HL Deb 16 December 1915 vol 20 cc647-69

Order of the Day for the House to be put into Committee, read.

Moved, That the House do now resolve itself into Committee.—(The Earl of Halsbury.)

THE LORD CHANCELLOR (LORD BUCKMASTER)

My Lords, before putting the question that the House do now go into Committee on this Bill I think it right that I should take the opportunity of making a further statement as to what the attitude of the Government will be in regard to these proceedings. When the noble and learned Earl moved the Second Reading of the Bill I pointed out that there was no doubt that the position of companies owned or controlled by or in any way constituted of alien enemies was a strange and startling one, and I quite recognised the importance of the position being thoroughly examined, and, if necessary, of having legislation that might make the matter regular and plain. I therefore, as your Lordships may remember, welcomed the discussion that arose on the Bill and pointed out that no objection would be taken to its Second Reading. The noble and learned Earl desires to proceed with the Bill in Committee now without any further delay, and it becomes necessary that I should make a little fuller statement as to the reason why the Government adopt the position I have stated.

The strange and unusual position of companies constituted in the manner described is one which, so far as the war is concerned, can produce no evil results at all. It may well be that when the period of hostilities is ended the whole matter had better be put upon a sound and reasonable foundation; but if your Lordships will allow me a few moments I think I can satisfy you that there is no danger whatever to this country from permitting this condition of affairs to continue during hostilities. And for this reason. The position of these companies has been very carefully regulated by Statutes which have been passed since the war began and which are known as of an emergency nature, in their very character and terms existing only for the duration of the war. One of the last of these Statutes, a Statute that was passed at the end of 1914, contains this provision— Where, on the report of an inspector appointed to inspect the books and documents of a person, firm, or company under section 2 of the principal Act, it appears to the Board of Trade that it is expedient that the business should be subject to frequent inspection or constant supervision, the Board of Trade may appoint that inspector or some other person to supervise the business with such powers as the Board of Trade may determine, and any remuneration payable and expenses incurred shall be paid by the person, firm, or company. Section 2 of the principal Act, to which reference is made, is a section which among other things contains this provision— Where it appears to the Board of Trade, is the case of a company, that one-third or more of the issued share capital or of the directorate of the company immediately before or at any time since the commencement of the present war was held by or on behalf of or consisted of persons who were subjects of, or resident or carrying on business in, a State for the time being at war with His Majesty, the Board of Trade may… give to a person appointed by them …. authority to inspect all books and documents belonging to or under the control of the person, firm, or company. So that as the law stands to-day the position is this. Where the share capital of a company to the extent of one-third—not the predominant amount, but onethird—or where one-third of the directorate is held by or on behalf of or consists of persons who are alien enemies, there is power to inspect and to appoint a supervisor who may exercise in regard to that company all the powers which the Board of Trade may give. It is quite plain, with regard any such company, that the Board of Trade can take entire control of its affairs, regulate the whole of its business, and, if necessary, prevent its instituting suits, and can indeed do, through the operation of their inspector, all that could be done by the directors of the company themselves. In those circumstances it is difficult. to see how a company whose share capital is held to the extent of one-third by alien enemies can possibly be so used as to be a danger to the State.

I think it right to point out that the Bill which the noble and learned Earl has introduced does not go so far as the existing provisions. The noble and learned Earl's Bill provides that — Where it shall appear to the Attorney-General that any company registered in the United Kingdom is owing to the character of its directors or of its shareholders, or to any other cause, of a predominantly enemy character, he shall present a petition to His Majesty in Council praying that such company may be declared by His Majesty in Council to be an enemy company. The words "of a predominantly enemy character" would require proof that the share capital and the voting power were held by alien enemies to such extent that they were able to control the whole of the operations of the company. It is in those circumstances that proceedings could be taken under the noble and learned Earl's Bill and the company declared to be an enemy company; and an Amendment is to be proposed by Lord Wrenbury which suggests that where proceedings are taken before a Court, the Court may have the same power and may thereupon declare the company to be an enemy company. The result of that would be, of course, that the company would be quite unable to collect its debts and quite unable to carry on its business unless it had a special licence. Instead of being, as now, in the position of a company whose actions are watched and controlled by the Board of Trade, it would be in the position of a company who could not carry on business at all, or, if it were left unaffected, it would be carrying on business protected by the Statutes as they existor not protected at all. I submit to your Lordships that one thing is plain—namely, that so far as it is possible to apprehend trading by a company in this country controlled by enemy aliens of such a character as to be hostile to the interests of this country full power exists, and nobody suggests that it has not been exercised by the Board of Trade, to take such a company under their complete control and prevent the possibility of any dangenats activity.

