Clause 1.—(THE AGREEMENT AND THE CORPORATION.) (Hansard, 7 July 1955)

§ Mr. Warbey
Before the proceedings were interrupted for the consideration of a matter of public enterprise, I was endeavouring to call attention to the question of definition in the Articles of Agreement of the International Finance Corporation.
You, Sir Charles, had just ruled that it was not in order for me to discuss a precise point on these Articles. So, in deference to your Ruling, I will leave that aspect and return to the general question of what, in fact, is being defined in Clause 1. The Committee has got into a considerable muddle on this, and I am afraid the blame for the muddle must be attached to the Government. It has already been admitted, in speaking of the Agreement which this Clause attempts to define, that something different is meant in Clause 1 from what is meant in Clause 2. I think that the Economic Secretary shook his head, but no doubt he will be able to explain this matter in due course.
I would point out that what we are contemplating in this Clause is a matter not of one or two but of three different types of Agreement. First, there are the words in Clause 1: In this Act 'the Agreement' means any agreement which may be signed and accepted on behalf of Her Majesty's Government in the United Kingdom in pursuance of Articles approved… 1428 I have been occupying a little of the interim period in looking through the proposed Articles of Agreement of the I.F.C., and I find that there are quite a number of possibilities, within these Articles, of agreements being concluded between the Government and the Corporation. The Bill refers to …any agreement which may be signed and accepted …in pursuance of Articles.… It is quite clear that we must take into consideration any agreements which may arise in connection with any of the Articles out of which agreements may be necessary.
I notice, for example, that by Section 1 of Article III The Corporation may make investments of its funds in productive private enterprises in the territories of its members. The existence of a government or other public interest in such an enterprise shall not necessarily preclude the Corporation from making an investment therein. If the Corporation is to make an investment in a public enterprise in a member country that will have to be the subject of an agreement between the Government of the member country and the Corporation, and, in our case, not only in connection with enterprises in the United Kingdom but in any territory for which the Government are responsible.
Section 3 (ii) of Article III says: the Corporation shall not finance an enterprise in the territories of any member if the member objects to such financing. Presumably, some procedure will have to be devised and become the subject of an agreement by which the Government of a member country can be notified that the Corporation is engaged or is proposing to engage in financial activities within the Government's territory. Clearly, the Corporation cannot, as it were, run about within the United Kingdom seeking for investments in productive private enterprises, to which investments the Government may want to object, without some form of agreement by which the Government shall at least be notified of the 1429 intentions of the Corporation within their territory, the territory for which the member Government are responsible.
Section 5 of the same Article says: Funds received by or payable to the Corporation in respect of an investment of the Corporation made in any member's territories pursuant to Section 1 of this Article shall not be free, solely by reason of any provision of this Agreement, from generally applicable foreign exchange restrictions, regulations and controls in force in the territories of that member. I cannot see how it can be ensured that the operations of the Corporation shall not conflict with currency regulations, exchange controls, and so on, without the conclusion of an agreement, and possibly several agreements, between the Corporation and the Government of the member country, which may be the Government of this country.
Section 6 (i) of the same Article makes certain provisions for the borrowing of funds and the making of a public sale of the obligations of the Corporation in the markets of a member. It says that in that case, … the Corporation shall have obtained the approval of that member and of the member in whose currency the obligations are to be denominated… There is another case in which agreement will have to be made with the member Government concerned. Section 9 of Article IV states that each member shall designate its central bank as a depository in which the Corporation may keep holdings of such member's currency or other assets of the Corporation…. It so happens that in this country the central bank is a nationalised institution under the control of the Treasury. Therefore, it is inevitable that under this Section it will be necessary for the Corporation to enter into an agreement with the Government of this country to regulate the manner in which its funds are deposited in the Bank of England.

§ Sir E. Boyle
On a point of order. I do not want to interrupt the hon. Member unnecessarily, but the long recitation which he is giving to the Committee is based on a misunderstanding. "Any agreement" in Clause 1 refers to any agreement which may be signed in pursuance of the Articles which the House has had before it in the White Paper, but the indefinite "any" refers to the contingency that there may be no agreement, not the 1430 possibility that there may be different agreements arising out of the same Articles. Therefore, I think that the hon. Member's meticulous analysis is based on a misreading of Clause 1.

§ The Chairman
I think that that is the right position to take. This first Clause is simply a definition Clause and it defines the machinery. When we were in Committee before the House considered the Private Bill, I tried to keep the Committee in order on that point. This is only a machinery Clause.

