HL Deb 06 March 1952 vol 175 cc551-9

4.0 p.m.

Order of the Day for the Second Reading read.

THE CHANCELLOR OF THE DUCHY OF LANCASTER (VISCOUNT SWINTON)

My Lords, this short Bill enables Her Majesty by Order in Council to give effect to Agreements made between Her Majesty's Government in the United Kingdom and foreign Governments relating to insurances and reinsurances affected by the war. The Bill follows well-established precedents in its procedure. In the Treaties of Peace following the First World War, special provisions were inserted to regulate the position of contracts of insurance and reinsurance affected by that war, and legal effect was given to those provisions by Order in Council under the Treaty of Peace Act, 1919. A similar provision was inserted in the recent Japanese Peace Treaty. The Treaties of Peace with Italy and, I think, with certain other ex-enemy countries following the last war, lay down certain provisions in respect of ordinary pre-war contracts, but provide that contracts of insurance and reinsurance shall be subject to separate Agreements between the Government of the allied or associated Power concerned and the Government of the ex-enemy Power.

An inter-governmental Agreement regarding insurance and reinsurance contracts has already been made with Finland—it was set out in Command Paper 7886—and, in the case of Italy, an Agreement has been negotiated between the representatives of British insurers and representatives of Italian insurers. The Italian Agreement is regarded as satisfactory and in due course will be embodied in an Exchange of Notes between the Governments. An Agreement on somewhat similar lines has also been negotiated between representatives of British insurers and representatives of German insurers operating in Western Germany. All these Agreements follow broadly the provisions of the old Versailles Peace Treaty.

The broad principle of these Agreements is that direct contracts of insurance between an insurer and an insured should remain intact, but that contracts of reinsurance should be terminated at the beginning of the war. The reason for that distinction is this. Broadly speaking, reinsurance differs from direct insurance in that in reinsurance the contract is between insurers, whereas in the case of direct insurance, of course, the contract is between an individual and an insurer. If a reinsurance or a treaty of reinsurance is cancelled, the insurer may be made responsible for larger particular risks than would ordinarily be considered prudent; but he is generally in a position to effect a fresh reinsurance. An individual, on the other hand, is in no such position, and he may be subject to ruinous loss if, contrary to his expectation and, perhaps, as in the case of war, by force majeure, the contract is abrogated. I am advised that the law in regard to the effect of war on insurance contracts is by no means clear, and may differ from country to country. That may be agreeable to lawyers but it is not so agreeable to unfortunate people who have effected a contract of insurance. In the interests of insurers and insured, it is therefore very desirable that any legal doubts should be removed as speedily as possible and without unnecessary recourse to litigation.

Moreover, the United Kingdom is the world's foremost international insurance market. It transacts a very large overseas insurance business, representing premiums of the order of £500,000,000 a year. Although the greater part of this business is with America and the Commonwealth, an important part is with Europe and it is very desirable that our insurers should continue to hold their own on the Continent. The speedy implementation of the Agreements reached regarding the position of pro-war contracts of insurance and reinsurance is one of the most effective ways of creating an atmosphere conducive to further business in European countries. The contracts which are maintained will not covet loss due to belligerent action by the forces of either country. This follows, I am told, the settled rule of English law on this point. For the protection of our own insurers, it is intended that we should mike it clear to the other Governments concerned that an Agreement will not be made enforceable by Order in Council here unless we are satisfied that corresponding action has been, or is about to be, taken to make the Agreement legally effective in the other country. What your Lordships would wish to know, I am sure, is that this Bill has the full support of the British insurance companies and of Lloyd's. In view of the world wide importance of British insurance, it is very desirable that these matters should be placed beyond doubt.

Turning now to the clauses of the Bill—or rather to the one clause—I would point out that subsection (1) enables effect to be given by Order in Council to the Agreement already made with Finland (to which I have referred) and also to similar Agreements which it is expected to conclude with the other countries I have mentioned. Under Orders made under the Trading with the Enemy Act, the interests of German enemies in insurance contracts were vested in the Custodian of Enemy Property; but in order to be in a position to give effect to the German Agreement, it is desired to transfer these interests back to the original German parties. Subsection (2) enables this to be done by a general re-vesting provision, instead of by having to make individual assignments. Subsection (3), your Lordships will see, makes any Order in Council subject to a Negative Resolution. It follows, therefore, that if any special point should arise under a subsequent Agreement to which effect is given by an Order in Council, that matter could, if necessary, be raised on a Prayer. Generally, I am sure your Lordships will agree that it is very important that we should safeguard and encourage invisible export insurance. And as those who are responsible for securing and insuring these invisible exports are wholly in favour of the Agreements which have been made or are in process of being made, I feel sure that your Lordships will wish to give a Second Reading to this Bill. I beg to move.