The matter does not end there. There are companies it this country which, though the shareholding is largely in the hands of alien enemies, are none the less companies which are carrying on business at this moment essential for the economic safety of this country I do not desire to mention the names of these companies, but I think they must be present to many of your Lordships. I should have thought it obvious that what you would desire in regard to such companies would be to secure that they should carry on their business for the benefit of this country, and at the same time to prevent the possibility of any of the profits being diverted into enemyhandsduring hostilities. The whole of that is provided for by the Trading with the Enemy Acts, so that there is no chance of money earned by a company of alien shareholders going to alien enemies either in payment of debts or distribution of dividends, and there is no risk of a company with alien shareholders getting outside the controlling power exercised by the Board of Trade under the provision to which I have referred.

If it is suggested that the present powers are ineffectual, I think it would be of the utmost importance that instances should be afforded of cases where it is thought that the powers given have failed to effect the object which these Acts were designed to secure. If such instances were given; I should be glad to have them investigated; but up to the present no such instances have been put forward, and it is clear that if such instances were well known they would have been indicated to the Board of Trade. If, on the other hand, it is suggested that the Board of Trade are supine and have failed to take action where action ought to have been taken, then the matter should be made public in order that the Board of Trade should be able to defend themselves. At present His Majesty's Government are unable to see that this Bill will immediately secure any object of value, and for that reason they are unable to take any part in approving of the discussions in the Committee stage. I have only to add this in conclusion, though I trust it is unnecessary to do so. I should very greatly regret if it were thought that this action signified, or could even bear the appearance of expressing, any discourtesy to the noble and learned Earl who has brought in this Bill, or any lack of appreciation of his labours in attempting to deal with a matter which I know he regards as of great public importance. Our action is not at all due to that, but to the reasons I have stated.

THE EARL OF HALSBURY

My Lords, the first observation I have to make is that this is a most irregular proceeding. Why did not the noble and learned Lord, if this is what the Government have determined to do, move that the Bill be read a second time this day six months? But the noble and learned Lord first of all acquiesces in the Second Reading and then makes a speech the whole object and purport of which is to show that the Bill ought not to have been brought in. Is this another instance of the Government being unable to make up their mind one way or the other? For my own part I entirely repudiate the sort of notion that has been brought forward that there is no harm in alien enemies carrying on business and earning dividends in this country while the war is in progress. Is that common sense? At all events it does not strike me that the point requires very much argument on my part. I certainly shall proceed with the Bill, and I hope your Lordships will carry it. Imagine what would be said in Berlin if an English company under the phantom of its being a German company, which everybody knew to be untrue, was attempting to carry on business there. What do you think would happen to it? I know, and I think your Lordships will be able to conjecture. So far as I understand, the noble and learned Lord is suggesting that we should not go into Committee on this Bill. I persist in my Motion that we should.

LORD WRENBURY

My Lords, should like to say a few words on what has fallen from the noble and learned Lord on the Woolsack, because I am not sure that he correctly appreciates the position of affairs. He has referred to the emergency legislation which is already in operation. One great flaw in that legislation, to my mind, resides in this—that it is based upon a numerical calculation of the proportion of the shareholders. If one-third of the shareholders are of a particular mind, then one view is to be taken; if a less number are of a particular mind, then another view is to be taken. When you are talking of the members of a corporation you mean those who are the registered holders of its shares or are otherwise in point of law the holders of interests in the company; but those persons may very well be trustees for others, and there is no reason why those others should not be alien enemies. Any veto, therefore, upon action or facility for the appointment of a supervisor based upon a mere calculation of the numerical holding of shares may be, and under circumstances will be, fallacious, because it may well be that as between your two-thirds and one-third, having regard to the extent to which the registered holders of the shares are in point of fact trustees for beneficial owners who are alien enemies, you fail to reach the bottom of the mischief.

As the law stands and while the decision of the Court of Appeal in the Continental Tyre Company's case is, as it must be taken to be for the moment, the law of this country, it is competent to any such company as the Continental Tyre Company to sue in the King's Court. Although in point of fact it is comprised of persons who are alien enemies, it is entitled to approach the King in his Court and ask for relief. That is a matter which might be of vital importance in such circumstances as these. Supposing there has been a contract by way of covenant between that corporation and one of its servants by which the servant has bound himself not to serve another master or to trade in competition with the company employing him. As the law stands, the company could sue him upon that covenant and obtain an injunction to restrain him from using his energies in serving another master or trading in such a way as to interfere with the trade of the corporation which in point of fact, by my hypothesis, is an alien enemy. It appears to me that this is a serious state of things.