§ Mr. Warbey
I am dealing purely with a question of definition, because what we are trying to elucidate is what the Clause means. The Economic Secretary has given an interpretation but, after all, it is only his interpretation. I do not know what kind of authority it has. It seems to me that it is quite possible for a lawyer, or indeed a layman, to read the Clause in a quite different sense and in the sense which I have attributed to it, namely, that it refers to any agreement signed and accepted by the Government in pursuance of the Articles.
All that I have done is to run through the Articles to show that in pursuance of them there may be a necessity not for one Agreement but for a number of different agreements and therefore that what we are asked to consider in discussing this Clause is not one Agreement but any agreement which may arise in pursuance of any of the Articles of the International Finance Corporation. It is all very well for the Economic Secretary to say that he puts another interpretation on it, but that is not an interpretation which I and possibly other hon. Members may accept.

§ The Chairman
Perhaps hon. Members may not accept it, but that is the interpretation which I have been putting on it for a long time now. I must ask the hon. Member to stick to the point. I may be wrong, but I am responsible and that is my opinion. This is a machinery Clause, and if hon. Members do not keep within my Ruling, I must ask them to resume their seats, because my patience is exhausted.

§ Mr. Warbey
With respect, I am not trying to be obstructive or difficult. I thought that I was keeping strictly within your Ruling, Sir Charles, that the Clause is concerned solely with definitions. All 1431 that I am seeking to do is to find out what we are defining and what the definitions mean, but that is still not clear. However, I will leave that point. I think I have made it sufficiently for it to be appreciated by the Economic Secretary. If it does not mean what I suggest it could mean, then presumably what it may mean is the procedure by which the Government accept and accede to the whole of the Articles of the International Finance Corporation.
9.45 p.m.
If that is the case, then I understand we are concerned with the procedure which is laid down in Article IX of the Agreement, the first section of which is headed "Entry into Force." Here I think I am entitled to ask whether, in fact, what is referred to in the first sentence of the Clause is the procedure by which the Government will accede to the Articles of Agreement of the International Finance Corporation; in other words, that what we are concerned with here is the authorisation of the deposits of the instrument of accession to the Agreement.
If that is the case, I think it is perhaps worth calling attention to the fact that the Government are required to deposit that instrument in a form which would guarantee our accession to the terms of the Article without any reservation whatever and without any amendments. That is a matter of some seriousness for this Committee, and, I would suggest, for the whole House, because it brings us back to the question whether or not we are debarred by the wording of this Bill from properly discussing the details of the Articles of Agreement.

§ The Chairman
We are debarred, and this is the last warning that I shall give on this matter.

§ Mr. Hale
May I venture to submit, Sir Charles—I do not want to come into conflict with the Chair—previous Rulings of Mr. Speaker on this point and also refer you to the observations in Erskine May?

§ The Chairman
It may be that Mr. Speaker gave a different Ruling on the matter, but we are now in Committee, and I am in charge. My Rulings must be carried out, and I am getting rather tired of saying so.

§ Mr. Hale
I am submitting to you the Rulings contained in Erskine May, and I apologise very much for the fact that, when the matter came up before, I was not armed with the authority and could not raise the point. I have since had an opportunity of referring to the authorities, and I would respectfully refer you to the authority of Erskine May in page 533, paragraph 2. I think I have the latest edition, which says: Bills to confirm agreements.—When a bill is introduced to give effect to an agreement or to confirm a scheme and the agreement or scheme is scheduled to the bill as a completed document, amendments cannot be made to the schedule, but an amendment to the clauses of the bill for the purpose of withholding legislative effect from the document contained in the schedule is in order, as are also amendments to those clauses which deal with matters not determined by the document contained in the schedule. The reference given is to three Bills first discussed in 1917, one of which was the Coal Mines Control Agreement Bill. I can say quite fairly that the matter was raised on Second Reading, in the next volume of the OFFICIAL REPORT in Committee, and in the next volume on Report, and the result was that Mr. Speaker gave a considered Ruling, in which he said: That alteration will have to be made in the Bill. It cannot be made in the Schedule. —[OFFICIAL REPORT, 8th November, 1917; Vol. 98, c. 2409.] That means that if we want to vary the agreement, we must make the alteration in the Bill.
On consideration of the matter on Report, the matter was raised again, when the Chairman of Committees was then in charge. The passage between Mr. Lough and the Chairman went as follows:

"Mr. LOUGH
Yes; but with great respect, if it is in order and can be carried by the House, will it not affect your Ruling that the House cannot do anything that affects the agreement? If it carries that Amendment, it will knock a substantial part of the agreement out. That is the point.