Moved, That the Bill be now read 2a.— (Viscount Swinton.)

4.10 p.m.

EARL JOWITT

My Lords, this is a complicated, a difficult, and an abstruse subject. Indeed, it is so complicated, so difficult and so abstruse that I have seen to-day what. I have never seen before and what I thought I should never see—I have seen the noble Viscount, Lord Swinton, read a speech, almost every word of it. That makes me highly suspicious, being naturally of a suspicious nature. Although I believe it to be perfectly harmless, and in some respects admirable, I suggest that the Bill is none the less a constitutional outrage. I should like to know what noble Lords opposite would have said had I introduced a Bill like this. The first part of the Bill is quite impeccable. There has been an Agreement with Finland. I have the greatest sympathy with Finland, as we all have, in the position in which she found herself during the war. That Agreement has been signed, and the Government now come to Parliament to ask for its ratification. That is perfectly right and in accordance with standard, orthodox practice, so far as this Bill is orthodox. That Agreement was prepared and signed in the days of the Labour Government and what the Government now propose is the proper course.

I do not think that we are in any sense responsible for the second part of this Bill, although I do not pretend to know. The second part proposes to give the Executive carte blanche, subject to the right of Prayer, to give the force of law to any Agreements which they may make hereafter and which are not specified. I will ask the noble Viscount this question: Is it proposed that these Agreements shall affect the rights of individuals? Suppose there is a Mr. "A" who had entered into a contract of insurance and that contract was voided by the war because he and his opposite number became enemies. Is it proposed that Mr. "A" should become liable, by virtue of the fact that that contract, which had been destroyed by the war, is brought to life again? If so, what steps have to be taken to make sure that Mr. "A" has been consulted and that he has agreed? I appeal to all noble Lords in every section of the House. Surely, if this is not done, it is a great hardship on Mr. "A." I do not know whether it is a fact that individuals are affected. I well understand, as the noble Viscount pointed out, that the great insurance companies and Lloyd's think that on the whole this is a good Bill. But Parliament is bound to look at this matter very carefully to see exactly what impact it may have on the individual. It would be wholly wrong to reinstate, to the prejudice of an individual, a contract which has become dead, without giving that individual every opportunity of being heard and saying what he wants to say. Therefore, I ask the noble Viscount to have regard to that point.

I know that the noble Viscount introduces this Bill with the best intentions. I am prepared to think that on the whole it is a good Bill, but I think the form of the Bill is wrong. I do not remember precedents for this Bill, and if there are any precedents I think that they should not be followed. If it be said, as it may be said, that this Bill was on the stocks under the Labour Government, and that we should have had to introduce it, then I stand in a white sheet. In principle, I agree with the Bill, but I do not think I should have introduced it in this form. The right form is to make an Agreement first and then to let Parliament consider that Agreement and decide whether to give legislative effect to it—not for us to give the Government a blank cheque and say that we will approve all Agreements they may make hereafter. I agree that there is a safeguard—there is the right to pray against it. The value one attaches to the power of Prayer partly depends upon which side of the House one sits. In the last few years I have heard noble Lords who are now sitting on the other side of the House suggest that there was not very much value in it. I expect I used to contend to the contrary. Now I rather begin to think that perhaps they were right in what they said. At least I would say this. If we are going to trust to this power, instead of providing for a mere Negative Resolution procedure we should have an Affirmative Resolution. That would give us an opportunity to consider the terms of an Agreement, to consider whether it affects individuals, to consider whether individuals are properly protected and have had a chance of having their case heard, and to receive representations from individuals. At the very least, before we can allow this Bill to pass through all its stages. I shall ask whether the Government cannot please us to that extent. If what I have said on this constitutional point is worthy of any weight, I hope the noble Viscount will agree that the proper way of dealing with this matter is to make the Agreements first and then come to Parliament. These are the points of substance which arise.

I have made inquiries and they lead me to the same conclusion as that which the noble Viscount enunciated. There is no organised exception to this Bill at all. Indeed, I have ascertained that Lloyd's and the insurance companies think it a good Bill and desire that it should pass. But even to please Lloyd's, I shall not be prepared to pass a Bill in this form without a protest. I believe that in principle this form is wrong and not appropriate for this type of matter.

