HC Deb 06 July 1994 vol 246 cc420-4 10.29 pm
The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor)

I beg to move, That the draft Contracts (Applicable Law) Act 1990 (Amendment) Order 1994, which was laid before this House on 24th May, be approved. The purpose of the order is to make some minor modifications to the Contracts (Applicable Law) Act 1990 in order to reflect the accession of Spain and Portugal to the 1980 Rome convention on the law applicable to contractual obligations.

It may be helpful at the outset to say a few words by way of background about the 1980 Rome convention. It is a convention made between member states of the European Community, the purpose of which is to harmonise their private international law rules on contract: It lays down rules to determine which law is to apply to a contract that has connections with more than one country. It does not affect the substantive law of contract, but merely enables courts to decide which country's law governs a contract. That harmonisation is designed to make it easier for people to do business in the Community, as the rules on applicable law will no longer vary according to which member state's courts hear litigation in the field of contract law.

The convention was opened for signature in 1980. This country signed it in 1981 and ratified it in January 1991, having given effect to it in United Kingdom law by the Contracts (Applicable Law) Act 1990. The reason for the delay was the time taken to negotiate two protocols to the convention, which provide for the European Court of Justice to have jurisdiction in certain cases under the convention and which were signed in 1988. This country's ratification was the last needed to bring the convention into force on 1 April 1991. All nine member states at the date of the opening for signature of the convention have now ratified it.

Although the Rome convention is not strictly a piece of Community legislation, it is related to article 220 of the treaty of Rome—the treaty which established the European Economic Community. The purpose of that article is to ensure that member states enter into negotiations to secure the simplification and facilitation of recognition and enforcement of judgments in the Community and new member states undertake to accede to the conventions made thereunder, in particular the 1968 Brussels convention on jurisdiction, and the enforcement of judgments in civil and commercial matters. The Rome convention concerns a related area of private international law. Greece acceded to it by the Luxembourg convention of 1984. The United Kingdom ratified that latter convention, and it too is now in force.

The convention on the accession of Spain and Portugal was signed in Funchal on 18 May 1992—as a matter of fact, by me. It resembled that for Greece closely in text and is largely formal. It is to be found in the schedule to the draft order, article 9 of which will insert it as a new schedule to the Contracts (Applicable Law) Act 1990.

The changes to the 1990 Act contained in this draft order are minor and uncontroversial, and are necessary in order for this country to ratify the convention whereby Spain and Portugal have acceded to the 1980 Rome convention. As such, the order facilitates a useful development in an important area of private international law and I commend it to the House.

10.33 pm
Mr. Paul Boateng (Brent, South)

However minor and uncontroversial the order may or may not be, the manner in which it was moved by the Minister was indicative of a wider problem. Mr. Deputy Speaker, when you called the order for debate, the Minister was strangely absent from his place, showing his marked reluctance to come to the House to be accountable for the actions of the Lord Chancellor's Department and, for once, to be accountable for his own actions: we learned that he signed the relevant document himself.

Well, that is good news. For once, he can come to the House and be accountable for something that he has done, rather than something that the Lord Chancellor has done—or rather something that he has not done in fulfilling his duties. [Interruption.] I see that some hon. Members are anxious that we should get on. By the look of them, I think that this matter must have some vaguely European purpose because representatives of the two sides of the Conservative party are present in the Chamber. It is enough to make one wish to stay for the next business, rather than beating a hasty retreat.

Mr. Winston Churchill (Davyhulme)

The hon. Gentleman is trying to stir up trouble again.

Mr. Boateng

I am surprised that the hon. Gentleman has not realised that it is part of the Opposition's job to stir up trouble. We do not have much difficulty with that lot on the Conservative Benches. Some of the usual suspects are here tonight. [HON. MEMBERS: "Where are the they?"] We do not have any usual suspects on the Opposition Benches—we are all one great big happy family.

I shall focus on the measure before the House because that is what you would wish me to do, Mr. Deputy Speaker. Article 1 of the Rome convention, to which the Minister referred, was given effect by the Contracts (Applicable Law) Act 1990, which gave rise to the amending order that was laid before the House. The article contains a number of exclusion areas, if I may use that phrase—areas that are excluded from the rules of the convention. We are anxious to ascertain tonight the Government's intentions in relation to those areas.

