§ Order for Second Reading read.
4.20 pm§ The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mark Lennox-Boyd)I beg to move, That the Bill be now read a Second time.
The House has before it a short technical Bill to amend the Foreign Compensation Act 1950. The Bill received its Second and Third Readings in the other place on 5 November and 3 December 1992. It enables the Foreign Compensation Commission to act in those cases where Her Majesty's Government receive or expect to receive compensation for losses overseas from or through an international organisation or tribunal.
The key reason for the Bill is to cope with claims against Iraq as a result of its unlawful invasion and occupation of Kuwait in August 1990. As an independent statutory quasi-judicial body, the Foreign Compensation Commission is able to bring special administrative and legal skills into the determination of individual claims that the Government have espoused and into the equitable disbursement of any funds received in settlement. However, as the explanatory memorandum to the Bill explains, the Foreign Compensation Commission may be empowered to act only where the Government enter into an agreement under which compensation is to be paid by another country, or in anticipation of such an agreement.
When the Foreign Compensation Act was passed in 1950, it was not anticipated that there would be a situation in which compensation would flow through an international organisation or tribunal. We now face that very situation, as a consequence of Iraq's unlawful invasion and occupation of Kuwait. It is for that reason that the Bill comes before the House. It replaces section 3 of the 1950 Act with a new section which will enable Her Majesty to provide, by Order in Council, for the Foreign Compensation Commission to act in circumstances in which the Government receive compensation paid by another country or by an international organisation or tribunal.
Provision for the commission to act will also be possible where receipt of such compensation is contemplated. There will no longer be a requirement that an agreement with another country must be concluded or contemplated before provision is made for the Compensation Commission to act. Nor will compensation have to be paid directly by another country.
I need to explain how the claims following the Iraqi war are being handled, in order to explain the practical effect of the amendment. Under the provisions of Security Council resolution 687 of 1991, the Security Council established the United Nations Compensation Commission and a compensation fund and that new United Nations body is mandated by resolution 687 to receive claims for damage or injury to individuals, Governments or corporations as a result of Iraq's unlawful invasion, and occupation of Kuwait.
493 The policy-making body of the new United Nations commission is the governing council, which has the same membership as the Security Council. Since July 1991, it has drawn up the detailed criteria for eligible claims and claimants, and established the commission's procedures. Claimants submit claims to their Governments who forward them to the United Nations Compensation Commission. The commissioners will recommend to the governing council allocations of compensation to Governments. Governments will then distribute compensation between their claimants.
While the majority of claims will be for fixed amounts under expedited procedures, we cannot be certain whether the commission will nominate specific amounts for individual claimants or companies in every other case, or whether there will ever be occasions when Governments are given overall sums to distribute between their claimants. Particularly in the case of large or complex claims, the Government will need to be prepared to adjudicate claims and decide on the distribution of compensation. Amending the Foreign Compensation Act in the way proposed will provide us with the appropriate means to do that, by authorising the Foreign Compensation Commission to undertake the task.
Other Governments are making similar arrangements and I trust that the Bill will commend itself to the House.
§ Mr. George Robertson (Hamilton)I welcome the Bill. I am sure that the entire House—there are numerous Members in the Chamber—will agree that it is uncontentious. It will agree also, I am sure, that it was right in the situation in which the Government found themselves—especially in relation to collecting information on compensation claims and distributing payments —that the Government should find the appropriate mechanism. Existing legislation, deficient as it is, is the ideal vehicle. We welcome the fact that the Government are using an existing institution and existing legislation to deal with the problem that has arisen.
The battle for Kuwait, following the illegal annexation by Iraq, is some time behind us, though its legacy lingers on in so many different ways. The Bill seeks to deal with the reparations that arise from Security Council resolution 687, whereby Iraq must contribute to compensating those who lost their assets, livelihoods, and in many instances, their personal possessions as a result of the annexation. None of us should underestimate the pain and suffering of so many people in the area as a result of Saddam Hussein's illegal policies.
One of the remarkable features of this minor piece of legislation is the speed with which the United Nations has been able to move. The Foreign Compensation Commission has moved with enormous speed, given the way in which the United Nations has had to work in the past. It is quickly getting to grips with an extremely serious issue. It is good that the British Government have been able to find a mechanism so early on for handling claims and I hope, eventually, payments.
I should like to know precisely how much money will be available. The Minister has told us how many claims there are likely to be and how many of them are likely to be British; it will be quite a large number. Quite a few British 494 citizens worked in the area and many claims will be made on their behalf. The principal source of compensation moneys will be the oil revenues that Iraq can gain from its supplies. It was given permission to start delivering oil, and all revenues from the oil shipments were to go to the United Nations. At least 70 per cent. of the revenues were to be remitted to the commission.