VISCOUNT SWINTON

My Lords, I am much obliged to the noble and learned Earl the Leader of the Opposition. It is indeed interesting to see how one's point of view changes with the quarter Of the House in which one sits. I never thought, even with this chance of venue, that I should see the noble and learned Earl denouncing, in the manner of Satan rebuking sin, legislation by Order in Council. I congratulate him on his conversion, however late. I think all the Agreements were negotiated under the late Government, though the period of gestation of this Bill leaves me in doubt about exactly where the paternity lies—it may be a joint one. The noble and learned Earl would not expect me to give him an answer now to his point about an Affirmative Resolution. He will appreciate that the Bill does not originate in my own Department. If he would put down on Committee stage an Amendment providing for an Affirmative Resolution, I will consult my right honourable friend President of the Board of Trade and see what his ideas are about it. I am sure it is not unreasonable to have the Agreements made effective. The great point is that the insurance companies should be able to go on doing business in these countries. Assuming the Agreements are right and reasonable, the quicker they can be put into force and carried out, the better. I think we can agree in this case, much as I dislike legislation by Order in Council, that that is the only way to do it. Difficulties over Parliamentary time are much greater in the other place than they are here, and it would be most unreasonable if, as a result, a measure we all wanted to see passed were held up for weeks.

As regards the impact on individuals—I speak without instruction and entirely in the light of such common sense as is vouchsafed to me—I should have thought that, if the noble and learned Earl's criticisms were apt at all, they were apt not to procedure by Order in Council but in respect of the particular Agreement itself. Though the Order in Council makes the Agreement operative, it is not that which governs the rights of the individual, but the inter-governmental Agreement which has been made between the two Governments. Certainly, so far as I have been able to learn anything about this Bill it is greatly in the interests of individuals. After all, what is made effective here is the right of the person who takes out a policy of insurance against the company with whom he insures. The whole purpose, therefore, is to safeguard the right of the individual—I understand that what his rights would be is a very doubtful matter of law.

EARL JOWITT

No.

VISCOUNT SWINTON

I can only say I am instructed that it is a difficult matter of law.

EARL JOWITT

May I just point this out, so far as the Agreement is concerned? An Agreement between two Governments does not affect, adversely or favourably, the rights of an individual. What does vitally affect the individual is when that Agreement made between two Governments is given the force of law.

VISCOUNT SWINTON

I quite follow that. I agree that until you have given the Agreement the force of law it does not vitally affect the individual. I imagine that that applies in this country, although the treaty-making power is in the Crown. I am not quite sure how far one could carry that argument, because here, as distinct from the United States of America, for example, the treaty-making power is the prerogative of the Crown. Both the noble and learned Earl and I have had dealings with these matters. When, as President of the Board of Trade, I made a treaty, I was bound as soon as I put my signature to that treaty; whereas in the United States a treaty is not binding until it has been approved by the Senate. It is true that we bring certain Agreements to Parliament, so that Parliament may ratify them; but I thought that that was in order to give Parliament the opportunity of expressing an opinion. Indeed, where we do that, in making the Agreement we, as the Executive, defer the exercise of the prerogative of the Crown to make the treaty until Parliament has given its approval.

EARL JOWITT

Yes, that is correct. When the noble Viscount makes an Agreement, the convention now is that the prerogative of the Crown is not used until Parliament has been given an opportunity of expressing an opinion about the matter. But when he makes the Agreement, although it binds the two Governments, it does not bind any individual citizen—the individual citizen can treat it as of no importance. That is why you have to have these things, in order that the Agreement becomes not merely an Agreement between Governments but operates with the force of law, binding every one of the lieges.

VISCOUNT SWINTON

That is perfectly right. I can recollect on many occasions presenting legislation to Parliament in order to make the terms of a treaty entered into between two Governments binding upon the individual citizens of this country. But surely that does not affect the point I have made: that although you do not make the Agreement binding upon the citizens of this country until it is made effective by an Act of Parliament, what you really have to look at, to see whether the thing is reasonable or not, is not the Act of Parliament, which is, so to speak, a formal signature to it, but the Agreement itself. I do not think these is any doubt that these Agreements are in the best interests of British citizens—and there should not be doubt in the noble and learned Earl's mind, because, as a matter of fact, all of these Agreements were made by the late Government. I do not want to use that as a debating point, because I am certain that we all regard the matter from the same point of view of the interests of the individual citizen. I feel sure that when the late Government were in office they considered this question entirely from the point of view of what is in the best interests of the British citizens.

The Foreign Office and the Board of Trade are no doubt both concerned in this matter. The Finnish Agreement we were bound to keep; that was carried out and signed when the late Government were in office. But the other Agreements, which were largely negotiated when the late Government were in office, have again been looked at by us, and we are satisfied that they are in the interests of the individual. I think the noble and learned Earl can rest satisfied that, so far as legislation can help or hinder an individual, he is covered here. Certainly without this legislation no individual can have any rights. It is agreed that it is desirable to give the individual these rights, and this is the only way to do it. I think the only point of substance remaining between us is whether there should be an Affirmative or a Negative Resolution procedure, and that question I should like to consider between now and the Committee stage.

On Question, Bill read 2a, and committed to a Committee of the Whole House.