The areas excluded from the rules of the convention are: contractual obligations relating to wills and succession; rights in property arising out of a matrimonial relationship, and rights and duties arising out of a family relationship; obligations arising under bills of exchange, cheques and other negotiable instruments, to the extent that the obligations arise out of the instrument's negotiable character; questions governed by the law of companies and other bodies corporate or unincorporate; the constitutions of trusts and the relationship between settlors, trustees and beneficiaries; and, importantly, contracts of insurance that cover risks in the European Community. All those are excluded under article 1. We want to know the Government's attitude towards them.

Also, it is important that we know from the Minister what steps he and the Lord Chancellor's Department are taking to ensure that the Rome convention and its application, in the way he described tonight, enhance legal certainty in that area rather than create fresh uncertainty.

The purpose and intent of the convention, the 1990 Act and the amendment order are that there should be a degree of certainty within the European Economic Community—certainty which, by its existence, would facilitate the free movement and exchange of goods and services and in that way underpin the aims and purposes of the European Economic Community. We want to know what the Lord Chancellor's Department is doing to monitor that. We also want to hear from the Minister whether he is satisfied with its current application. The purpose of the Act and the order is that the parties to a contract should be free to choose which country's law shall govern it. That is an important principle, and it is one which has considerable implications for our courts.

The Royal Courts of Justice and the various divisions are groaning under a weight of work and litigation. Their resources and staff are often stretched to breaking point. Some steps have been taken—under pressure, it must be said, from this side of the House—to deal with the shortage of High Court judges, although there remains a problem with the recruitment of those judges. But there is a problem in terms of the framework and infrastructure of the justice system within the jurisdiction.

It is a popular jurisdiction, and one which many companies and bodies corporate and unincorporated seek to utilise for the purposes of litigation. We are anxious to ensure that the Government take steps to make sure that the cost of that litigation in utilising the legal infrastructure of the jurisdiction is not an undue burden. It must not constitute an unfair burden on the ordinary citizens of this country who choose to have recourse to our courts and who do not have the option for which the order provides. Many people who seek to institute litigation must choose whether or not they institute it here or in some other area of jurisdiction.

Spain and Portugal have been added to those countries which have acceded to the convention. Their accession has implications for our jurisdiction, and I hope that the Minister will be able to assist in that area. What steps is he taking to ensure that that does not constitute an unfair burden on the infrastructure of the courts?

We have in recent weeks written to the Minister on a number of occasions, and we have placed questions on the Order Paper which relate specifically to accommodation and infrastructure matters as far as the jurisdiction is concerned. On 26 May this year, we asked about the report which is being undertaken by those who are undertaking the fundamental review of the Department's spending. We asked that the report be published, and that any policy changes arising from that report be made known. It is obviously important to the consumer of legal services that we should know the implications of the fundamental review of the Department's spending.

Mr. Deputy Speaker (Mr. Michael Morris)

Order. It is not appropriate to go into that matter in the sort of depth which the hon. Gentleman is seeking to do this evening.

Mr. John M. Taylor

Not at all.

Mr. Boateng

I am not anxious—

Mr. Deputy Speaker

Order. I heard a sedentary remark which was not appropriate.

Mr. John M. Taylor

I withdraw.

Mr. Deputy Speaker

I am most grateful.

Mr. Boateng

I would not for one moment ask the Minister to launch into an explanation now of his Department's fundamental review. That, as you have said, Mr. Deputy Speaker, would be improper. However, I do ask him to reconsider the decision not to publish the report.

The order clearly has implications for the review. If Spain and Portugal accede to the convention and litigants who might formerly have chosen either of those countries as the appropriate jurisdiction now use this one, we are entitled to know the spending implications and the implications for multi-party actions. Contracts and the performance of contracts are giving rise to increasing implications for a wide range of persons. They may not all be parties to the litigation, but they are certainly affected and influenced by the contracts.