Take another case. It is said that if the mere matter of the suit be the collection of debt there is not much harm in a foreign corporation collecting a debt due to it because, when it has got it, it cannot hand the money over, and it may be that it will never reach the enemy country. Whether the precautiens for the purpose are sufficient I do not stay to inquire. I will assume that they are. But if you allow that state of things to go on it is competent to the plaintiff in the action, an alien enemy, to sue a loyal British subject, to obtain judgment against him, to issue execution against him, and to use all the armoury of the law for the purpose of enforcing in favour of an enemy rights against a loyal subject of the Crown. The Lord Chancellor has suggested that if a supervisor is appointed he can, amongst other things, control litigation. I have not looked into that point. It may be so. But I can see that it would be difficult for him to do so in such a case as I have put, where a covenant had been entered into. In such a case it would be difficult for the supervisor to say that such an action should not be brought. I do not know upon what principles he could proceed in saying that the company whom he supervises, whose interests he is, so far as they are legitimate, bound to take into account, should not be allowed to sue because the result would be that a British subject would be attacked. I think that legislation is wanted for the purpose of putting this matter right, more paticularly fur the purpose of preventing a corporation which is an enemy from approaching the King in his Court and asking for relief against a person who is a loyal British subject. To my mind it is illusory to take into consideration that a certain proportion only of the registered holders are alien enemies. The truth may reside in a totally different direction. It may be—and if matters continue as they are it will be—that they are merely trustees for other persons, and those other persons, alien enemies, will be only concealing themselves behind the cloak of a registered holder who, by the hypothesis, is a British subject. This matter is one which to my mind requires legislation, and I hope that your Lordships will proceed with the Bill.

THE MARQUESS OF LANSDOWNE

My Lords, I am sure it is not necessary for me to say that I could be no party to any action in this House which involved any kind of discourtesy to my noble and learned friend who sits opposite and who has introduced this Bill. His position in the matter is perfectly plain. His Bill has been in preparation for a long time, and I understand that he did not proceed with it only because there seemed to be reason to anticipate that the question at issue was likely to form the subject of a final legal decision. That decision has not been reached, and I understand that there is no immediate prospect of such a decision being arrived at. In those circumstances the noble and learned Earl thought himself justified—and I should be the last person in the world to suggest that he was not-—in presenting his Bill to your Lordships' House. But it did seem to some of us, considering the importance of the subject and the very few days which had been given us in which to examine the Bill, and considering also the fact that Amendments of great importance had been put on the Paper by the noble and learned Lord on the Cross Benches (Lord Wren-bury), that it was not unreasonable to suggest that a few days more at any rate should be given to us in which to examine what on the face of it is a somewhat difficult and embarrassing situation. In support of that view I understood the noble and learned Lord on the Woolsack to tell the House, speaking with all the weight of his authority, that in his opinion the existing emergency legislation already on the Statute Book was not only sufficient to deal with at any rate some of the cases which my noble and learned friend has in view, but even went further than his Bill would go. The Lord Chancellor also remarked, I thought somewhat pertinently, that no arguments had been adduced to show that the emergency legislation had been insufficient for the purpose for which it was intended. I have no knowledge or experience which justifies me in pronouncing an opinion as between those two views. All that I venture to say as a layman is that I think enough was said by the noble and learned Lord on the Woolsack to show that we should not be any the worse for having a little more time to consider the matter.

One other point I may, perhaps, mention. My noble and learned friend (Lord Halsbury) dwelt particularly upon the position of British-owned companies in Berlin. He said, Is it conceivable that a British-owned company in Berlin would be allowed to proceed with its operations in the same way that we are allowing certain alien-owned companies to go on with their work in this country? I am assured that no steps have been taken either in Germany or Austria-Hungary up to the present for the purpose of preventing the businesses of British-owned companies registered there from being carried on. That is, perhaps, pertinent to the case we have in view. But I rose really more because I was anxious that my noble and learned friend should not suppose that there was any desire to treat him with discourtesy. The matter is in his hands and in the hands of your Lordships' House, and if he desires to pursue the discussion of the Bill in Committee we cannot prevent him doing so; but we feel bound to point out that in our view the circumstances are not such as to render it possible for us to take a useful part in the discussion.

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF DONOUGTIMORE in the Chair.]

Clause 1:

Procedure for obtaining royal declaration that a company is an enemy company.

1.—(1) Where it shall appear to the Attorney-General that any company registered in the United Kingdom is, owing to the character of its directors or of its shareholders, or to any other cause, of a predominantly enemy character, he shall present a petition to His majesty in Council praying that such company may be declared by His Majesty in Council to be an enemy company.

(2) Any officer or shareholder of the company, not being an enemy of His Majesty, may enter a caveat, addressed to the Registrar of the Council at the Council Office, against such declaration.

(3) If His Majesty shall refer any such petition to the Judicial Committee of the Privy Council, the said Committee shall proceed to consider the same, and any officer or shareholder of the company who has entered a caveat shall be entitled to be heard by himself or counsel on the petition.

(4) The Judicial Committee, after considering all the circumstances of the case, shall report to His Majesty in Council.

(5) If the Judicial Committee report that the company is of a predominantly enemy character, it shall be lawful for His Majesty in Council to declare such company to be an enemy company, and any ship belonging to such company shall forthwith become the property of His Majesty the King.

