HC Deb 29 July 1966 vol 732 cc2162-75
The Minister of State for Foreign Affairs (Mrs. Eirene White)

I beg to move, That an humble Address be presented to Her Majesty, praying that the Asian Development Bank (Immunities and Privileges) Order 1966 be made in the form of the draft laid before this House on 12th July. The draft Order which was before the House follows from the Agreement signed by 22 countries on 4th December last in Manila for the establishment of the Asian Development Bank. A text of the Agreement was placed before Parliament by my right hon. Friend the Foreign Secretary in Command 2989 last May. This Bank is a project of the United Nations Economic Commission for Asia and the Far East and is complementary, or will be complementary, in its operations to the Colombo Plan.

The Order before us would bring the United Kingdom into compliance with chapter 8 of the Agreement. It must be made before the United Kingdom can proceed to ratification. The date for the coming into force of the Agreement has been set for 30th September, by which time, if it is to be effective, at least 15 countries, subject to certain conditions, must have deposited their instruments of ratification or acceptance.

While this procedure is necessary, I should point out that the practical consequences of the Order are likely to be minimal. The United Kingdom, while being a full member of the Bank, would not be likely to have any offices or staff established or stationed here. The headquarters of the Bank is to be in Manila. Therefore, I repeat that the practical effect of this Order might be really nothing at all, although from time to time, no doubt, officials and other representatives of the Bank might find themselves in London.

Nevertheless, it is right that the House should examine the Order. It is similar to previous Orders made in respect of international organisations of which Her Majesty's Government are a member, although in some important respects its scope is more limited than most previous Orders. It follows the precedent of the two most recent Orders of this nature, those in respect of the European Space Research Organisation and the European Launcher Developer Organisation, each of which contain an exception from the immunity of the organisation and its officers in respect of civil proceedings relating to motor vehicle accidents and motor traffic offences.

A similar limitation has been incorporated into the present Order. This limitation, however, does not appear in the text of the Agreement establishing the Asian Development Bank, and it will, therefore, be necessary for Her Majesty's Government to add to their instrument of ratification a reservation on this matter. We shall also make reservations on one technical point concerning the deduction of tax at source in the United Kingdom and telecommunications. We cannot accept Article 54 of the Agreement.

Another exception to the immunity of the Bank is that proceedings arising out of the exercise of the Bank's powers to borrow money, guarantee obligations, or buy, sell or underwrite the sale of securities, are not covered. This means that when the Bank is raising loans or is engaging in any of the financial transactions which will form an important part of its functions, it will not be protected by immunity by suit but will be in the position of any other entity. This limitation is necessary to ensure that the Bank is able to raise money on terms as favourable as any competing enterprise. Financial enterprises who fear that the Organisation may, in effect, default by shielding behind its immunity would not be prepared to lend money on such favourable terms.

While the immunities and privileges conferred on the organisation in general are as extensive as is customary in these Orders, the privileges and immunities accorded to individuals are much less extensive than is usual. For example, no special degree of privilege or immunity is accorded to high officers. In the majority of organisations the heard executive officer and his deputy are accorded privileges and immunities comparable with those of a diplomatic agent. But in the present Order all officers and staff, including governors and directors of the Bank, are entitled only to a minimum level of privileges in respect of their official acts and to exemption from Income Tax in respect of their official emoluments.

As an important financial contributor to the Bank and as a supporter of it during its creation and establishment, we have a particular concern to see that it is able to function successfully and smoothly. Care has been taken to ensure that the limited character of this Order accords with views on the subject which have previously been expressed in the House.

I hope that these efforts will be welcome and that the approval given by this House to the Order will enable Her Majesty's Government to ratify the Agreement before the closing date of 30th September and thereby participate effectively in the crucial stages of its initial development.

We have not been able to put a specific date in Article 11 of the draft Order because we cannot forecast the date at which the Agreement will be legally binding on the United Kingdom. This depends upon the deposit of the instrument and the ratification by other Governments as well as by the United Kingdom. However, we have indicated that the date will be notified in the London Gazette, as the hon. Member for Crosby (Mr. Graham Page) may be interested to learn. I gather that there are numerous precedents for this in Orders made in accordance with the Act of 1950.

I hope that with this explanation the House will approve the draft Order.

