HL Deb 21 July 1964 vol 260 cc543-55

2.55 p.m.

Order of the Day for the Second Reading read.

LORD CHESHAMM

My Lords, I do not think I have ever put a Bill before your Lordships with more confidence than I have in asking your Lordships to read this one a second time. Its object—"to secure Her Majesty's jurisdiction against encroachment by certain foreign requirements"—is so plainly one that your Lordships would wish to promote that I have little doubt it will commend itself to you in the same way as it has to all sides in another place.

As your Lordships know, the reason why the Government have introduced this Bill and are asking for it to become law before the end of this Session is that we have encountered some difficulties with the United States Federal Maritime Commission that we have so far been unable to resolve by discussion. In particular, we are confronted with the continued insistence on the Commission's part to lay down the terms of contracts between shipowners and traders throughout the world, whether within its jurisdiction or not. We and other likeminded countries—ten of them, to be exact—are discussing these matters with the American Government and propose to go on doing so. But we thought it indispensable to make sure, before these discussions went further, that we were not in a position where, if the American authorities became impatient, our position might go by default. I will explain in a minute or two the precise way in which this Bill is calculated to preserve our position.

Although it is in fact troubles with the Americans that have led us to introduce the Bill now, it applies to foreign countries generally. I would emphasise that it is not retaliatory but defensive. We are asking for no powers that we should not be willing to see any Government in the world possess. It does not provide for any action on the part of a British Minister within the jurisdiction of another country. It deals solely with the action that the Government may take where another Government has intervened, or interfered, in matters that are within our own jurisdiction. Surely, my Lords, it is not for a foreign Government, any foreign Government, to decide how business is carried on here; it is and must be the province of the British Government and Parliament to judge whether there is to be any such regulation. That is the reason that the Bill provides power to resist encroachment of this kind.

On the Bill itself, Clause 1 deals with shipping contracts. It operates in three stages. First, the Minister of Transport may, by making an Order, identify the measures taken by a particular foreign country concerning contracts for the carriage of goods or passengers by sea which appear to him to constitute an infringement of our jurisdiction and to which Clause 1 will apply. Secondly, when an Order is in force, it becomes the duty of any shipowner in the United Kingdom to notify the Minister if the specified measure requires him to do something or prohibits him from doing something. A shipowner who wilfully neglected to do so would be liable to penalties. Finally, the Minister may give such directions as he considers necesary to maintain the jurisdiction of the United Kingdom to the person or persons concerned, forbidding compliance with the requirements or prohibitions of the foreign country.

Clause 2 goes on to deal with foreign demands for commercial documents and information. It has happened in the past that people doing various kinds of business in the United Kingdom have been asked for commercial information by courts or authorities in a foreign country. These demands have not so far, frankly, been pressed home, but that kind of requirement could happen again. Clause 2 therefore applies to business documents generally and not only to shipping documents. It covers the case in which someone is required to produce commercial information, whether it has to be compiled from tape recordings or information stored in computers, or from existing documents, or both. It gives permissive powers of direction to a Secretary of State, the President of the Board of Trade, the Minister of Aviation, the Minister of Power. or the Minister of Transport, subject to three conditions. First, it must appear to the appropriate Minister that a person in the United Kingdom has been, or may be, asked to supply documents or information to a foreign court or other authority; secondly, the document required must be outside the territorial jurisdiction of the country asking for it; and, thirdly, the appropriate Minister must be satisfied that the foreign requirement constitutes an infringement of our own jurisdiction.

Your Lordships will know that within the last few days the United States Court of Appeal has handed down a judgment involving British shipping companies in the possibility of fines for infringement of the United States Shipping Act, 1916. I do not want to discuss the implications of this judgment to-day, first because it is a very recent one and its terms need very full study, and, secondly, because this judgment is only one stage in a complicated series of proceedings, and it would be, to say the least of it, undesirable for me to make public comment on it at this juncture. What I can say is that the case in question, which concerns the terms of contract between certain British shipping companies, is an example of a case where, in our opinion, the Americans are concerning themselves with matters within our jurisdiction, and therefore it is an illustration of the need for us to put beyond risk of misunderstanding our intention of preserving our rights. This we must do. Having done it, I still hope that we shall never need to use it and that future problems and difficulties will yield to friendly negotiation and discussion. But it must be done. So I beg to move.