§ The CHAIRMAN
I do not think so. It is clearly within the power of the House to leave out that part of a penalty Clause and to say that they will not agree to the imposition of a penalty in that matter."—[OFFICIAL REPORT. 27th November, 1917; Vol. 99, c. 1849.]
Again, referring to the agreement by way of Amendment to Clause 1, Mr. Speaker gave a considered Ruling at col. 1433 901 of Vol. 100 on an intervention by Sir Gordon Hewart. Sir Charles Cory sought to move an Amendment to Clause 1 which would affect the terms of the Agreement in the Schedule. The Report reads as follows:

"Sir CHARLES CORY
I beg to refer you to your Ruling that though it might not be possible in the agreement itself to alter the terms of the agreement, it might be possible in the Bill to alter the terms of the agreement.

§ Mr. SPEAKER
I was not so well acquainted when I made that observation as I am now with the agreement and with the Bill. I understand that the hon. Member agrees that if his Amendment were inserted, it would completely alter the character of the agreement. If that be so, of course, it is not admissible, because the object of the Bill, as the first words of the Clause show, is to confirm the Agreement"
There was then a good deal of discussion in which the then Attorney-General, Sir Gordon Hewart, intervened, and Sir Charles Cory said: …I do not think this point has been raised as applicable to those who are not parties to the agreement. There is nothing contrary to any ruling in defining the agreement so far as it applies to those coal owners who have not been parties to it. On that, Mr. Speaker, said: The fact that the matter has been discussed in Committee does not preclude the House from discussing it on Report; therefore, the subject is open for discussion now. The Amendment of the hon. Member, instead of being as it is on the Paper, would be after the word 'trustees' to insert the words 'not parties to the agreement.'"—[OFFICIAL REPORT, 10th December, 1917; Vol. 100, c. 899–901.] On Report, Mr. Speaker specifically permitted a manuscript Amendment to be introduced to permit a variation in the agreement. In case it be said that the fact that the agreement was embodied in the Schedule was of any importance, the matter was again raised on the National Assembly of the Church of England (Powers) Bill. In this case the agreement was not in the Schedule, but was referred to in a White Paper just as it is today. The Report reads:

"MAJOR HAYWARD
On a point of order, Sir. I think it would be of assistance in the attitude of many hon. Members to the Second Reading if we got your ruling on this point. It is: 'an Act to confer powers on the National Assembly of the Church of England constituted in accordance with the constitution attached as an Appendix to the Addresses presented to His Majesty by the Convocations of Canterbury and York.' 1434 The hon. Member, in moving the Second Reading, referred to Amendments in Committee, and I should like to ask whether it will be possible in Committee to move Amendments altering the Constitution of the National Assembly as set forth in the Appendix, and particularly whether it will be possible to move Amendments altering the Constitution of the House of Laiety as set forth in Section 4 of the Schedule to the Appendix.

§ MR. SPEAKER
No; it would not be possible to move any Amendments which would alter the constitution of the National Assembly. That is provided for … in the Appendix to the Addresses from the Convocations of Canterbury and York. In regard to the constitution of the Ecclesiastical Committee of the Privy Council or the relations of the Legislative Committee of the Church Assembly to the Ecclesiastical Committee, I think it would be open to the House to make Amendments there but not in the constitution of the Church Assembly itself."—[OFFICIAL REPORT. 7th December, 1919; Vol. 120, c. 1823.]
The final Bill on which this subject came up to be discussed on a Ruling from the Chair—a matter of great constitutional importance—was the Bill that settled the powers of the Eire Parliament following the division under the Irish Free State Constitution Bill. The Chairman said he wished to say a word or two on a matter of order before the Committee stage of the Bill began. He said that Clause 1 gave the force of law to all the Articles set forth in the Schedules to the Bill, which were Schedules of an Irish Act. He added that they were specific documents and that no alterations could be made in them which would be inconsistent with the description in Clause 1. He said that it followed that if Clause 1 was once passed, no Amendments at all to the Schedules of the Bill would be possible. He pointed out that if any hon. Member wished to amend either of the Schedules, he must do so by way of addition to or proviso in Clause 1.
That was the specific Ruling that I had in mind, that this matter can only be discussed on Clause 1. I am sure the hon. Gentleman on the Government Front Bench would agree that at an earlier stage we were a little misled about the meaning of Clause 1—quite involuntarily, I know, The position is that Clause I refers to an agreement, but I am sure the hon. Gentleman will agree that it must be the Agreement in the Articles, and that is settled by the second Clause of Section 9 of the Articles which says that they must be passed without any amendment. That means that we accept them without amendment, or reject them.
1435 In the circumstances of the Ruling on the Irish Constitution Bill, in which the Committee stage went down, there was a discussion of Amendments on the Question, "That Clause I stand part of the Bill." The Ruling was that the matter could only be discussed on Clause 1.
May I say, in conclusion—I will conclude, as I have no intention of unduly detaining the Committee—that there are ample precedents in the way of treaties. It is not unknown in this House to bring in a single-Clause Bill under which we accept or reject a treaty. In my recollection—I will not quote the Austrian State Treaty because there the discussion lasted only for a few minutes, although a discussion did take place—it has always been recognised as competent for an hon. Member to say about Clause 1, "I do not propose to vote for the Question, 'That the Clause stand part of the Bill' because, in my view, there are aspects of this Treaty which are repugnant to the sensibilities of the House, and I vote against it for that reason."
I seek your guidance, Sir Charles. It is a point of difficulty, because the Bill has been drawn in a way which misled some of us in the first instance. The Bill is one of three Clauses. The first virtually adopts the Agreement. It authorises the Government either to adopt that Agreement or the thing falls to the ground. That is clear, and the hon. Gentleman himself does not dispute it. The Agreement must be adopted without amendment or not adopted in conformity with Article 9.
The second Clause is for the making of some international commitments in accordance with the Agreement. Surely, when we are spending £5 million, we are entitled to discuss where the £5 million should be paid and give the reasons why it should not be paid?