It is my understanding that precious little oil is being exported from Iraq. Little, therefore, is as yet available to settle the compensation cases that we are talking about. The unwillingness of Iraq to use its oil to gain revenues and to gain contributions for itself stands in marked contrast to the complaints that are made by the Iraqi Government about the penalties that are being imposed on their country by the world community. It stands also—not for the first time—in stark contrast to the pain and suffering that are still being experienced by the poor, benighted population of Iraq, which could well do with the resources that would be available if Iraq took the opportunity to export the limited amount of oil that is available.
I am therefore presuming that the bulk of the assets so far available to the commission will be coming from the sequestration of assets previously held by Iraq in the west and frozen by Security Council resolutions. It would be interesting to know precisely how much is still available through that means.
It is estimated that the claims that are likely to be made to the commission will amount to about £50 billion. The maximum that is likely to be obtained through oil revenues and subventions will produce a mere £3.5 billion per annum. I am sure that the Minister will be able to confirm those figures, which I obtained from the March 1992 edition of Law Times. If this is the case, clearly the ability of the commission to settle anything but a fraction of the compensation cases in the short term will be extremely limited. It will be many years before all these compensation cases are likely to be settled, however quickly the commission works.
Having made those few remarks and welcomed the Bill and the expedition of the process, I hope that the Minister will understand that the Opposition believe that the speed with which the process can be carried out and resources can be given to the commission will be the biggest test ahead.
§ Mr. Bob Cryer (Bradford, South)The Bill contains powers to make subordinate legislation by Order in Council. Orders in Council are not made by the Queen, although that is the rubric that is used. They are made by a group of Ministers meeting in the Privy Council, and that can be as few as two or three.
We all welcome provision for the awarding of compensation, but this is a fairly controversial area. Some people will feel that they qualify for compensation when the criteria that the commission lays down through the order—or which Her Majesty lays down by Order in Council—may not embrace such people. The whole of clause 1(2) relates to the conditions that must be fulfilled in order to qualify for compensation. That is clearly an area of some controversy, because some people will feel that they are eligible, whereas the Order in Council may rule them out.
I should, therefore, like to know from the Minister before the Bill slips through the House virtually unnoticed 495 what further parliamentary procedures the Orders in Council will be subject to. One of the strengths of the Commons is that people have some recourse when there is a conflict between an institution established to set out criteria, as under the Bill, and the criteria that some people feel should apply to them. It is on those occasions that some parliamentary scrutiny is of advantage.
If an Order in Council is made, will it be subject to further parliamentary scrutiny of any kind? Will the Minister be open to representations from people outside the categories laid down by the criteria in clause 1(2), or will it be beyond any kind of negotiation?
These are minor matters in a minor Bill which is designed to enable compensation to be paid. I am not objecting to it, but there are too many occasions on which too much delegated legislation is given to too many Ministers, and I believe that, where there is the opportunity, we should raise these questions so that at some future date we are not confronted with the necessity, if criteria need to be changed, of making another Order in Council. Of all the procedures of delegating powers, the Order in Council procedure tends to be the most arcane, and I believe that we should make things as open and democratic and as subject to the scrutiny of the House as possible.
§ Mr. James Molyneaux (Lagan Valley)I apologise for intervening towards the end of the hon. Member's timely speech. He will know that Northern Ireland in its entirety is governed by Orders in Council. If we are very lucky, we get a 90-minute debate.
Coming to the relevant point, there is no possibility of amendment. In fact, on one occasion when the former right hon. Member for South Down, Mr. Enoch Powell, pointed out a printer's error in an Order in Council, the Minister acknowledged that it was a printer's error but it could not be altered even when the House entirely agreed that it was an error; it had to return to the Privy Council. Real scrutiny and the possibility of any amendment are absolutely nil.
§ Mr. CryerThat is one problem with delegated legislation. Except in one or two minor cases, such as census legislation, primary legislation cannot be amended. Indeed, some of my remarks would not be relevant if delegated powers could be amended.
As Chairman of the Joint Committee on Statutory Instruments and the Select Committee on Statutory Instruments, I find that we are often confronted with instruments which are badly drafted and which give to Ministers powers not provided by the primary legislation. In other words, they are ultra vires and the terms are ambiguous.
That happens only with a minority of instruments, but they may affect people's lives—no more so than in a case where the person is seeking compensation for injury or loss, but, because of bad drafting or a lack of awareness by those who drafted the instrument and those who subsequently rubber-stamped it, the framework cannot be amended.
Recently we had an example at the Joint Committee. Two Ministers had signed identical statutory instruments produced by their Departments. In both cases the instruments had been altered, apparently after signature. When Ministers are presented with instruments to sign, it 496 is conceivable that, because they have a pile of documents before them, they do not scrutinise the instruments as minutely as they should. That is how mistakes happen.
We are talking about legal documents with legal enforcement. If the documents do not cover all cases, some may be excluded by virtue of that definition. I seek information from the Minister. There are real problems with delegated legislation. The Minister is probably aware, and I hope that he is trying to do something about it, that in 1992 the Government produced more statutory instruments than any other Government in the history of Parliament. They produced just under 3,500 instruments, which is 10 every day. Therefore, I am using the opportunity to seek information and to remind Ministers that, while there is a need for delegated powers, there is also a need for scrutiny.
