That was one of the reasons why the Opposition, elsewhere, proposed that where money had been paid to a custodian, and that money belonged to a non-enemy person, then when that money was repaid it should be repaid with the interest which it had earned. That was obviously a just proposal. I was a little shocked that the Government should have held out against it for so long, but I am very pleased that they have now accepted it.

I recognise the administrative difficulties of calculating the precise amount which has been earned by some particular parcel of money, or investment, over some period of time, and working it out separately in each individual case. The proper course to take is that which has been taken, of calculating the all-over, average interest which has been earned by that money whilst it has been in the hands of the Custodian.

This is an illustration of how important it is, in dealing with Government Departments, to see that administrative convenience does not override the claims of justice. Here we had a just claim for the payment of interest to the non-enemy persons to whom the money belonged, and it was proposed by the Government that no interest should be paid—not because it was unjust, but because of administrative inconvenience. That is an intolerable argument for any democratic government to put forward as justification.

I am very pleased that the Government have at last accepted the provision which avoids the administrative complexity of calculating separate amounts in the case of each individual claimant and has accepted a suggestion that there should be an all-over average payment. That is a very definite improvement, which is accepted by a Conservative Government on the proposal of the Socialist Opposition against the confiscatory effect of Conservative legislation.

The other Amendment which has been proposed, and been accepted by the Government, makes it clear that the indemnity provided by the Act is limited to those who acted in good faith. There are a few matters of substance with which we are still concerned, and several matters of drafting and other points which will require probing when we get to the Committee stage. Each of the Clauses will have to be very fully explained before it can even be understood, let alone before we consider what appropriate Amendments can be made. Let me say, for the benefit of the Leader of the House and to avoid any repetition of the kind of trouble we had earlier in the Session, that it looks as if we shall take some time in dealing with the Bill on the Committee stage.

Perhaps I may deal with this question of justice to the innocent non-enemy. This is the second principle to which I referred as being a matter for concern in the Bill. The innocent non-enemy should not suffer, as the result of action taken in the wrong belief that he was an enemy. I am not saying that action for damages should lie, but he should not suffer. The President of the Board of Trade referred to the provisions of the Bill as being what would be in a peace treaty, but I think he recognises that a peace treaty would not cover persons who were not citizens of the enemy country, and these are the persons we are concerned with. Therefore, it is no argument against us to say that we are only doing what would be done, and has been done, in the past in a peace treaty.

Another important matter which has a bearing upon our concern for the non-enemy nowadays is that during the last war great expanses of territory with vast populations were over-run while the people in the territory were firmly adhering to the allied cause. Many of them were running the utmost risk as partisans, and suffering most from the Nazi tyranny which they of all people had most reason to abhor. We must take the utmost care in passing legislation through this House that we do not deprive these people of rights and interests which they would otherwise have. I am sure that the Government will consider this point sympathetically in the Committee stage. I will mention briefly two matters of substance which illustrate the kind of difficulty which arises.

Let me take the effect of Clause 2 on money belonging to a French partisan in occupied territory. His money was in an English bank. The bank pays the money to the Custodian. The bank does not get protection, unless it acted in accordance with what it conceived to be the furthering of our war effort, in which case it is right that it should be protected. The money is in the hands of the Custodian, but the Bill gives the Frenchman no right to recover the money. It says merely that there is power for the Custodian, if he thinks right, to pay the money to that person.

Why should there not be a right of payment, if the money is in the hands of the Custodian? Why should it rest with some civil servant in the exercise of his discretion to say: "Yes, you shall have it," or "No, you shall not have it"? This matter involves questions of liberty and rights, and of the honour of this country in dealing with men who were friendly and who fought on our side. Why should they not have the right to payment?

Let me take the matter a stage further. Suppose the Custodian paid the money to a third party after the war is over, in the belief that the third party was entitled to it. That payment had nothing to do with the furtherance of the war effort, or with reaping the fruits of victory, but was like a payment by an ordinary civilian to a third party in the mistaken belief that the third party was entitled to it, perhaps without taking adequate trouble to verify the position. There would be no right to recover from the Custodian, and it might be completely impossible, for practical or legal reasons, to recover from the third party.

Whose responsibility is that, in justice? Surely it is our responsibility and the responsibility of the Custodian, who is an instrument created by an Act of Parliament. Why in that case should the innocent partisan suffer? That is the kind of case we have in mind. It is the application of the second principle which I mentioned, and we are insisting as far as we can that the second principle should prevail.