Moved, That the Bill be now read 2a.—(Lord Chesham.)

3.4 p.m.

LORD SILKIN

My Lords, I am sure the House will approve this Bill and give every facility for getting it passed in the shortest practicable time, but I am bound to say, speaking for myself—and I attach no blame to the noble Lord who introduced the Bill—I am still a little in the dark as to what it is all about. It would have been helpful if the noble Lord could have given us a more specific example of what the difficulty really is. He referred to a case, but I do not know what that case is and how it comes about that an American court can order British subjects to produce documents or give information which relate only to matters that are within our own jurisdiction. I am assuming that they have that power. Is it contractual? is it the result of contracts that shipowners enter into under which they agree to certain terms, is it under the United States law, or what is it? How does it comes about that they have this right to require British subjects to give information, and, I assume, to impose penalties if they decline?

I am very glad to see the noble Viscount, Lord Runciman of Doxford, is to speak. He, as a shipowner, will no doubt be able to be a little more specific—at least I hope so—and tell us what the trouble is all about. It certainly is not clear from this Bill, although in principle we should all agree that nothing ought to be done by another country to compel British subjects to do things within our own jurisdiction. I would ask how long this difficulty has been going on. Is it a recent thing? Is it something which the Maritime Commission of the United States has recently initiated or have we been more or less suffering from it for a long time? And which other countries are affected? Are we taking joint action in these discussions with the United States or are we each trying to handle the matter individually?

The other point that rather puzzles me is what is the position of the British subject who is, or will be, apparently involved in a conflict between the law of Great Britain and the United States law. Is it possible that he may be penalised for acting contrary to the United States law, or may he be penalised in this country for giving the information that is required? Is there any likelihood that he will be involved in a penalty either way, either because of breach of contract, or because of failure to comply with American law, or, by reason of failure to notify the appropriate Minister in this country, as a result of which he may be liable to a fine of £1,000?—I am not sure whether he is liable to imprisonment as well; probably not. Is it conceivable that he may get involved in one or other of these penalties, and, if so, is there no provision for indemnifying him, assuring him, assuming he acts quite properly that he will not get into trouble with one or other country or both? These are some of the questions I should like to have clarified. I have no doubt the matter is all right, but it is not self-evident from reading the Bill. I should be grateful if, when the Minister replies, he could deal with some of those questions.

3.8 p.m.

VISCOUNT RUNCIMAN OF DOX-FORD

My Lords, in venturing to speak upon this Bill I must declare a very direct interest in it as chairman of one of the shipping companies against whom judgment was found, as my noble friend said, in New York the other day. If I can do so with some reliance on my memory and without detaining your Lordships too long, I will attempt to answer the historical question that the noble Lord, Lord Silkin, put as to how this problem came about. It stems from quite a long way back, originally with the United States Shipping Act, 1916. The crux of the position in the United States, I think it is fair to say, is that a shipping conference, being a body designed to regulate rates and other conditions of carriage of a particular freight, is un- lawful under United States anti-trust legislation. Recognising the necessity of shipping conferences, they have for many years passed legislation of a temporary character to say that shipping conferences were people relatively of an honest sort.

This legislation was replaced two, or it may now be three, years ago by an Act which conferred upon the United States Federal Maritime Commission regulatory powers over shipping conferences, and the present controversy arises because the Federal Maritime Commission, which is an instrument of Congress of the United States, is seeking to exercise those powers outside what is believed in this country to be the limits of United States jurisdiction. I would hesitate to venture into the legal aspects of the matter which I am quite sure my noble friend can deal with; but, as I understand it, the position is that there is, or may be, a vacuum in International Law whereby, if the law of this country does not apply to certain of these matters, it could be held by the United States courts that, in the absence of any contrary law, their law applied. The object of this Bill is to make quite sure that that vacuum is filled, and to make perfectly clear what are the obligations and, indeed, the rights of British subjects in these matters.