4.0 p.m.

Mr. Douglas Dodds-Parker (Cheltenham)

The House is grateful to the Minister, who put this Order forward with her usual charm, using a somewhat dog-eared brief which I first looked at 10 years ago when this problem came before us in its first beauty. I am sure that the House will accept the Order in principle. But it is right that it should look at these matters, because what is being done by the Government is important in many ways. It is very important that we should have international organisations making use of this country. It is not so much a benefit to us in the House but it is for the benefit of Whitehall and the City that the country should be used by permanent residents and temporary residents, and by individuals passing through.

The House and the public have always been rightly jealous of extending privileges and immunities, and from the explanation that the hon. Lady has given it would seem that these privileges and immunities are somewhat less than the Order would lead us to believe.

It is right to take up a few moments of the time of the House on one or two points which occurred to me in reading the Order. I have had the hon. Lady's answer to the first already. It was not clear to me why we should be asked to extend privileges and immunities, although we have not ratified the Agreement. I understand from her explanation that this is putting the cart before the horse, and that the two will meet up in due course and all will be well.

Secondly, is it really necessary for the bank and other such financial institutions to have even these minimal privileges? I have thought about this question quite a lot. Can the hon. Lady tell us what other financial institutions have such privileges and immunities? I assume that the World Bank does and also, probably, the officials of the International Monetary Fund, but do any other development banks of this sort have the rights which are before us at the moment?

Thirdly, how many permanent officials are likely to pass through the United Kingdom and enjoy these privileges?

I now turn to the Order. Article 3 (c) says: In respect of a civil action by a third party for damages arising from an accident caused by a motor vehicle … I am glad that this modification has been made to the 1950 Act, because this question, more than any other, has inflicted itself on public opinion. It is seldom the holder of the privilege himself who is the offender, but some lighthearted driver, and over the past few years I think that it has been generally accepted that this immunity should not be too widely given. Therefore, I agree that Article 3 (c) is correct.

Articles 4–8 are modifications of Articles 54–56 of the Agreement establishing the Bank. I think that the hon. Lady said that we objected to the whole of Article 54 of the Agreement. I assume that Article 54 does not cover any secret communications, such as the use of cyphers or code, but if everybody is allowed the same treatment within the area of the Bank I am not sure why we should object to it.

The next point arises on Article 9 (b), unless he is a citizen of the United Kingdom and Colonies, exemption from income tax in respect of emoluments received by him as an officer of the Organisation Does a citizen of the United Kingdom pay United Kingdom taxes even it serving the organisation in the Manila headquarters? I have always thought that this would be a pity, because it might discourage some countryman of ours from taking up work in the organisation. Does he, on the other hand, pay Philippine rates of tax, which, I am sure, must be less discouraging than the taxes he would have to pay at United Kingdom rates?

My next point is, perhaps, the most important. In the opening words of Article 9, the persons referred to are, among others, Director, alternate, officer … and any expert…. This is very wide. As Lady Tweedsmuir, then my hon Friend the Member for Aberdeen, South—alas, missing from this bench now—said in the debate on 29th July, 1965, when this point was referred to, the objection which the Select Committee found to Article 12 of the Order then under discussion was that it included a category of staff undefined.

It seems to me that this term "expert", without definition, is too wide. Whether one could use some such words as, "an individual appointed for a specific task for a limited time", I do not know, but I do not like the blanket word "expert". In any case, "expert" is a designation which I am always very frightened of in any form of activity in this world, and, as I have said, the Select Committee on Statutory Instruments has objected to it in the past, I am sure that others would be pretty quick to rumble a local Balogh or Kaldor—rather quicker than we have been in the past in this country.

This is a somewhat wide term to be used here, and to some extent it vitiates the narrowness which I have understood to be the intent of the Order now put before the House.

If the Minister can give us assurances on these points, I am sure that I can persuade my hon. Friends not to press the matter to a Division.

4.8 p.m.

Mr. Eric Lubbock (Orpington)

I hope that I shall be forgiven for taking a little time to raise certain additional points on the Order. I agree with the hon. Member for Cheltenham (Mr. Dodds-Parker) that it should not be allowed to go through without discussion. We are conferring on a commercial organisation the privileges and immunities which apply to diplomats resident in this country. Article 4 makes clear that these privileges and immunities are precisely the same as those applying to the envoy of a foreign Power. In these circumstances, we ought to scrutinise the terms of the Order carefully.