(6) It shall be lawful for His Majesty in Council to make rules of procedure and practice for regulating proceedings on such petitions and, subject thereto, such proceedings shall be regulated according to the existing procedure and practice of the Judicial Committee.

(7) The costs of all parties of and incident to such proceedings shall be in the discretion of the Judicial Committee.

LORD WRENBURY

The first Amendment which stands in my name is to strike out, at the beginning of subsection (1), the words "registered in the United Kingdom," for the purpose of substituting the words" incorporated under and subject to the laws of some part of His Majesty's Dominions." The object of this Amendment allay be stated in very few words. There was a learned Junior of the Chancery Bar who passed a long, laborious, and lucrative career in finding means of escape from many salutary provisions of the Companies Acts, and if this phrase remains in the clause in the form in which it stands now it would enable a person who wished to display similar ingenuity to exercise it effectually. The registration of companies in this country involves the providing of certain information, and in order to escape from that the device was resorted to of incorporating the company in Guernsey, in the Channel Islands, instead of in the United Kingdom. The result was that certain provisions of the Companies Acts became inapplicable. The words in the clause are "registered in the United Kingdom." The result of retaining those words would be that it would be easy to evade the Bill by procuring registration elsewhere, and then showing, and truly, that the Bill did not apply. It is to meet this that I propose to substitute the words which I have read to your Lordships. The words themselves are taken from the Merchant Shipping Act, except that there the words are "body corporate established under and subject to," whereas the words which I propose will run "company incorporated under and subject to," which is the same thing. I suggest this Amendment in order to broaden the operation of the Bill and to make it apply to any corporation incorporated under the law prevalent in any part of His Majesty's Dominions.

Amendment moved— Clause 1, page 1, line 6, leave out ("registered in the United Kingdom") and insert ("incorporated under and subject to the laws of some part of His Majesty's Dominions").—(Lord Wrentrury.)

THE EARL OF HALSBURY

I accept the Amendment.

On Question, Amendment agreed to.

LORD WRENBURY

I now move to substitute the word "members" for "shareholders" in subsection (1); and I shall propose later to do the same in subsection (2) and subsection (3). Your Lordships may be aware that a company may be incorporated as a company limited by shares, or it may be incorporated as a company limited by guarantee and not having a capital divided into shares, or it may be incorporated as an unlimited company not having a capital divided into shares. By using the word "shareholder" you are confining the Bill to that sort of company which is limited by shares, whereas if you use the word "member" you apply it to all classes of company. The Amendment, therefore, broadens the scope of the Bill.

Amendnumt moved— Clause 1, page 1, line 7, leave out ("shareholders") and insert ("members").——(Lord Wrenbury.)

On Question, Amendment agreed to.

LORD WRENBURS

I now come to an Amendment of a more substantial character. The noble and learned Earl in the first subsection of this clause uses the words "of a predominantly enemy character." I am desirous of showing what is the proper meaning to be attached to those words. In this connection what you have to consider is this. The members of the company may hold the shares and beneficially own them also; but, on the other hand, they may hold the shares and be trustees for other people. You have to consider those two kinds of cases. Then, further, it may be that the persons beneficially interested in the shares are alien enemies, whereas the registered holders of the shares are British subjects. As the decision in the Continental Tyre Company case now stands, the corporation as a separate entity is treated as being a person capable of being enemy or friend; it is treated as having a character of its own. That decision is that the corporation, being a British corporation by virtue of a British registration, is therefore British and is a British person. It therefore has a character under that decision, and its character is British. Now the language of this clause is that where it shall appear to the Attorney-General that any company registered in the United Kingdom is, owing to the character of its directors or of its shareholders, or to any other cause, of a predominantly enemy character," and so on. The company has a character, according to this decision. The clause runs that you are to determine whether it is friendly by "the character of its directors or of its shareholders." I confess that leaves me in some difficulty. It is as if you were to say that you were to judge whether Smith was an alien enemy or not by the character of his butler or his agent. You are to regard the character of one person by reference to the character of another. I am not sure how that matter is to be resolved. I suppose that it could possibly mean no more than this, that you would regard the fact that Smith had a German butler as some evidence that Smith had pro-German tendencies.