Take one other matter by way of illustration. Take the definition of "enemy." We have here in Parts I and II of this Bill different definitions of "enemy." This, perhaps, raises a wider question, but one which, I think, will be within the ambit of this Bill. As the right hon. Gentleman said, the definition of "enemy" is a territorial definition. It does not depend upon nationality. It does not depend upon friendliness to this country. It covers the partisan who is in enemy occupied territory. It includes also a company which is registered according to the law of an enemy country.

So take the case of a company incorporated in Germany, of which the sole owners, in which the sole shareholders, are two persons who may be refugees here, who fought on our side in the war—Poles, perhaps, who joined the Air Force and played such a distinguished part during the war, or in enemy occupied territory. It is a company formed according to the law of enemy territory. In that case that would be enemy property. It would be treated as enemy property although the only persons who were interested would be two persons who fought on our side in the war.

Let me say at once here that I appreciate the difficulties of administration that are involved. I am not at all blind to them. I appreciate that when we come to company law there are difficulties in piercing beyond the legal entity and saying the decision shall be taken according to the nationality, or what you will, of the beneficial owners. I appreciate that, but it is quite unjust, on the other hand, that the two persons who are the sole owners of the company should be treated in precisely the same way as a hostile German—a Nazi, perhaps—who fought against us during the war.

I understand that in the United States of America they have in fact pierced beyond the legal entity as their test for what course they take in a case of this kind and look to the beneficial ownership. I appreciate that in our own prize law, although we do not pierce legally beyond the legal owner, nevertheless, we do have regard to the beneficial owners when it comes to making ex gratia payments. I was very glad to hear the President of the Board of Trade make some reference to the attitude that has been adopted towards beneficial owners of this kind, but I was a little nervous when he said something more.

I did not take down his precise words at the time, but it seemed to me to be as careful and niggard a statement as could conceivably be made. If I remember aright, it went something like this. The Government would not rule out the possibility in exceptional individual cases of making some payment. That really is an unworthy course to take. I am not sure—I do not know yet—whether we can properly deal with this by an Amendment which will ensure that regard must be had as a matter of law to the beneficial owner, and that the criterion should be in all these cases the beneficial ownership rather than the legal ownership. I do not know. I appreciate the difficulties, as I have said, but, at any rate, I trust that before we eventually part with this Bill we shall have a very much more forthright statement and far more satisfactory statement from the Government on ex gratia payments, if, indeed it is to be left to the ex gratia method of dealing with this problem.

I have said enough at any rate to show the difficulties and complexities of the Bill, and while we are wholeheartedly in support of giving indemnity to those who have acted bona fide in the furtherance of the war we are at the same time deeply concerned that innocent persons should not be hurt without remedy as a result of our action, and if it is our action, action for which we are responsible, which has caused them to be hurt I hope we shall be big enough to see that they do not suffer in consequence.

1.36 p.m.

Mr. Charles Fletcher-Cooke (Darwen)

I suppose that this Bill is the epitaph, legislatively speaking, of those two bodies who have served us so well, the Trading with the Enemy Branch and the Custodian of Enemy Property, because although their functions will, no doubt, continue a little bit longer, I suppose that really this House by this action is substantially parting with the matter and winding up a history of some 13 or 14 years. I do not think the occasion should be allowed to pass without a tribute being paid to those bodies. I have myself had something to do with them on the other side of the counter from time to time, and although one gets occasionally annoyed and maddened by what one conceives to be unworthy and unnecessary delays, at the same time I think everybody in the House will agree that they have fulfilled a very thankless task very well.

From time to time hard words have been said about them—in the case of the Bank Voorhandel v. Slatford, for example. I think the amount of interest they earned came in for some criticism; this is scarcely surprising when one learns that the average interest earned on these large sums of money is only three-quarters of 1 per cent. I think that if they were trustees in the ordinary sense of the word some hard words might be said. Of course, they have to be careful, but they need not be as careful as that. Three-quarters of 1 per cent. must be the lowest interest ever earned on sums of this size.

Nevertheless, the Bill is obviously right and proper, and these persons should have indemnity, but, as the late Solicitor-General, the hon. and learned Gentleman the Member for Leicester, North-East (Sir L. Ungoed-Thomas), said, that is a quite different matter from the other matter dealt with in this Bill, which is what should happen to the property if it can be traced, or to the money if it can be traced, of the ex-enemy who is an ex-enemy only in the most technical senses, if at all; and I should like to ask the Parliamentary Secretary to tell us a little more about the scope of the ex gratia payment.