I should like to say from a practical point of view, as one of those who are directly affected, that we welcome this Bill wholeheartedly. It might conceivably, one must foresee, give rise to the sort of conflict which the noble Lord, Lord Silkin, envisaged, where a shipowner might find himself in breach of orders or instructions of a contradictory character from two different countries; but I believe that this is a great deal better than the position in which he finds himself to-day, of having no defence against orders which are probably, we believe, not strictly speaking valid under International Law, but might be held to be so in the absence of domestic law in this country to the contrary. That is, at any rate, how I understand it as one who is likely to be affected by it.

The other thing that I should like to say to your Lordships is this. It has already been said by my noble friend, but I think it deserves saying again. This Bill is not, and cannot be, in itself the solution to these problems. They will be solved in the end only by negotiation, by arriving at an agreement, based, I think, on the honest convictions of both sides that what we are trying to arrive at is the freest and fairest system of trade which can be worked out, admitting that the United States are, as I believe, in a genuine difficulty legally and otherwise in shipping matters, which I would not wish to weary your Lordships with this afternoon and which fortunately we are free from; and that they are, therefore, not as able to negotiate, either shipowner to shipowner or Government to Government in the sense that British shipowners and Her Majesty's Government may be.

Again, I think this Bill may well be helpful in strengthening the position of Her Majesty's Government and, in the same way, of British shipowners in that regard. But in the end what we have to do is to arrive at a friendly agreement with the Americans on these matters. I think that, though the road will certainly be hard and difficult because there are a great many obstacles in the way, it is not too much to hope, if you like to put it this way, that enlightened self-interest will in the end prevail. It must be the object of both countries to promote the freest and largest volume of trade between them, whether by sea or in any other way. In the end, that is the situation at which I think we shall arrive. I welcome this Bill as a necessary step, but no more than a step in what I think will be a long and arduous process; but without this Bill I think that this process would be a great deal more arduous and, indeed, might be difficult to complete at all.

3.15 p.m.

LORD SHACKLETON

My Lords, it is clear that your Lordships' House welcomes this Bill. I should like to ask the noble Lord, however, whether there have been discussions, particularly with I.M.C.O., and how far the International Maritime Commission have been involved. It is rather sad that we have to form, so to speak, an independent trade union with nine other countries to negotiate with the United States on this matter. But having said that, I would add that we accept the necessity for this Bill, although a little further clarification on matters raised by my noble friend Lord Silkin, if the noble Viscount, Lord Runciman of Doxford, has not satisfied him, would be helpful.

At the same time (this is a matter about which I should think the noble Viscount feels strongly, though he may feel it inappropriate to raise it on this occasion) I cannot fail to contrast the difference between the Government's attitude when the jurisprudence, the law of our land, is involved—when, quite properly they have acted—with the lack of action in regard to the defence that has been necessary for British shipping in relation to flag discrimination. It is striking, and it may well be that the Government ought to be coming forward with other legislation to give them powers to deal with flag discrimination.

It is ironic that the United States, who in certain respects practise flag discrimination—or at least make certain requirements in regard to exports of aid—should themselves have taken powers which they have used against countries that have gone in for flag discrimination. It is a fact that this country, which is so dependent on shipping, and, in particular, on overseas earnings—and we have seen in the figures of visible and invisible earnings some of the consequences of the decline of our position—when dealing with such countries as the South American countries, finds itself at the gravest disadvantage. There is one South American country to which it is literally impossible to export steel in British bottoms because there is a discrimination, the effect of which amounts to £9 a ton.

I do not want to make much of this matter, but we hear so little of the problems of the shipping industry. We hear a great deal about the aircraft industry, and a great deal of the extent to which the Government may, or may not, make up their mind whether there is a national or a purely commercial interest. I would urge that there is a strong national interest in regard to shipping, and I cannot do other than contrast the action the Government have taken in regard to the aircraft industry with their failure to give support in regard to flag discrimination.