§ The Chairman
This is not a confirming Bill, it is a machinery Bill. The Articles apply to something quite different.

§ Sir E. Boyle
I think that the hon. Member for Oldham, West (Mr. Hale) is under a misapprehension. Clause I does not confirm anything; it is simply a definition Clause. What is required of the Government with regard to the 1436 Articles of Agreement is that we must deposit an Instrument showing the Government have accepted the Agreement and taken all the steps necessary to carry out their obligations. The United Kingdom Government require authority to accept two obligations. The first is the payment of a subscription—which comes under Clause 2 and not under Clause 1—and the second is the extension to the Corporation and its officers and staff of certain immunities and privileges, which comes under Clause 3. I cannot see that any of the considerations adduced by the hon. Gentleman are relevant to Clause 1.

§ Mr. Hale
The hon. Member has stopped at the vital words which say that we must accept the Agreement without reservation.

§ Sir E. Boyle
Clause 1 is purely a machinery Clause, a defining Clause. Two things are required of the Government for which this Bill is necessary. The first demand is for the payment of a subscription—and that is done under Clause 2 —and the second demand is the extension to the Corporation and its officers and staff of certain immunities and privileges under Clause 3. I can assure the hon. Gentleman that Clause 1 is purely a definition Clause, and nothing else.

§ Mr. Warbey
Hon. Members are concerned with the preservation of their rights in the discussion of matters which come properly within their province. We are concerned with the question of the payment of £5 million from public funds, and surely, therefore, we are concerned about the manner in which that money is to be used and for the purpose to which it is to be applied. It is all very well for the Government to say that this is a purely machinery Clause——

§ The Chairman
Not only do the Government say so, but I said it first, and I stand by that.

§ Mr. Warbey
I accept your Ruling, Sir Charles, that Clause 1 is put in as a defining Clause. Included in this definition is a reference to the Articles, that is to say, the Articles of the International Finance Corporation and the "explanatory Memorandum as aforesaid" which were laid before Parliament, by Command of Her Majesty, on 16th June, 1955.
1437 10.0 p.m.
I would call the attention of the Committee to this date. The Articles were laid only on 16th June of this year. Under the Ponsonby Rule governing the ratification or adoption by the Government of international agreements, a rule which the Government have said they accept and are applying, any international treaty or document having the character of a treaty is required to lay on the Table of the House for a period of 40 days during which time the House can demand a debate on the subject matter of that agreement. That 40 days have not yet expired.

§ The Chairman
That does not arise on Clause 1.