This is the more necessary, I suggest, because one notes from the Order Paper that the Order has not yet been considered by the Select Committee on Statutory Instruments. I notice these words appearing fairly frequently on the Order Paper nowadays, and I wonder whether an Order of this kind conferring extensive privileges and immunities ought to have been brought before the House before having been considered by the Select Committee. Perhaps the hon. Lady will give us a reply on that point.

Mr. Graham Page (Crosby)

It is unfortunate that this phrase has to be used on the Order Paper. In fact, the Order has been considered by the Statutory Instruments Committee and has been held up on a point on which I hope to catch the eye of the Chair this afternoon.

Mr. Lubbock

The hon. Gentleman reinforces my point. If the Select Committee has observed something in the Order which it thinks should be drawn to the attention of the House, one is all the more entitled to criticise the Government for bringing forward the Order at this stage. In the light of what the hon. Gentleman has just said, perhaps we ought to reconsider whether the Order should be passed this afternoon.

I agree with the hon. Member for Cheltenham in welcoming Article 3(c) under which exemption from proceedings is not to apply to motor vehicle offences. I wonder whether this limitation is entirely necessary. As he said, we are here considering a commercial organisation, and I cannot see the a priori justification for according to a commercial organisation such extensive privileges as ordinarily apply to the embassies of foreign countries.

If one looks at Command Paper 2989 which the hon. Lady mentioned, one finds in Article 48 of the Agreement these words: To enable the Bank effectively to fulfil its purpose and carry out the functions entrusted to it, the status, immunities, exemptions and privileges set forth in this Chapter shall be accorded to the Bank in the territory of each member. There is no justification for that. It then goes on to outline what those privileges and immunities should be. It does not say why it is necessary to the commercial functioning of the Bank that the privileges and immunities should be conferred upon it. Having read them, I cannot see they have anything to do with the commercial operations of the Bank.

Also, I note that even Her Majesty's Government have not accepted Article 54, "Privilege for Communications". I agree with the hon. Gentleman that it seems odd that this particular one should be singled out, because it seems one of the most innocuous.

Then there is Article 50, which says: The Bank shall enjoy immunity from every form of legal process, except in cases arising out of or in connection with the exercise of its powers to borrow money, to guarantee obligations, or to buy and sell or underwrite the sale of securities … Does this mean that the Bank has immunity from legal proceedings in respect of its employees? I know that the hon. Lady said that not many employees or servants of the bank would be likely to be resident in this country, but this is surely a matter rather like that of the housemaid's illegitimate baby —it could be overlooked because it was a small one.

Does Article 50 really mean that an employee of the Bank who is resident in this country is not entitled to take proceedings, for example, in respect of the Contracts of Employment Act? I mention that as only one example which has occurred to me, among a number which might possibly arise.

To come to the Order itself for a moment, I see that the Organisation will have the like inviolability of official archives as is accorded in respect of the official archives of an envoy of a foreign sovereign Power accredited to Her Majesty. Again, I really cannot see that it is necessary for the Bank to have this particular privilege in order to carry out its commercial operations.

By Article 6 The Organisation shall have exemption from taxes on the importation of goods directly imported by the Organisation for its official use … I am almost positive that the hon. Lady will say to the House that she cannot see any circumstances in which that article will be brought into operation because the Bank does not import goods; it is not likely to be bringing in large quantities of duty-free cigarettes or liquor.

I see the hon. Lady shaking her head. So why have this article in at all? It strikes me that we have just put in everything anybody could think of and said, "These are the privileges we will confer". I should like to have a much fuller explanation from the hon. Lady than that which we have had so far.

Then we come to Article 9(b). I agree with what the hon. Member far Cheltenham has said. We have this exemption in respect of emoluments received from Income Tax for a servant of the Bank. Why should a person resident in this country, even if he is a citizen of a foreign Power, be entitled to complete exemption from our Income Tax? Bearing in mind the present economic situation of the country, I should have thought it wholly wrong to exempt altogether from Income Tax any person working in this country.