3.18 p.m.

LORD LUCAS OF CHILWORTH

My Lords, I should like to associate myself with the other speakers in warmly welcoming this Bill, and to offer a word of congratulation to the Government on having had the courage to take the first step in what I join the noble Lord, Lord Shackleton, in hoping is a stand that this country is going to make, at last, against the perils of flag discrimination, from which we have suffered for so long.

The short answer to the noble Lord, Lord Silkin, is that this Bill has a narrow application. We find ourselves, or the Americans find themselves with us, against the monopolistic power of shipping conferences. The shipping conference, as we practise it in this country in association with other countries, is against the anti-trust laws of America. That is the simple point. If this Bill helps us to overcome the difficulty then we shall always be glad. But I agree with the noble Viscount, Lord Runciman of Doxford, that this is going to be a hard and a long road; and, in the last analysis, I do not think that legislation between ourselves vis-à-vis the Americans is going to be the solution. But we must, as the noble Lord, Lord Shackleton, has said, take some notice of the difficulties that this country has had in its export trade. We have to ply our trade on the Seven Seas of the World more than any other country, and the doors of practically the whole of South America are shut against our exports because of flag discrimination.

I should like to ask the noble Lord, Lord Chesham, whether we may take it that this Bill is an earnest of the Government's intention that at last we are going to grapple with this problem of flag discrimination. Is this a forerunner of retaliatory measures—for retaliatory in some cases they will have to be: there is no burking that issue—to see that our shipowners and our shipping have a fair field in world competition? If the noble Lord can give the House that assurance, I can assure him that we shall all be delighted. In the meantime, we support the Second Reading of this Bill.

3.21 p.m.

EARL ALEXANDER of HILLSBOROUGH

My Lords, I have no hesitation in supporting this Bill—support which I indicated I would give when it was announced that this measure was to be put forward. The fact is, however, that in the debate to-day we seem to be going round and round in circles. My noble friend Lord Silkin has rightly raised legal questions—and they were followed up by the noble Viscount, Lord Runciman of Doxford—as to what would be the effect where there are two exactly opposite decisions between the courts of the two countries. What we must not lose sight of is the sense of injustice that must be felt by all British shipowners who are trading in spheres also covered by the Maritime Board of the United States, when they are requested to divulge information of the most secret and important nature about the actual shipping trade in their company and ultimately about the general maritime trade of this country. That is the fundamental point which I want to bring out.

In regard to the question of flag discrimination, the first thing to remember is that many American shipowners indulge greatly in flag discrimination. Some years ago I took the chair at a shipping conference in the City of London, at the request of an American shipowner who, as a flag discriminator, wanted to put his point of view to the shipping Press in this country. A great deal was revealed to me on that occasion. Whilst flag discrimination can have all the ill-effects mentioned by the noble Lord, Lord Lucas of Chilworth, and by my noble friend Lord Shackleton, what we first of all have to concentrate upon is to fill in the blank which faces British shipowners at present if they are brought within immediate danger—and when I say "immediate", I understand that the latest date will be September of this year—by being taken before the American courts on the initiation of the American Maritime Board. They have no legal protection in this matter on our legislative list. This is filling up a gap that I want to see filled up. I should be happy to support anything that is done, in the months to come after this Bill is passed, to bring some easement to the nation, of whose maritime history we are so proud, in order to deal with flag discrimination.

3.25 p.m.

LORD CHESHAM

My Lords, I am grateful to all noble Lords who have spoken for their welcome and broad support of this Bill. I appreciate the way in which the House has received this Bill. There are certain points which I will take up. I shall deal first with the question of flag discrimination, which was raised by the noble Lord, Lord Shackleton, because of the evident interest of the House on this matter. I know that the noble Lord will not want me, on the strength of this Bill to go deeply into the whole question of flag discrimination. First, I must be careful on this subject; and, secondly, it would take more time than your Lordships would wish to spend upon it.