The phrase now in the clause is so capable of raising contention that I wish to define it, and I propose to do so by the new subsection standing in my name on the Paper. It runs, "For the purposes of this Act a company is of predominantly enemy character when the majority of its members, or of the persons beneficially entitled to or interested in the shares, or interest in the company, whether in number or in voting power, or in authority or in influence, or its directors or the majority of its directors, are alien enemies." I have sought in those words to cover every case, You will notice that this is not answered by saying, "Nine-tenths of the shareholders are British, and only one-tenth is German," because it may be that although the majority in number is British the majority in voting power is not, because the votes may go the other way. If, again, both the majority in number and the majority in voting power be British but the fact be that the British shareholders never attend the meetings, because, let us say, they are held in some place in Germany which is not accessible, then you may find that, although both in number and in voting power the British are in a majority, yet in point of fact in being able to use their power they are still in a minority. I want the tribunal who have to investigate the facts to take all these things into consideration, and not stop by saying that the registered owners of the shares are British. They should go behind that and see whether they are trustees for. Germans, and also go beyond that and see whether the British are really the majority in number, in voting power, in authority, in influence. I have been unable to think of wider words and under these words I conceive that the tribunal could exhaust everything which would go to show whether or not the company is of a predominantly enemy character. I propose the insertion of this new subsection because it seems to me that the words "of a predominantly enemy character" may lead to endless discussion, and because if you supply a definition of this sort you have then a basis on which you can determine whether or not the required quality has been satisfied of the company. If any one can suggest wider words, I will gladly accept them.

Amendment moved—

Clause 1, page 1, after line 11, insert as a new subsection: (2) For the purposes of this Act a company is of predominantly enemy character when the majority of its members, or of the persons beneficially entitled to or interested in the shares, or interest in the company whether in number or in voting power, or in authority or in influence, or its directors or the majority of its directors, are alien enemies."—(Lord Wrenbury.)

THE EARL OF HALSBURY

I am afraid I cannot accept this Amendment. I think it is a very good canon of legal drafting that whenever you proceed to specify everything minutely you in fact limit. I have chosen the word "Predominantly" because that will leave it to the tribunal itself to ascertain the fact in the ordinary mode by which such things are ascertained. When you attribute some intention, you find out whether you are right by looking up the facts, circumstances, actuating motives, and so forth. I do not propose to specify anything. I leave it to the tribunal. I think the tribunal is best fitted to decide whether or not a company is of a predominantly hostile character, and if it is, then, by whatever means the tribunal has ascertained that fact, the circumstances follow. I am quite sure that if you attempt to show in what way you are to ascertain the predominantly hostile character of a company you will certainly limit the provision in some way, because you will be assuming beforehand, in drafting your Bill, that you are contemplating all the circumstances that can arise, and that is absolutely impossible.

It is better to have a broad, simple proposition, and to leave it to the decision of the tribunal in what way and by what evidence they think desirable. I am therefore unable to accept my noble and learned friend's Amendment.

LORD WRENBURY

The noble and learned Earl is, perhaps, the most competent judge of how his meaning is best expressed, and as he has not accepted the Amendment I will, by leave of the House, withdraw it.

Amendment, by leave, withdrawn.

Amendment moved— Clause 1, page 1, line 12, leave out ("shareholder") and insert ("member").—(Lord Wrenbury.)

On Question, Amendment agreed to.

Amendment moved— Clause 1, page 1. line 18, leave out ("shareholder") and insert ("member").—(Lord Wrenbury.)

On Question, Amendment agreed to.

Clause 1, as amended, agreed to.

Clause 2:

Effect of such royal declaration.

2. If His Majesty in Council shall declare a company registered in the United Kingdom to be an enemy company, it shall henceforth during the present war be deemed to be an enemy within the meaning of all royal proclamations and statutes dealing with trading with the enemy, and all such disabilities and other consequences, whether at common law or under any royal proclamations or statute, shall attach to the company and to its property, and to any dealings by or with such company, as if it were a company incorporated and carrying on business in an enemy country:

Provided that the Registrar of Companies shall not remove the name of such company from the register, but shall notify therein that the company has been declared an enemy company, with the date of such declaration, and in any case in which such declaration shall be applicable to such records, and be removed from the Register of British Shipping.

LORD WRENBURY

I move to omit from the beginning of Clause 2 the words "registered in the United Kingdom," and to insert "incorporated as aforesaid." This is merely consequential upon what was done in the previous clause.

Amendment moved— Clause 2, page 2, line 10, leave out ("registered in the United Kingdom") and insert ("incorporated as aforesaid").—(Lord Wrenbury.)

On Question, Amendment agreed to.

LORD WARENBURY

I move to strike out from the next line of the clause the. words "henceforth during the present war." I do so upon the ground that they are redundant. If there is no war, of course there is no enemy.

Amendment moved— Clause 2, page 2, line 11, leave out ("henceforth daring the present war").—(Lord Wrenbury.)

THE FART OF HALSBURY

This is only drafting, and I do not object.

On Question, Amendment agreed to.

LORD WRENBURY

I now move to omit the words "as if it were a company incorporated and carrying on business in an enemy country," and to insert "as if it were a natural person who was an alien enemy." The object of this Amendment is simply to make the matter more clear. The earlier part of the clause says that the company dealt with is to be "deemed to be an enemy within the meaning of all Royal Proclamations." I apprehend that Royal Proclamations do not generally address themselves to corporations but to natural persons, and if you reduce the corporation to a natural person it. will fall within all Royal Proclamations.