My view in general of this is that there has been a proliferation of international bodies of one kind or another, on which extensive privileges and immunities have been conferred, and I really do not think the House should permit this situation to be extended. We really want not only a statement that we have signed a treaty, the terms of which are embodied in the order, but art a priori justification for conferring such extensive privileges on anybody.

4.15 p.m.

Mr. Graham Page (Crosby)

As I said in an interjection while the hon. Member for Orpington (Mr. Lubbock) was speaking, the statement on the Order Paper that The Instrument has not yet been considered by the Select Committee on Statutory Instruments is normal but not correct. The Instrument has been considered by the Committee and it has asked for an explanation by the Department of Article 11, which deals with the coming into force of the Order. It states that the Order … shall come into operation on the date on which the Agreement establishing the Asian Development Bank, signed at Manila on 4th December, 1965, enters into force with respect to the United Kingdom. There is no explanation of what is meant by … enters into force with respect to the United Kingdom. It seems quite impossible for the ordinary layman reading the Order or having to apply it afterwards or even for judges in the courts having to apply it, to know what is meant by that phrase and when exactly the Agreement does come into force with respect to this country.

It is true that the Article goes on to say: This date shall be notified in the London Gazette." That, however, is not conclusive evidence of when the Order comes into force. If it were to be conclusive evidence, we should on this occasion be delegating to a civil servant the power delegated to Her Majesty in Council in this case—that is to say, the civil servant cannot decide for himself and advertise in the London Gazette the date on which he thinks the Agreement enters into force with respect to the United Kingdom.

This is not a mere academic point. By this Order we are taking away the rights of a subject to take action in the courts. It is true that motor accidents are not immune but a motor accident is not the only tort which can occur. There may be many cases of neglect, for example, by a person with immunity under the diplomatic privilege rules and it may be very important to know the date on which that immunity arises. If a certain act of negligence or default has occurred, it may be very important, in the action by the person who has suffered the injury or the damage, to know when the immunity arose, but it may be difficult in this case because of the vague words in Article 11— … enters into force with respect to the United Kingdom. An Order should not be put before the House in this vague way when it is affecting the rights of ordinary citizens. This is not, as I say, an academic point. It may well arise in the case of injuries suffered and in the case of an action brought by an ordinary citizen against an employee of this Bank. In approving the draft Order, we should be more certain as to what is meant by these words, "enters into force", what has to happen in order to bring the Agreement into force and, therefore to bring the Order into operation. and this should be stated clearly in the Order itself.

4.19 p.m.

Mrs. White

I will first deal with the last point made by the hon. Member for Crosby (Mr. Graham Page). He is making extraordinarily heavy weather about it. It is clear from what I said that one cannot at this point put a precise date into the draft Order because we do not know the dates on which other countries will deposit their instruments of ratification and until they and we do so, we are not bound by the Agreement. I am sure that it would be contrary to the wishes of the House to put some date extending these privileges, about which some criticism has been made, which might be prior to the date under which we would be under an obligation to do so.

I fail to see the force of the argument advanced by the hon. Member for Crosby. The point that he made in a discussion on an earlier Order has been met in this Order, because we have said quite clearly to the public that the date on which the Order comes into operation will be published in the London Gazette. This is common form for matters of this sort, and I am disappointed that the hon. Member for Crosby, who is usually so clear headed, should have allowed himself to become enmeshed in what is a completely bogus argument.

Mr. Graham Page

I was complaining of the words, "enters into force". The hon. Lady is endeavouring to define them as laying some papers or others. If they were defined in some form such as that in the Order, I would have no complaint, but I am saying that it will not be possible to identify the date when it enters into force.

Mrs. White

The date on which it enters into force will be the date when it becomes applicable to the United Kingdom. We cannot foretell what the date will be. In the Explanatory Note it says that it will come into operation on the date on which the Agreement.. enters into force with respect of the United Kingdom", and I do not see how we can put it more clearly. It is nonsense to suggest that this is an arbitrary act, that it is some date chosen at random by a civil servant, when it is a point in time which can well be established. It seems to me that the hon. Gentleman's argument is an unworthy one.

There are other matters connected with the Order which I think merit some further explanation, which I shall do my best to give.