Was I right or wrong when I thought I heard the President of the Board of Trade say that it would be available only for persons of British nationality? Of course, there are persons of British nationality who were enemy persons for the purpose of the trading with the enemy legislation. Those who were caught in Malaya, those who were caught in the Channel Islands and places like that, became enemies. I hope it is not to be restricted to them, because it would really be the worst example to the world if we were to give those people treatment which no doubt they deserve but deny it to the examples that the former Solicitor-General instanced, the French partisans and the Polish airmen. I hope it will cover everybody who can conceivably be described as a friendly enemy and those who were not, as it turns out, enemies at all.

On this question of ex gratia payments, I would just enter this warning on the whole principle. It is very important from every point of view that this Bill when it becomes an Act should be recognised by foreign courts, because if it is not recognised by foreign courts we shall get into endless conflicts between our courts and foreign courts. Of course, if we adopt the principle that the Board of Trade have adopted, I understand, which is to say there shall be no right at all to repayment of this property, but that it shall be done as a matter of grace, there is grave danger of this Bill being stigmatised in foreign courts as a confiscatory Measure, and, therefore, not recognised by those foreign courts.

That, I think, would be a very dangerous situation and one which would not put this country in a very good light, but apart from that it would cause endless legal complications. I should like to have some sort of explanation or assurance from the Parliamentary Secretary to the effect that the Government have been advised that this Measure they have adopted has not run them into the danger of having this Act regarded by foreign courts as a confiscatory Act.

Finally, I do not understand precisely the distinction between money and property as between Clause 2 and Clause 3. I understand that under Clause 3 if one's property can be identified one can have it. Why does not the same principle apply to one's money, assuming that it can be identified and traced? Of course, if it has been dispersed, then naturally one cannot have it. One cannot put one's finger on it and say, "This is my money," but in many cases these moneys are paid into separate accounts, are often not paid over at all, and merely earmarked in some bank. If money can be identified, why should it not be treated in exactly the same way as property that can be identified?

This Bill is warmly welcomed because it tidies up a very complicated part of the law, but I very much hope that in tidying it up we are not going to be so tidy as to do damage or seem to do damage to those who fought for us in the war. Those of us who have to advise people about these matters would like a further explanation of the methods of ex gratia payment.

I would suggest that if ex gratia payment is to become a reality provision ought to be provided for it in this Bill. The President of the Board of Trade said that, of course, ex gratia payment would only be possible if Parliament so decided by voting the necessary moneys. Why cannot Parliament vote the necessary moneys in this Bill? Maybe there are technical reasons why it cannot—I do not know—but if it could be put in, that would give a much better impression to us that there is a serious intention of satisfying all genuine cases by this means.

1.43 p.m.

Mr. Barnett Janner (Leicester, North-West)

I agree that this is a very complicated Measure. I am not surprised that the Parliamentary Secretary did have another last look at the Bill to discover whether he understood it or not. He reminded me of a man at a meeting who, when called upon to speak, said sotto voce, "O God, why was I born?" and someone in the audience who overheard him said, "It is too late to worry about that, guvnor; carry on." I think that the Parliamentary Secretary is in the same position this afternoon in regard to having to speak on this Bill.

I was interested to hear what the hon. Member for Darwen (Mr. Fletcher-Cooke) had to say about it. He touched on a very interesting point and raised a question which I would like to have asked towards the end of what I have to say. It is this: Has representation been made in regard to this matter by any Government of the countries concerned? May I mention some of them?—the U.S.A., the Netherlands, Switzerland and Israel. I do not think that the Government have yet appreciated the serious nature of the Measure which they are introducing. I think it is an entirely new type of Measure, and I doubt whether there is a similar Measure in any other country in the world.

I am very worried about this matter. I appreciate that we want to do the right thing by those who have acted in good faith, but doing the right thing by those who have acted in good faith has to be weighed against doing the right thing by those to whom the property belongs, and who in similar good faith are not entitled to be deprived of it.

It would appear that the purpose of this Bill is to sanction acts of the Custodian of Enemy Property and the Board of Trade which were ultra vires at the time when they took place. As I see it, this purpose is achieved by depriving of their legal rights those persons who at the time when the said ultra vires acts were carried into effect were the rightful owners of property and the rightful claimants of debts due to them. May I give a few illustrations of what I mean? A Swiss citizen, residing at all times in Switzerland, owned a London house. The Custodian, wrongly believing that he was a German residing in Germany—I am not blaming the Custodian—sold the house in 1939, when houses were at rock-bottom prices, to a third party. I hope that the House will forgive me if I deal with these matters at some length, because I am hoping that by the time this Bill goes to the Committee stage the points will have been reconsidered in such a way as to make a very material alteration to the Bill.