Amendment moved— Clause 2, page 2, lines 17 and 18, leave out. ("as if it were a company incorporated and carrying on business in an enemy country") and insert ("as if it were a natural person who was an alien enemy").—(Lord Wrenbury.)

THE EARL OF HALSBURY

I cannot accept this Amendment. Instead making it clearer, it appears to ale to make the matter more obscure.

Amendment, by leave, withdrawn.

THE EARL OF HALSBURY

I move to delete from the proviso at the end of Clause 2 all words after "declaration" where it first occurs. Somebody or other— who it was remains a mystery—first discovered that there was a Register of British Law. I am not, familiar with any such register. Then the word "Shipping" was substituted for the word "Law." But I move that all words after the word "declaration" be struck out.

Amendment moved— Clause 2, line 22, leave out all words after ("declaration").—(The Earl of Halsbury.)

On Question, Amendment agreed to.

Clause 2, as amended, agreed to.

Clause 3 agreed to.

LORD WRENBURY

I now move the first of a series of new clauses which deal with a new subject-matter, and I am afraid I shall have to trouble your Lord ships with a few observations in order to show why the are necessary. Your Lordships will remember that in the case in question the Continental Tyre Company sued the Daimler Company for the purchase price of certain tyres which had been supplied. The Daimler Company were perfectly prepared to pay for the tyres and they paid into Court the purchase money, but upon patriotic grounds they raised the question that the Continental Tyre Company was in substance a German company and could not sue them. That matter was argued and discussed, and the Court of Appeal decided that the Continental Pyre Company, inasmuch as it was a British corporation incorporated under Statutes in this country, must be treated as being British.

The facts as regards the company were these. There was in Berlin a certain company with a German name, which I do not remember, which carried on the business of the manufacture of tyres for motor vehicles. It established, as appears to be the custom, subsidiary companies in other countries; and, amongst others, it established in this country a British corporation which was called the Continental Tyre Company. That company had a capital of 25,000 shares. The facts as proved were that all the directors of the company were German subjects resident in Germany, that all the shareholders, the holders of the 25,000 shares, were Germain subjects, largely, I think, resident in Germany—I am not sure that all were— and that there was one share not held by a German subject resident in Germany but held by the manager or secretary of the company, and he was a German who was a naturalised British subject. In that state of things as the law at present stands that corporation, although in point of fact it was indisputably German heart and bone, was for all purposes of suing to be treated as if it were a British company. In other words it was competent to German subjects, by going through certain formalities required by our law, to clothe themselves in a garment or put themselves behind a mask under which they were entitled to go into Court and say "We are British and are entitled to sue."

If that be the law—and I must take it that it is the law as matters stand at present—it appears to me to present a very serious state of things. As I said just now, it would enable a company of that sort, suing on a covenant, to restrain a British subject for the benefit of the alien corporation; it would enable an alien corporation to bring actions to recover debts, and to enforce a judgment, if they got one, by execution against the defendant in that action; and many other cases might be put in which the corporation would be entitled by litigation, although it was an alien enemy, to sue British subjects. The object of the new clause which I am now proposing is to put an end to that state of things. When you are considering whether the corporation which is suing is or is not German, the first operation of this clause is to say you may go behind the corporation and see who are the holders of its shares, and the question will be resolved according to whether they are British or alien enemies. When you have got to that stage, you may find that another corporation is a holder of some of the shares, and that holder may again be a German company. Then you have not got to the bottom of things. You have to provide then that if there be a holder of any of the shares in the first company who is again a corporation, you may treat that corporation in the same way, and so you may go on until you have arrived at last face to face with the natural persons who really are the persons moving in the matter.

I will ask your Lordships to look at my proposed clause to see that the effect is what I say. In the first place, all the proposed new clauses standing in my name are governed by the initial words "In any legal proceeding." This part of the Bill would apply only if the corporation comes to sue. If the corporation does so then in that legal proceeding, if it is material to determine whether it is or is not an alien enemy it is to be regarded as not being in law a legal person apart from its corporators—you get rid of the corporate existence for this purpose—but as being a body not corporate composed of the persons who are the holders of the shares or other interests in the corporation. These words will enable you to say, "This plaintiff is composed of persons who are alien enemies." The next words effect this, that any body corporate which is such a holder shall in like manner for the same purpose be regarded as being a body not corporate, and so on with every other corporation as you proceed down the scale; so that the effect of those words is that you bring before the eye of the Court the natural persons and see whether they are British or alien enemies.

The dominant words of my new clause provide, when you have thus found out who the people are, that if the Court shall be satisfied that the majority of the members of the first-mentioned body corporate, whether in number or in voting power or in authority or in influence, are, or that its directors or the majority of its directors are, alien enemies, the Court may declare the corporation to be an alien enemy, and thereupon the corporation shall be under the same disabilities and shall for all purposes stand in the same position as if it were a natural person who was an alien enemy. This is a clause which will enable you to find out who are really the individuals at the back of the corporation, and if you find that the majority of them in number, voting power, authority, or influence are alien enemies, then the Court in that legal proceeding is enabled to declare the party an alien enemy, and all the consequences will ensue that would follow if he were a natural person and were an alien enemy.