The hon. Member for Cheltenham (Mr. Dodds-Parker) inquired how many international financial organisations other than the one which we are discussing have comparable immunities and privileges. The other ones concerned have wider immunities and privileges than the ones being proposed here. The organisations are the International Bank for Development and Reconstruction, the International Monetary Fund, and the International Finance Corporation. The International Development Association is not quite comparable, but we might put that in as well. They are covered mostly by special legislation which confers wider privileges than the relatively narrow ones proposed in this Order.

The hon. Member for Orpington (Mr. Lubbock) said that this was a commercial organisation. It is not in the ordinary sense of the term. It is an inter-Governmental organisation. The members are not private persons, they are Governments and they are States. That being so, it is the opinion of the Government, as it was of our predecessors, that organisations of this standing have certain differences from ordinary commercial organistions, of which the members would be private persons, or private bodies, and therefore they enter into the realm of diplomatic behaviour, and some recognition of this is desirable.

Mr. Lubbock

I was looking at the power of the Bank to borrow money to guarantee obligations, to buy and sell, to underwrite the sale of securities, and so on. It is those activities of the Bank which say are commercial in their nature.

Mrs. White

But those activities arc the ones which do not attract privileges under this Order, as I had hoped I had explained when I spoke earlier.

I turn now to the question of our difficulty over Article 54 which is referred to in paragraph 8 of the draft Order, which is concerned with communications. The point here is that in our view the proposal under Article 54 of the Agreement goes wider than we consider is justified for an organisation of this kind because in the International Telecommunication Convention signed in Geneva in 1959 which lays down the persons and authorities entitled to these special privileges, no international organisations other than those of the United Nations are included, and this Bank, although it is linked at one or two removes with the United Nations, is not a United Nations organisation in that sense.

Therefore, we felt it would not be desirable to extend the special privileges it was trying to claim under the Agreement. In this respect, as in several others, we are narrowing for the United Kingdom, the privileges which it is proposed to extend. I am sure that the hon. Member for Orpington will appre- ciate that the countries in which the Bank will be carrying out its operations will not be confined to the United Kingdom and that it may be very desirable to have certain safeguards. One should judge the matter partly on that basis.

The hon. Member for Cheltenham asked about Income Tax as it affected a United Kingdom subject. My advice on this—and I confess that I am no expert in the law of Income Tax—is that it would depend on the particular circumstances of the case, and that in some circumstances an officer with United Kingdom citizenship might be liable to United Kingdom tax on part of his emoluments even though he was serving in Manila or elsewhere outside the United Kingdom—but that this is not very likely. I am afraid that that is as far as I can go in elucidating that point.

On the question of experts, referred to in Article 9, I have great sympathy with hon. Members over the difficulty that has arisen in this matter. All I can say is that it is necessary to include them in order to bring ourselves in line with Article 55 of the Agreement, which refers to: All Governors, Directors, alternate, officers and employees of the Bank, including experts performing missions for the Bank". That is the reason for using that term. I admit that it could be regarded as a fairly wide one but, as I have said, it is to bring us into line with an Article the general purposes of which we agree with.

I do not wish to detain the House by going into any wider issues, except to refer to one other objection made by the hon. Member for Orpington, who spoke about the proliferation of bodies. If we concern ourselves primarily with those which come under the 1950 Act, which is the basis for these various Orders, we find that there are 29 international bodies, with two pending and the one that we are now discussing.

On the other hand, in the period in question 13 have lapsed, and although one cannot give any estimate of what number of persons may be involved under this Order—the organisation has not been set up, so I cannot give a proper estimate of how many employees might be concerned—I am advised that at present, in the United Kingdom, there are 284 persons who would come under these sorts of arrangements—some of those arrangements being rather wider than this but some of them being as narrow as this.

This compares with nearly 5,000 in the United States, well over 3,000 in France, and about 200 in even so small a country as Austria, so that we are not more burdened than other countries, or unduly generous in this matter.

I hope that, having given as full an explanation as I can in reply to the points that have been raised, the House will be willing to approve the Order.

Question put and agreed to.


That an humble Address be presented to Her Majesty, praying that the Asian Development Bank (Immunities and Privileges) Order 1966 be made in the form of the draft laid before this House on 12th July.

To be presented by Privy Councillors or Members of Her Majesty's Household.