§ Mr. Warbey
With very great respect, Sir Charles, it is referred to in Clause 1, and I was trying to make the point that what the Government have done, owing to the way in which they have drafted Clause 1, is that they have, as it were, by-passed the kind of discussion which the House should have had—not merely the Committee of the House—on the Articles of Agreement of the International Finance Corporation. Surely, we are entitled to comment on the Government's drafting of the Clause.
We had assumed that by presenting a Bill dealing with the matter the Government were providing us with an opportunity of discussing the Articles of Agreement, but we now find that they have done nothing of the sort. They have presented this Bill in such a form that we are precluded from discussing the substance of the Articles. I think that the Economic Secretary to the Treasury must admit that.
We are now faced, from the Parliamentary point of view, with the extraordinary situation that we are called upon to pass a Bill not only through its Second Reading stage, but through its Committee stage, and, possibly, its Report and Third Reading stages, before the period of 40 days has elapsed during which we could have a debate on the Articles of Agreement. It seems to me that the Government are anticipating the desire of the House in the matter. Since we are in Committee, I think that we are at the point when we really ought to call upon the Government to move to report Progress so that they can look at the Bill again.
1438 The Government have got themselves and the Committee into a muddle and into the position in which the Committee is being asked to prejudge an issue which ought to be decided by the House. The whole House has the right to discuss the Articles of Agreement of the International Finance Corporation, which document has been laid upon the Table of the House. Yet the Economic Secretary asks the Committee to pass the Clauses of a Bill which will prejudge, and, in fact, render impossible, the discussion which this House is entitled to have.
This is the time when I think that the Economic Secretary might say something instead of merely telling us that on Report he proposes to introduce a drafting Amendment to the Bill, because that is quite inadequate. We want the Government to take the Bill back, to redraft it and to present it in a form which will enable us to do the job which we ought to do, namely, to have a proper discussion upon the Articles of Agreement of the International Finance Corporation.

§ Sir E. Boyle
The hon. Member for Ashfield (Mr. Warbey) has just said that the time has come for me to say something. I am bound to say that during the last half hour I have been waiting to say something because I wanted to give the House an exposition of Clause 1.
There is really nothing about the Ponsonby Rule in Clause 1, even if it were relevant to this Agreement, which it is not. The position is that there are certain Articles of Agreement in existence, those which have already been laid before the House and which we laid as soon as we possibly could in June last. These Articles are not by themselves an agreement, but they will become an agreement if and when they have been signed by the necessary number of parties. I tried to explain to the House in my Second Reading speech just what were the mechanics of bringing the Corporation into being. I said: The Articles of Agreement will come into effect when they have been accepted by at least thirty Governments, subscribing in total not less than 75 per cent. of its capital, but in any event not earlier than 1st October of this year."—[OFFICIAL REPORT, 1st July, 1955; Vol. 543, c. 694.] There is no question of these Articles of Agreement being signed with modifications. If they were to be modified, this Bill would not apply. But once the 1439 Agreement has come into force, then, under Article VII, there is machinery at a later date for modification. If hon. Members will turn to page 13 of the White Paper, they will see there the provisions relating to Amendments.
I am sorry that the phrase "any agreement" caused a certain difficulty, and I apologise if any words of mine earlier on added to that difficulty. I apologise wholeheartedly for any way in which I may have unintentionally misled the Committee.

§ Mr. Hale
I should like to apologise to the hon. Gentleman, because he did say that he was going to explain the position. I thought that his intervention was his explanation, and I apologise for intervening myself before he made his statement.

§ Sir E. Boyle
I thank the hon. Gentleman very much. With regard to the phrase any agreement…which may be signed … in pursuance of Articles as I said during an intervention in the speech of the hon. Member for Ashfield, the word "any" relates to the contingency—which we must keep in mind for the purpose of the Bill—that there may be no Agreement; and not to the possibility that there might be different Agreements arising out of the same Article.
I should like to round off this question of definition, because I may have been responsible for misleading the Committee earlier. Clause 2 is quite accurate in referring to "the Agreement." This means the Agreement when it has come into being, and since there can be only one Agreement—that is to say, the Agreement as defined in Clause 1—it is fair enough to refer to particular Articles in terms of "the Agreement." I hope that I have made the definition of the Clause clear to the House. It is purely a definition Clause, and, having given that explanation, I hope that the Committee may now be able to pass to Clauses 2 and 3, which deal with other points.

§ Mr. Warbey
Before the Economic Secretary leaves this matter, I should like to take up one point. He said that the accession by the Government to the Agreement does not come under the Ponsonby Rules. I do not follow that, because Article IX, Section 2 (a) says 1440 Each government on whose behalf this Agreement is signed shall deposit with the Bank an instrument setting forth that it has accepted this Agreement without reservation in accordance with its law.… Surely that Instrument is equivalent to the ratification of a treaty and, therefore, what we are dealing with is what all international documents are until they are ratified by the Governments concerned, namely, draft agreements.
We have the draft Agreement laid on the Table, and the Government will ratify it by depositing its instrument of accession to the Agreement. It therefore appears that the matter does come within the Ponsonby Rules, and the House is still entitled to discuss it before 40 days have elapsed.