However, I would say this. The noble Lord contrasted this action with lack of action on the broad question of flag discrimination. The one thing we have to remember here is that, if and when we should start taking measures of the kind referred to—it is not within my knowledge whether we shall or shall not; I cannot peer into the crystal ball to that extent—we must not in doing so breach a principle for which we have always stood and which has resulted in the proud British maritime history, to which the noble Earl who leads the Opposition so rightly drew our attention. The principle is to be able to operate a merchant navy with freedom of the seas. That is the first point on which we must be most wary as to action taken on the straight subject of flag discrimination.

Having said that, should have thought that in a small measure this Bill was in fact related to this problem. If the Americans, or any other nation, should start imposing conditions on our shipowners, which they openly do in the interests of their own shipping, I should have thought that that was at least tantamount to a form of flag discrimination. So we are to an extent dealing with something related to the matter, if not with the actual problem itself.

The noble Lord, Lord Silkin, asked me to expand a little on this, and with your Lordships' permission I should like to do so. This is a matter which all the other ten nations I have mentioned and ourselves discuss together on the same kind of level with the same kind of argument. I cannot say to your Lordships what legislative plans they may have in their own countries, but I certainly can say that in the discussions with the Americans we are standing very much together. If I may be forgiven for going back a little in history, the United States Shipping Act, 1916, which was modified by the Bonner Act, 1961, lays upon the Federal Maritime Commission the duty of regulating shipping in the United States trades in various ways, such as disallowing freight rates which they consider discriminating or against the interest of United States commerce. That is the sort of point I have in mind which is tantamount to a form of flag discrimination. To find out the facts which they need, the Act empowers them to call for documents and information, and they consider that this power applies wherever the documents may be located.

The next thing is that conferences must lodge with the Federal Maritime Commission their tariffs and submit their contracts for approval—contracts which they themselves have made in other countries with their customers—and also their agreements with each other. Only contracts which the F.M.C. approve may be used. In some cases these are contracts made in this country between a British conference and British traders. That is the kind of thing to which we object and against which we ought to be able to protect ourselves.

My Lords, among other things the Commission have attempted, as I said, to lay down the terms and conditions of contracts between British subjects in this country. They claim the right to make "unlawful" any international ocean freight rate which appears "unreasonably high or low" in the interests of United States' commerce. They sometimes seek information for no other purpose, it seems to us, than to enable the Commission to interfere in the affairs of our shipowners. They claim the right, of course, to impose penalties for "disobedience" to American law in respect of shipowners' activities in their country which are perfectly lawful here. This is indicative of the degree of encroachment against which I think we should protect ourselves. As my noble friend Lord Runciman of Doxford said, it is perfectly true that they have some belief that there is no reason why they should not do that in the absence of any law to the contrary in this country, and that is a belief which we cannot share or support in any shape or form.

As regards the hypothetical case which the noble Lord, Lord Silkin, put, of a shipowner (or, as the Bill calls him, a "person") finding himself in breach of the law on each side of the Atlantic, this is a question which most certainly requires some comment. I think that his position will be greatly strengthened, because if the United States court sees clearly that by complying with United States law he is liable to be in breach of his own national laws, it is, certainly in the first instance, much less likely to impose a penalty on him, because of the position he will be in at home. Therefore, I think it will be perfectly clear that, if a person is expected to do something in the United States regarding what he has done at home which will thereby put him in breach of the law at home, the United States' court could only provoke a situation whereby we should have to challenge it in a suitable international court.

That is the value of this Bill. I believe that it strengthens the individual shipowner, if he should risk being in breach of the United States law, to make his stand clear, and it enables him to have the backing that he needs in the circumstances. I hope that this explanation makes more clear the situation about which the noble Lord, Lord Silkin, asked me. I am sure your Lordships will agree with me that this Bill will be very helpful in the shipping world, and I hope that your Lordships will now give it a Second Reading.

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