EXCLUSION AGREEMENTS NOT TO APPLY IN CERTAIN CASES UNLESS ENTERED INTO AFTER COMMENCEMENT OF ARBITRATION. (Hansard, 2 April 1979)

§ Mr. Michael Neubert (Romford)
I wish to oppose the clause.
By way of introduction to my argument, I should put it on the record that the Bill, in the circumstances of the Government's defeat last Wednesday, comes before us unexpectedly soon and comes before a Committee of the whole House rather than the more intimate and leisurely proceedings of a Standing Committee. For this reason, it has taken by surprise many of those most closely interested in its provisions. Only this morning, I received three letters of substance on the Bill all dated last Friday and all expressing concern that the Bill should not be rushed through while it remained un-amended in several important respects.
Clause 4 seeks to exclude so-called special category disputes from the opportunity which the supranational disputes have of being contracted out of judicial review. It is thought that this proposal may be unattractive to many large commercial organisations concerned in matters relating to shipping, insurance and commodities, which comprise the special category disputes.
It seems to a dispassionate onlooker that this disagreement is a blemish on a Bill which otherwise has received acclaim and is thought to have considerable merit. The overall purpose is to maintain and, if possible, to improve the reputation that London possesses as a centre of arbitration. It is with some sadness that I draw the attention of the Committee to the terms of this controversy which has arisen on this clause and with which the right hon. and learned Gentleman who is in 1065 charge of the Bill for the Government will be familiar.
The argument brought forward for this exception seemed very slight. The Solicitor-General, in his speech on Second Reading, alluded to the arguments given by the Commercial Court committee whose recommendations the Government follow. The Solicitor-General said that the Commercial Court committee reported that there was no evidence of any widespread desire on the part of those engaged in special category disputes to be able to contract out of a right of judicial review.
The Solicitor-General added: Second, the committee believed that the right of review by the courts over a wide field of arbitrations is essential if English law is to develop comprehensively and so maintain its place as first choice of law in international commerce. 9.30 p.m.
It appears to me that those two arguments largely cancel each other out. If there is no evidence that there will be a widespread taking-up of the opportunity offered, there will still be the opportunity for the law in this respect to be developed case by case.
We are requiring people engaged in these international contracts to pay for the development of law, in this respect, by long and costly litigation. Be that as it may, those two arguments do not seem very strong, taken side by side.
Thirdly, it was thought that if contracting-out were permitted freely a contracting-out clause might become a normal term in standard form contracts, so that often the parties would not apply their minds to the question. This anxiety exercised Lord Diplock, who is an authority on this subject as president of the Institute of Arbitrators. It seems to a layman to be lacking in substance that, because a contract is in printed form and becomes commonplace and standard, the parties to a contract cannot themselves individually negotiate different terms, in limited respects, to the contract before them.
Fourthly, it was suspected that the present dissatisfaction with abuses of judicial review may evaporate after the commercial community has experienced the new form of procedure in the Bill.—[Official Report, 14 March 1979; Vol. 964, c. 642.] 1066 That might also stand as an argument were it not for the fact that the Government have thought it wise to introduce into the Bill a clause which would enable them to review the situation, as recommended by the committee, after two or three years. There is considerable doubt all round. No one is absolutely sure that what is proposed is right. The safety clause is left in in case it should be necessary to remove the current proposal.
That being so, I hope that the Solicitor-General will be able to respond now, in a way that he no doubt expected to do elsewhere and with more time in hand, to the representations by the interested parties which want an explanation with more cogency and conviction of why these contracts should not also be subject to the freedom to contract out of judicial review if that is the wish of one or other or both of the parties. The maritime arbitrators particularly feel strongly about this. They can see no great substance in the arguments against their having the right that is conferred on supranational contracts. The House will wish to have a proper case made out before agreeing to the clause as it stands.