Amendment moved— After Clause 3 insert the following new clause: In any legal proceeding in which it shall be material to determine whether a body corporate is or is not an alien enemy the body shall for that purpose be regarded as not being in law a legal person apart from its corporators but as being a body not corporate composed of the persons who are the holders of the shares or other interests in the corporation, and any body corporate which is such a holder shall in like manner for the same purpose be regarded as being a body not corporate composed of the persons who are the holders of the shares or other interests in the corporation, and so with every body corporate which is the holder of shares or other interests in another body corporate. And if the court shall be satisfied that the majority of the members of the first-mentioned body corporate whether in number or in voting power or in authority or in influence are or that its directors or the majority of its directors are alien enemies, the court may declare the corporation to be an alien enemy, and thereupon the corporation shall be under the same disabilities and shall for all purposes stand in the same position as if it were a natural person who was an alien enemy."—(Lord Wrenbury.)

THE EARL OF HALSBURY

Not without hesitation am I disposed to accept this new clause, but the reputation of the noble and learned Lord on such a subject is such that I hesitate to refuse to acquiesce in the Amendment; but I feel the danger of making the Bill more complex than it already is. At any rate I will take the risk in deference to the noble and learned Lord's authority, and accept the Amendment.

EARL LOREBURN

I do not rise so much to say anything in regard to the merits of my noble and learned friend's Amendment, which has been accepted, as to make this observation. This decision in the Continental Tyre Company's case was a decision of the Court of Appeal in England, and in coming to their conclusion the learned Lords Justices differed from my noble friend Lord Wrenbury. Lord Wrenbury is admittedly the highest authority in the United Kingdom upon this branch of the law. I think we should all confess that without any doubt.

LORD WRENBURY

You are forgetting Lord Lindley.

EARL LOREBURN

Lord Lindley is another great authority. On the merits of the decision in the Continental Tyre Company's case I cannot say anything, because it is possible that I may have, sitting in your Lordships' House judicially, to express an opinion whether or not that decision is a right decision. But this I feel quite satisfied of, that the decision does complicate the law a great deal, and it pushes to a greater length than hitherto it has been pushed the doctrine that a company is a person in the eye of the law. Without expressing any opinion as to what ought to be the conclusion from an appeal, I cannot help thinking that the Government should facilitate the case being brought to this House in order that the law may be finally settled by the authority of this House and in order that we may know whether the opinions of the five Lords Justices who held as they did are to prevail against the opinion of my noble and learned friend Lord Wrenbury. As I understand, the party who failed in this litigation had no objection at all to handing over the money; they objected in order that the interests of the nation should not be prejudiced by giving practically an alien enemy company the right to sue. I cannot help thinking that if His Majesty's Government were to sanction a small expense—it would not be much—they would be able to put this matter on a right footing at once by ascertaining whether or not the decision of the Court of Appeal is sound. The hearing of the case could be expedited, and it is possible that all the difficult questions raised by the noble and learned Earl's Bill would be largely averted by the result. I do not say that against my noble and learned friend's Bill, because I think this Bill is right; but there might be a shorter cut to settle the whole thing by reconsidering in this House whether in point of law the decision in this case was a good decision or not.

THE LORD CHANCELLOR

I quite feel what the noble and learned Earl has just said. I think it must have been plain to the minds of all your Lordships that the final and complete determination of the case would be by far the most satisfactory preliminary to a discussion of a Bill of this nature. I can assure the noble and learned Earl that I will take care that his suggestion is placed in the proper quarter, but I cannot premise that funds will be provided for the purpose of carrying on this litigation. It is always a very unsatisfactory thing for the Government to interfere and provide funds to enable a litigant for any purpose to prosecute a claim against another. I had heard that this case was coming before your Lordships' House. I have always carefully abstained, when this matter was under discussion, from expressing with any authority the statement that it was in fact coming, because I have never been able to ascertain that in fact it was. But there has been a considerable amount of statement that it was believed it was coming, and I can only say, if it is coming,, that as far as it is possible for me to control the affair I will undertake that every means of expediting the hearing shall be granted.

THE EARL OF HALSBURY

I understood the noble Marquess to say that there was now no chance of an appeal.

THE ATARQUE OF LANSDOWNE

did not say there was no chance, because I do not know. I said I understood that the noble and learned Earl's expectation that there was to be a decision of your Lordships' House sitting judicially had been disappointed, and for that reason I thought he was warranted in asking the House to give his Bill a Second Reading.

On Question, Amendment agreed to.