A former national and resident of Germany emigrated in 1938 to the U.S.A. and acquired United States nationality in 1943. He owned shares in a London company which did not pay dividends between 1938 and 1943. The Custodian, believing in 1944 that he was still a German residing in Germany, sold the shares at a very low price to a third party, who now holds them. The third party—and this is very important—knew perfectly well that this man was a United States national residing in the U.S.A. but did not inform the Custodian of this fact.

In both these cases the effect of the Bill would be to deprive both parties of their rights of recovering their property. The only remedy left to them would be to obtain the purchase price received by the Custodian which in both cases constitutes a mere trifle of the true value of the property.

I want the President of the Board of Trade to bear with me on this. It is my feeling that this Bill does not refer to the rights of ex-enemies at all. Ex hypothesi it refers to and deprives of their rights only those persons in respect of whose property the Custodian acted ultra vires. Where the person concerned was an enemy he could not act ultra vires. The consequence of this Bill appears clearly to be that neutral nationals and allied nationals or British subjects are in many cases to be deprived of their rights.

It must be very seriously questioned whether there is any reasonable ground for this Bill in those circumstances. I do not believe that any other allied country has found it necessary to introduce similar legislation. Why should this be necessary here? Every day people acquire property from other persons who have no right to sell. Why should persons who have acquired from the Custodian of Enemy Property be better treated than such other persons? What is there to give this preference to the Custodian over, say, the Ministry of Supply, the War Office, the Post Office and other Government Departments which daily sell property to third parties? Why should persons who acquired from the Custodian be better treated than persons who acquired from private individuals who may sometimes also have wrongly believed that they were entitled to dispose of property which in fact they had no right to dispose of?

I hope I shall be proved to be wrong in some of the issues I raise, but I do not think the Parliamentary Secretary will be able to do that today. He will have to think a lot about the Bill before he can answer some of the points I am raising. I am glad the Recess is intervening for it will give him an opportunity of going into them. I am not putting these points forward in an aggressive spirit; I am trying to weigh up the rights and the wrongs of the matter in the earnest hope that we shall not find ourselves on the wrong foot when we have to face the rest of the world on these problems.

This is not a Bill granting an indemnity for civil servants who then acted in very harassing circumstances on many occasions no doubt, for the Custodian. In the main, it is a Bill to protect the purchaser. It is difficult to find anything in the nature of the position of these purchasers to justify their being favoured by an exemption from the ordinary rule of the common law, whose preservation even in time of war has always been the pride of our country. Nor is there anything in the characteristic actions of the persons who are to be deprived of their rights, which could justify such abolition of their rights as is suggested in the Bill. They are neutral or Allied nationals, or even British subjects who merely had the misfortune that, by some mistake, they were wrongly believed to be enemy nationals living in enemy territory. No enemy national can possibly be affected by the Bill.

I should like to put forward some ideas which have occurred to friends of mine and myself on the subject. First, a provision should be introduced into this Bill so that it will not operate to defeat a claim against any person who, or whose predecessor in title, was not acting in good faith at the time of the dealings in respect of which the claim, but for the operation of the Bill, would arise. Secondly, the Bill should not apply if the effect of its application would be that a person who did not at any time between 3rd September, 1939, and 8th May, 1945, possess the nationality of a State at war with His late Majesty, would thereby be deprived of any property, assets, title, right or other interest without receiving proper compensation. Thirdly, the Bill ought not to operate so as to defeat any claim by any person who during the period from 3rd September, 1939, to 8th May, 1945, was, on the grounds of his or her race, religion, ideology or political conviction, deprived of or restricted in regard to his or her liberty or injured in respect of life or health.

The purpose of my first suggestion is to make sure that nobody benefits from the Bill who was not himself acting in good faith at the time when the dealings with the Custodian took place. It is important to note that, in its present form, the Bill provides that an authority which was acting must have done so in good faith. That is not enough. I may be wrong in my interpretation of what the President of the Board of Trade said, but I do not believe it is the right point of view. I believe that the Bill is intended to protect not the authority but the person who received the property. So it is the good or bad faith of that person which should be taken into consideration.