§ The Solicitor-General (Mr. Peter Archer)
The hon. Member for Romford (Mr. Neubert) is, of course, right to say that events have overtaken the expectations which I think we all had on Second Reading. It is true that, if the Bill had been discussed in Standing Committee, we might have been able to debate this matter at some length.
The situation has changed now for a reason that I shall try to describe in a few minutes. I begin by saying that the Bill's purpose is twofold—first, to preclude the abuse of a right of appeal to the courts by those who wish to delay the day of judgment when they have to pay their debts and, secondly, to retain the attractions of London as an international centre of arbitration.
The Bill provides that, in international arbitrations, those who so wish may stipulate when they make their contract that there shall be no appeal to the courts from a decision by the arbitrator. However, two considerations were very much in the minds of the Commercial Court committee. The first—the one to which the hon. Member has alluded—was 1067 that where we are not dealing with international arbitrations, between what, in another place, Lord Hailsham, called "the grandees", there is a danger that one party would be in a weak bargaining position and would be bullied into accepting an exclusion clause about which, if he had had a better opportunity of entertaining the question, he might have had doubts.
Secondly, the great attraction of English commercial law as a medium for these agreements is that it is comprehensive, providing for most of the eventualities which are likely to be encountered in practice. That is, as the hon. Member himself fairly said, possibly because examples of every kind of dispute fall to be decided by the courts. It would be a serious step to encourage any development which would preclude that.
I fully take the hon. Gentleman's argument that, if there is no demand for the right to contract out, the courts might not be deprived of that opportunity, but that is a two-edged argument. If the hon. Gentleman is right and there is a real demand for the right to contract out, they would be. So, on that one, we end equal.
The real problem is that, if the Bill is to reach the statute book in this Parliament, realistically it will have to do so unamended. I say that for two reasons—first, because the agreement of the official Opposition on which the progress of the Bill depends was clearly given on the basis that it should proceed in its present form. I should regard it as a breach of faith on my part if I were now to agree to the introduction of amendments.
Secondly, in any event, if the Bill were amended, it would have to go back to another place and I doubt whether there would be time for amendments from this House to be considered there. I hope that the hon. Gentleman will accept that it is better to have the Bill in an unamended form than not at all.
The Bill goes some way in the direction in which he and those who have written to him clearly wish it to go. It abolishes the procedure by case stated and replaces it with a less far-reaching appeal procedure. It permits some powers of contracting out which at present do not exist. What I think the hon. Gentleman 1068 and those who have written to him might regard as particularly important is that the Bill provides what I regard as a compromise solution, because it empowers the Secretary of State, when there has been some experience of the workings of the Bill, to add to or subtract from the categories which now fall within the special category procedure.
As the hon. Gentleman knows, I have also discussed with those who have written to him the problem which is in their minds. I hope that I am not misquoting them when I say that I believe even they are persuaded that the prospect of the Secretary of State being able to amend the Bill when we have seen how it works is a distinct step forward. I hope that the hon. Gentleman will agree that, being realistic and facing the options we are facing tonight, it is better to have an unamended Bill than no Bill at all.

§ Mr. Ian Percival (Southport)
I should like to add to, and in many ways echo, what the Solicitor-General said.
I believe that all of us appreciate the importance of the points that my hon. Friend the Member for Romford (Mr. Neubert) raised and the concern of those who wrote to him. All of us would have preferred to have discussed those concerns fully in Committee—and most interesting they would have been. I think that it is quite likely that we should have been able to persuade London Maritime that what we have is not a bad solution. On the other hand, perhaps that body would have persuaded us that at least some minor variations were necessary.
I am sure that the Solicitor-General was right to advise the Committee that it was better to have the Bill as it is than not at all. It is quite right that those were the terms of the Opposition's agreement to the Bill going through. I hope that no one will think that that was niggling. The Committee on reflection would, I am sure, feel that this is the kind of Bill with which one must not mess about in a hurry.
I have spoken to the Solicitor-General about one or two matters myself, such as the question of having a certificate of general public importance before one can have an appeal. There are one or two things that many of us would have wished to have discussed in detail and perhaps amended. However, we have all learned 1069 that unless something is absolutely clear, to try to amend it in a hurry is a recipe for disaster. We felt that we really had to say either "Yes, let us have the whole Bill as it is" or "No, let it be considered in more detail later". To have tried, in the limited time available, to eliminate some of the warts, if that is the right description of them, some of the things about which there is concern at present, might well have landed us in the situation where we all got something we really did not want.
I hope that my hon. Friend and those on whose behalf he has spoken and whose views he has put forward will appreciate the dilemma in which we found ourselves. They will find that the whole House is very ready to look again at the Bill if it can be improved. What we all hope is that the Bill will at least provide a workable solution and a distinct improvement on what we have at present without it. For those reasons, I hope that my hon. Friend will not persist in his objections.