LORD WRENBURY

The second clause which I propose to add to the Bill is one to work out a point of detail in the first. There may, of course, be (say) three registered holders of a share. Let us suppose that two are British and one German, or two German and one British. You have to determine in those circumstances whether the holders of that share are to be treated as of the one complexion or the other. The operation of the clause is that if there are more than one person registered as holders of a share and some are and others are not alien enemies, then if the Court is satisfied that the majority in number, voting power, authority, or influence are alien enemies, all are to be treated as alien enemies.

Amendment moved— Insert the following new clause: If more persons than one are registered holders of or are beneficially entitled to or interested in any share or interest in a company and some of such persons are and others are not alien enemies and if the court shall be satisfied that the majority of such holders or of such persons beneficially entitled or interested in number or in authority or in influence are alien enemies then the court may declare that the rights disabilities and obligations of all such persons in respect of such share or interest shall be the same as if all of them were alien enemies, and such declaration shall have effect accordingly."— (Lord Wrenbury.)

THE EARL OF HALSBURY

I cannot accept this Amendment.

LORD WRENBURY

I withdraw it.

Amendment, by leave, withdrawn.

LORD WRENBURY

The next clause which I move to insert is one which has to do with the rights of alien holders. The effect of it is that an alien enemy who is the holder of a share is to have no right, vote, interest, or benefit in respect of the share. It is necessary to add a proviso. The operation of the proviso is only this, that if a company being a private company sinks below two in number or being a public company sinks below seven in number there is an immediate right to wind up the company, because there are a less number of holders than is provided by the Statute. The proviso is that notwithstanding the share is thus one held by an alien enemy in respect of which he has no right, vote, interest, or benefit, he shall be counted for the purpose of keeping up the minimum of two or seven as the case may be.

Amendment moved— Insert the following new clause: Every person who is the registered holder of or is beneficially entitled to or interested in any share or interest in a company shall so long as he bears the character of an alien enemy have no right, vote, interest or benefit in or in respect of such share or interest, provided nevertheless that in determining whether the number of members is reduced below two in the ease of a private company or below seven in the case of any other company he shall for that purpose and that purpose only not be disregarded if but for this section he would be a member."—(Lord Wrenbury.)

On Question, Amendment agreed to.

LORD WRENBURY

My fourth new clause is again simply working out the first clause. There may be a registered holder who is a British subject but who holds for a person beneficially entitled who is an alien enemy. The provision in this clause is that in those circumstances the beneficial owner—a German beneficiary and not the nominal owner, the trustee on the register—shall in all questions relating to the rights, disabilities, and obligations of an alien enemy be deemed to be the holder of the share. So that if in fact the ownership of the share is alien, although nominally upon the register it is British, regard will be had to the beneficial title and not to the legal title.

Amendment moved— Insert the following new clause: When a share or other interest is held by one or more person or persons in trust for another person or persons, and the beneficial owner or owners is or are or any one of them is an alien enemy or alien enemies, such beneficial owner or owners and not the trustee or trustees shall, in all questions relating to the rights, disabilities, and obligations of an alien enemy, be deemed to be the holder or holders of the share or other interest."—(Lord Wrenbury.)

On Question, Amendment agreed to.

LORD WRENBURY

The last Amendment in my name deals with a totally different subject-matter. Your Lordships will remember that in the first section of the Merchant Shipping Act, 1894, there are four definitions of the persons who are qualified to be owners of British ships. The fourth of those is, "Bodies corporate established under and subject to the laws of some part of His Majesty's Dominions and having their principal place of business in those Dominions." So that a corporation has only to satisfy those two qualifications to enable it to be the owner of a British ship. Be the fate of the decision in the Continental Tyre Company case what it may it will make no difference whatever to the operation of these words in section(d) of the Merchant Shipping Act, 1891, because even if you are to look behind the corporation to the corporators on a question of disloyalty it will remain a corporation established under our laws. At present the persons owning a British ship may be alien enemies, and that is a thing which I consider ought not to continue. My Amendment will add a third qualification to the corporation if it is to own a British ship—namely, that it must be a body corporate, of which all the corporators and all the parsons beneficially entitled to or interested in the shares of and interests in the corporation are persons falling within some one of the preceding sub-clauses (a) (b) and (c). Those are—(a) natural-born British subjects; (b) naturalised British subjects; and (c) persons made denizens by letters of denization. The effect of this will be that a British corporation established under our laws and having its principal place of business here must be able to predicate of itself that all its corporators are either natural-born British subjects, naturalised British subjects, or persons made denizens by letters of denization.

Amendment moved— Insert the following new clause: Section 1 (d) of the Merchant Shipping Act, 1894, shall be amended by the addition thereto of the following words and being bodies corporate of which all the corporators and all the persons beneficially entitled to or interested in the shares of and interests in the corporation are persons falling within some one of the above sub-clauses (a), (b), and (c).—(Lord Wrenbury.)

On Question, Amendment agreed to.

Remaining clause agreed to.

The Report of Amendments to be received on Tuesday next, and Bill to be printed as amended. (No.188.)