I referred to the Swiss who was deprived of his house. The person who bought it was a neighbour of the man who owned the house and knew quite well that the owner was a Swiss residing in Switzerland and not a German residing in Germany, while the official of the Custodian who sold the house to him wrongly but innocently believed that he was a German residing in Germany. Why should the bad faith of the acquirer receive protection, as it appears to do under the Bill? I see no reason in law and equity why a person of that nature should be protected.

My second point deals with a problem of international law which arises in connection with the Bill. The Bill means that in practically every case neutrals and Allied nationals will be deprived of their properly-acquired rights, these rights being taken away from them by way of confiscation. It is a rule in international law that no State is entitled to deprive a foreign national of his properly-acquired rights unless full, efficient and prompt compensation is being paid. This rule is being relied upon in many international disputes. I beg the President of the Board of Trade to remember that there never was greater need to pay due regard to this problem than there is at present.

To illustrate what I mean, litigation is at present being conducted concerning the Anglo-Iranian Oil Company. The sales effected by the Custodian have not in all cases been effected against proper compensation. Is it not likely or possible that, if we open the way for this kind of action on our part, we may find ourselves unable to defend the kind of case which is put forward—rightly, I believe—on the part of the Anglo-Iranian Oil Company where it is correctly stated that the deprivation has taken place without proper and full compensation? How can we continue to argue on this principle if we introduce a Measure here opening the door to confiscation without proper compensation? The point must be very carefully watched.

The third point which I raised has to do with the rights of certain people, nearly all of whom are now British, Allied or neutral citizens. The number of cases under this heading may be far smaller than that under some of the other headings to which I have referred, but we ought to make provision to help people in this category. I will give some examples of which I have perhaps a little more knowledge that some other hon. Members. Some German Jews who had long before the war emigrated to the United States, and had long been nationals of that country, were wrongly believed to be German nationals residing in Germany. It would be rather a harsh measure if these people were made to suffer for an error committed by somebody here who had failed to take note of their plight and of the fact that they had taken refuge outside enemy territory.

I could quote many other cases, but my hope is that this Bill, which I agree has been very fully discussed in another place but which was described by one of the noble Lords as not being light bedside reading, will be examined more carefully and fully at another stage when we can take all these matters into full and proper consideration. That is highly important from the point of view of our own standing in the eyes of the world, legally and morally. Not a very great amount is involved, but it is the principle which we must always have in mind.

Reference has been made to the proposal to make ex gratia payments. I would ask the Government on this occasion not to regard compensation as such, because by so doing they are, in fact, suggesting that they are not satisfied in their minds that they are doing the right thing to those who have been deprived of their rights. I am obliged to the House for having listened to me as patiently and sympathetically as they have done.

2.2 p.m.

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

I agree with the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) that this is indeed a complicated Measure. I did not follow the reference made by the hon. Member for Leicester, North-West (Mr. Janner) who said I had been caught napping. What happened was that an hon. Member on his side said during the discussion of the previous Measure that I had an enormous brief, but I pointed out to him that that brief dealt with the next Measure coming before the House, but I was not studying it.

Mr. Janner

I hope the hon. and learned Gentleman is not taking it in a personal sense. My remark was made in jest. He will remember that he said he had an eye on the Bill before the House and an eye on the one coming before the House.

Mr. Strauss

I am sure the hon. Gentleman's jest is frightfully good, but I was not aware that I was squinting. I assure the hon. Gentleman, however, that there is no sort of ill feeling on any point.

Mr. Janner

That is mutual.

Mr. Strauss

It has been a good humoured debate and will remain so.

The hon. and learned Member for Leicester, North-East welcomed the Bill, and I have no doubt that it will have a unanimous Second Reading. I also agree with him and with other hon. Members that there are details which it would be quite impossible, without wearying the House at great length, to discuss today. That must be left to a later stage. But perhaps I can deal with one or two points that have been raised by various Members.

The hon. and learned Gentleman welcomed the provisions regarding good faith and the payment of interest on these sums invested by the Custodian, but I would point out to my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke), who seemed to think that the irate of interest would have been considered a little inadequate if it had been earned by a trustee, that—and here, of course, I shall be subject to correction by the hon. and learned Member for Leicester, North-East, who practises on the Chancery side—it is the duty of a trustee to invest the money advantageously, but it is the duty of the Custodian to preserve the property. When, therefore, he actually used such very safe investments as Treasury Bills, that is not something which should be held against him. In fact, it was his duty to do precisely that kind of thing.