§ Mr. Lennox-BoydI am grateful to the hon. Members for Hamilton (Mr. Robertson) and for Bradford, South (Mr. Cryer) and to the right hon. Member for Lagan Valley (Mr. Molyneaux) for their contributions. I shall do my best to comment on all the points that have been made.
In response to the hon. Member for Hamilton, we expect some 3,000 British claims in all, 2,000 from individuals and the remainder from companies. More than 1,000 British claims have already been forwarded by the Foreign Office to the commission. Most are for loss of personal possessions, but many are for mental pain and anguish and, in some cases, injury suffered by former British hostages at the hands of Saddam Hussein. Prisoners of war ill treated by the Iraqis are also eligible to claim.
On the payment of claims, the hon. Gentleman asked me to explain two figures, £50 billion and £3.5 million. Under a Security Council resolution claims will be paid from a percentage, initially 30 per cent. of Iraq's oil export revenue. Before the 1990 invasion, Iraq's gross export earnings amounted to some $15 billion a year. Under resolutions 706 and 712 of the Security Council Iraq was permitted to export up to $ 1.6 billion worth of oil. The revenue would go into a special United Nations escrow account, which is immune from attachment of Iraqi funds by other creditors.
That is the position that the United Nations established, but, as we all know, Iraq has so far refused to resume the exporting of oil—at least, officially. As a result, the Security Council adopted on 2 October resolution 778, which authorises the sequestration of certain unencumbered frozen Iraqi assets—outside Iraq, of course—to be used in the same way as the oil revenues under the resolutions that I mentioned earlier. Of United States moneys sequestered, some $21 million has been placed in the United Nations for use by the compensation commission, and more is expected from that source.
There is not yet any estimate of the total number of claims. Thus, it is very difficult to say at this stage whether there will be enough money. It is clear that there is not enough in funds released into the escrow account so far. However, we are maintaining pressure on the Iraqi Government to export oil for their own benefit and to meet their obligations under United Nations resolutions.
I have been asked whether certain Export Credits Guarantee Department loans will be covered. It is important to establish that all losses must be eligible. 497 There are certain ineligible losses. For instance, losses arising from the situation caused by the United Nations embargo are not eligible. To be eligible, losses must be direct. Any loss that can be established to have arisen directly from Iraq's invasion and occupation of Kuwait —whether a business or a private loss—will be eligible. Of course, any debt existing before 3 August 1990 will not be eligible under these procedures. We expect about 800 British business claims. These will be eligible if they satisfy the direct loss criteria.
§ Mr. George RobertsonI should like to take the Minister back briefly to the question of debts that existed before the invasion. Clearly, any failure involving the ECGD would be an outstanding foreign debt constituting an Iraqi liability. From recent developments and discussions, we know that the rate of failure involving the ECGD in respect of contracts delivered, or intended to be delivered, from this country to Iraq is fairly substantial.
I wonder whether the Minister, either today or in writing at a later date, can give me the latest estimate of the proportion of Iraq's foreign debt that is accounted for by British ECGD cover where there was failure.
§ Mr. Lennox-BoydI shall write to the hon. Gentleman with that information. These compensation arrangements do not, of course, apply to debts incurred before August 1990.
I fully appreciate the desire of the hon. Member for Bradford, South to remind Ministers and the House of the need for parliamentary scrutiny of all procedures. However, the purpose of the Bill is to bring the Foreign Compensation Act 1950 up to date to deal with the Iraqi situation. We are not proposing to give the Executive any powers that are not available to them under the Act of 1950. We are seeking to secure compensation not under direct bilateral agreement with the Government concerned, as under the 1950 Act, but from the United Nations under the provisions established by Security 498 Council resolutions. The existing powers, with the available scrutiny measures, have operated satisfactorily. I might mention, as an example, recent settlements with the former Soviet Union, which are among the most prominent of recent years.
The Orders in Council will be subject to the usual parliamentary scrutiny, as under the 1950 Act. I am afraid that the negative resolution procedure will be adopted—again as under the 1950 Act— but I can assure the hon. Gentleman that any representations made by parliamentarians or by those acting on behalf of claimants will be considered most carefully by the Foreign Office. There will be a great deal of interest and publicity.
The Government intend that most of the work in connection with these compensation claims will be handled by officers of the United Nations compensation fund, rather than by officers of the British compensation commission. We are giving powers to the British commission lest claims be dealt with by the United Nations fund in a generalised way, with the detail of arrangements and distribution to be determined by the British commission. The provisions of section 2(2), to which the hon. Gentleman referred, are substantially administrative. The substantive criteria will be decided by the United Nations body.
I hope that I have dealt satisfactorily with the points raised by hon. Members.
§ Question put and agreed to.
§ Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).