On 21 June, we asked the Minister whether, in the light of the review that had been undertaken, he would publish his Department's findings on the rules governing multi-party actions. He refused to do that too, apparently because it was tied up with the fundamental review of legal spending with which we shall not be dealing tonight. We also asked—this, too, is highly relevant to the current position in the Royal Courts of Justice—[HON. MEMBERS: "The Lone Ranger!"] If I am the Lone Ranger, the hon. Member for Gainsborough and Horncastle (Mr. Leigh) certainly is not Tonto; we can be sure of that.

We are concerned about the implications for the Royal Courts of Justice, and the changes in the possible venue for litigation. Why is the Minister again not prepared to publish an apparently innocent review of court accommodation that his Department is undertaking? Why should we not all know about court accommodation? I see that the hon. Member for Billericay (Mrs. Gorman) is tickled pink by that suggestion—or, rather, tickled a still darker shade of blue.

I hope that the Minister will give us some answers. If we are given an assurance that in due course we shall receive still more detailed answers, perhaps the order will be approved; if not, we shall have to consider our position very carefully.

10.48 pm
Mr. John M. Taylor

If the hon. Member for Brent, South (Mr. Boateng) considers his position with the current number of supporters behind him, I do not think that he will make much headway.

It was extremely precocious and completely out of order for me to attempt to assist you, Mr. Deputy Speaker, but I am bound to say that the hon. Gentleman surpassed himself in straying from the subject. The internal review of the Lord Chancellor's Department, to which he referred several times, has absolutely nothing to do with the international protocols of private international law. I will at least oblige him in regard to resource implications. It must be plain to any man or woman of good will that, if Spain and Portugal accede, our citizens may be inconvenienced in such litigation as they may unfortunately find themselves involved in concerning those jurisdictions.

The hon. Gentleman's comments on infrastructure seemed to stray from the motion, and I shall not follow him. However, it was relevant to question the convention's adherence to the principles, which he and I understand, of freedom of contract. I hope that he will be reassured that the convention's two basic principles accord with previous United Kingdom law, and its implementation has therefore led to few changes in our law.

First, the parties to a contract may choose which country's law is to apply to it. We regard that enshrining of freedom of choice as being central to the convention. Secondly, in the absence of such a choice, the contract is to be governed by the law of the country with which it is most closely connected; and the convention lays down various rebuttable presumptions for determining that connection. That is a very English-law approach to the problem.

The hon. Gentleman rightly referred to exclusions. Matters excluded from the scope of the convention include contracts more closely related to family law, trusts, wills and succession, certain insurance contracts and questions governed by company law. My litany will be the same as the hon. Gentleman's, albeit not in exactly in the same order. He asked what was the Government's position, and I shall tell him. Those exclusions were negotiated and agreed between the member states in 1980. The Government have no plans at present to reopen the question of those exclusions. Any alterations would, of course, have to be negotiated between all parties to the convention.

May I conclude by saying something about Gibraltar which may interest the House? The convention mentions European territories outside the United Kingdom for the international relations of which the United Kingdom is responsible". Clearly, that means Gibraltar. I should like the House to know that shortly the Government intend to extend the Rome convention to Gibraltar under article 27 of the convention. We see no reason to delay extension until after the deletion of that article by the Contracts (Applicable Law) Act 1990 (Amendment) Order 1994. No legislation is needed in this country to effect such an extension because Gibraltar has already enacted the necessary legislation in its own legislature.

I hope that the House will welcome that. I also hope that it will welcome the accession of Spain and Portugal.

Mr. Boateng

With the leave of the House, Mr. Deputy Speaker—[HON. MEMBERS: "No."] Oh, how characteristically churlish.

Not surprisingly, we are not satisfied by the Minister's response. He has failed to answer questions about the fundamental review. We shall continue to push those questions and pursue and harry the Minister until he answers them. There will be many more interesting debates such as we have had under your chairmanship tonight, Mr. Deputy Speaker, until such time as those questions are answered.

Question put and agreed to.

Resolved, That the draft Contracts (Applicable Law) Act 1990 (Amendment) Order 1994, which was laid before this House on 24th May, be approved.