The hon. and learned Gentleman and others were anxious that this Bill should not cause any hardship or, as he said, do an injustice, if that could possibly be avoided. I am not quite certain whether I understood precisely the classes of person that the hon. and learned Gentleman had in mind, or, indeed, whether he was dealing with the same classes throughout his speech. But let me put this to him. Both at common law and under the Statute, the enemy for the purposes of trading with the enemy is not determined by nationality. Therefore, the hon. Member for Leicester, North-West when he talked about people who may not have been of German nationality but whose property is involved or affected in our legislation should realise that there is nothing wrong in that. That was inevitable under the Trading with the Enemy Act.

The hon. and learned Gentleman and my hon. Friend the Member for Darwen put a point on the distinction between Clauses 2 and 3 as regards a right of action in the courts. There is no sinister motive lying behind the distinction, as I am sure the hon. and learned Gentleman realises. It follows directly from the different nature of material property and a chose in action. If there was a debt by a bank and the money was paid by the bank to the Custodian, then, if the money was wrongly paid, the bank, of course, remains liable for the debt. If a right of action were given against the Custodian it would be a right of action wholly novel in law, and in the Government's submission not suitable for inclusion in an Indemnity Bill. Let me say at once that the difference is a technical one. There is no intention whatever for the Custodian not to pay out the money where his receipt of it was due to a mistake either of law or of fact.

My hon. Friend the Member for Darwen was not quite certain whether he had correctly heard the words used by my right hon. Friend the President of the Board of Trade in this House, and by my noble Friend the Lord Chancellor in another place, in the statement on ex gratia payments. That statement included the words: "British or Allied."

Some points were raised on the way this legislation might be regarded in other countries. Let me say at once that this legislation only purports to affect action in the courts in this country. It does not purport to affect anything else. In answer to the hon. Member for Leicester, North-West no representations have been received from other countries against this legislation.

Mr. Janner

Have we made any inquiries from these countries ourselves? It would be bad if, once the Bill becomes an Act, the countries had to make representations.

Mr. Strauss

I am sorry if I misunderstood the hon. Gentleman. I regard his description of this Bill as confiscatory, and as though it contained provisions even remotely resembling what the Persian Government have done, as so preposterous that I have heard nothing like it before, even from the hon. Gentleman. Like the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton), I was unable to follow, as it was delivered, the long legal conundrum which was read out. In fact I did not hear the middle bit.

Mr. Janner

I am not surprised at that.

Mr. Strauss

I do not think that great blame attaches to either of us. The hon. Gentleman gave numerous examples of Swiss and United States citizens who, he said, had suffered the most monstrous injury by the action of the Custodian and had legal rights in the matter. Is it not rather strange that they have not pursued their supposed legal rights in our courts? What was there to stop them?

Do not let the House build up a wholly imaginary state of affairs. I do not question the genuine concern of the hon. Gentleman for many people, but I beg him to preserve some sense of proportion and to examine carefully some of the provisions in the Measure we are discussing. Apart altogether from the point I have made, that there had been nothing to bar these people from taking action in our courts if they thought they had a claim, if the hon. Gentleman will look at Clause 3 (5) and other provisions he will see that, if the property has now passed to a person who may have got it by means of misrepresentation or anything of that kind, it is possible for the owner to pursue his rights against the person who so has it. That is only one of the provisions to which I hope the hon. Gentleman will pay some attention. I will not, however, anticipate the matters which can rightly be raised when we consider this in greater detail in Committee.

The hon. Gentleman talked about possibly amending the Bill so that it should not have any adverse effect on various people who, though enemies by definition——

Mr. Janner indicated dissent.

Mr. Strauss

Yes, enemies by definition. If the hon. Gentleman himself did not do so, others talked about anti-Hitler Germans in an enemy or enemy-occupied country. They were certainly enemies within the Trading With the Enemy Act and at Common Law. I can hold out no possibility of so amending this Measure that the indemnity granted to British subjects shall depend in any way on the merits of the particular enemy concerned. That would be impossible. I think I am in agreement with the hon. and learned Member for Leicester, North-East when I say that we must see that the Clauses of this Bill are as good as we can make them. We cannot foresee everything in regard to these extremely complicated matters, and that is the reason why some statement was made about possible ex gratia payments.

I know I have not dealt with everything that the hon. and learned Gentleman has in mind and may wish to raise hereafter. I appreciated the way in which he opened for the Opposition and I hope, after what I have said, that the House will be prepared to come to a decision.

Question put, and agreed to.

Bill accordingly read a Second time.

Committed to a Committee of the whole House.—[Mr. Vosper.]

Committee upon Monday next.