FOREIGN COMPENSATION BILL

HL Deb 04 February 1969 vol 299 cc11-72

2.48 p.m.

THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD CHALFONT)

My Lords, I beg to move that this Bill be now read a second time. The primary purpose of the Bill is to enable assets in this country of persons formerly resident, or carrying on business in the Baltic States and in certain other territories, ceded to the Soviet Union by Finland, Poland, Czechoslovakia and Rumania during and after the Second World War (and described in the Bill as the "ceded territories") to enable these assets to be disposed of so that compensation can be paid for losses suffered by British persons and interests in those regions. The Bill is the final stage in a somewhat complicated series of events extending over nearly thirty years and, if it is to be seen in perspective, I must ask the House to bear with me while I go over a little of the history concerning the former Baltic States from which by far the greater part both of the assets and of the claims arises.

In the summer of 1940 the Baltic States came under considerable Soviet pressure and to a large extent ceased to be free agents. In July of that year far-reaching measures of nationalisation were passed and British property in the Baltic States was seized without compensation. The United Kingdom Government of the day protested to the Baltic Governments against these measures and, when the Soviet State Bank tried to secure possession of the gold held by the central banks in London, the gold was blocked by Her Majesty's Government under wartime powers in order, as was made clear at the time, to safeguard British interests. In August, 1940, the Baltic States were formally incorporated in the U.S.S.R. and their Governments ceased to exist. At the same time their central banks were absorbed into the Soviet banking system and responsibility for the external debts of the Baltic States was repudiated, including three external loans—the Riga Loan, the Estonian Loan and the Vilna Loan—all of which had been raised in the City of London. In the following year, 1941, the Baltic States were overrun by the Germans and both the gold and other assets in this country came under the Trading with the Enemy legislation.

At the end of the war, after the reoccupation of the area by the U.S.S.R., the Soviet Government, who were recognised by Her Majesty's Government as the de facto but not the de jure Government of the region, put forward claims to the gold on the basis of purchase, and the assets on the ground that, as a matter of municipal law in those areas, the Soviet-controlled enterprises had become the successors of the former Baltic concerns. Her Majesty's Government, on the other hand, were claiming from the Soviet Government, as the de facto Government of the area, compensation in respect of the British interests which had been dispossessed, and this was the substance of the dispute. Many years of diplomatic correspondence ensued and it was not until 1959 that the then British Administration and Soviet Government agreed to hold negotiations to cover the various claims and counter-claims. The choice at that time was either to proceed by way of negotiation with the only Government in the area, with the prospect at the end of some sort of off-setting arrangement; or to leave the assets inviolate, and by the same token to leave the British claims unsatisfied, for an indefinite period, by which I mean until such day as Baltic States might again emerge, with whom the question could be discussed. A third possibility was to distribute the assets unilaterally; but to have done so would have involved accepting a considerable risk of retaliation. The British Government at that time, that is, 1959, chose to enter into negotiations with the U.S.S.R. and, with their clear duty to the British claimants, I do not see how they could have done otherwise.

To prepare for the detailed negotiations, an Order in Council was made in 1959 providing for the registration of claims by the Foreign Compensation Commission and our claims were then submitted to the Soviet Government. It was not, however, until 1965, six years later, after Her Majesty's present Government had taken office, that it was possible to begin detailed negotiations. Neither side accepted liability as a matter of law and progress towards agreement on the existence and value of the assets claimed on either side was slow. The principal asset claimed by the Soviet Government was of course the gold, the weight of which was known to them and which when it was sold in June, 1967, realised £5.8 million. In all, the Soviet side were claiming £10 million. The British side were claiming £15 million, including some arrears of interest, but I must emphasise—and this may be an important point in your Lordships' consideration of the Bill—that this represents simply the sum of the values put upon their claims by the individual claimants themselves and perhaps some of them were, as sometimes happens in these cases, somewhat inflated. Certainly the Soviet side thought so.

By the end of 1966 we were convinced that the only hope of breaking the deadlock was to seek agreement on a basis which would mean that each side, without admitting liability, would undertake not to pursue its claim against the other. This the Soviet Government would not accept, and in monetary terms the respective positions of the two sides were still far apart. But during Mr. Kosygin's visit to this country early in 1967, agreement was reached and announced on February 12, on the basis that each side undertook not to pursue further its claims, but with the payment by the British Government, out of the assets, of the sum of £500,000 in the form of consumer goods additional to Russian net purchases under the current five-year trade agreement. The settlement preserved the point of principle that we did not recognise Soviet title to any part of the assets and it remains our position that the Soviet Government is recognised as the de facto but not the de jure Government of the area. In the Government's view the payment to the Soviet Government of this small proportion of the assets which we hold was a necessary but worthwhile con cession to achieve a negotiated agreement, which would give a firm legal basis for their distribution and avoid the risk of the repercussions which would certainly have followed on a decision to distribute them on a unilateral basis.

The settlement of February 12, 1967, provided for the formulation of the terms of the settlement and this led, not without further difficulty, to the Anglo-Soviet Agreement of January 5, 1968, to which reference is made in the preamble to this Bill. Many noble Lords will be familiar with the terms of this Agreement and I do not think that it is necessary for me to go through them in detail. By Article 2, the Soviet Government undertook not to pursue its claims to assets in this country with which we are concerned in this Bill; and by Article 3 the Soviet Government is to be solely responsible for the settlement of claims by its nationals. Article 5 contains the provisions about the payment of £500,000 into a special account with the Bank of England one week after signature of the Agreement.

All this is the background to the Bill which is before us to-day. The primary purpose of the Bill is contained in Clause 1 and in subsection (2) of Clause 2. The broad effect is quite simple. Clause 1 would enable the Custodian to pay over to the Foreign Compensation Commission proceeds of assets which are "former property" of a Baltic State or ceded territory. The expression "former property of a Baltic State or ceded territory" has to be read in the light of the definition in Clause 3, subsection (1) on page 4, lines 8 to 27 of the Bill. It will be observed that the definition includes income which has accrued on such property. Subsection (5) of Clause 1 provides for the payment into the Exchequer of the £500,000 needed to recoup the Exchequer for the payment already made to the Soviet Government under the terms of the Agreement. In addition, there is to be a payment under subsection (4) of Clause 1 from the Board of Trade Vote of a sum not exceeding the income which has accrued from these assets since February 12, 1967, and has been paid into the Exchequer. This amounted to about £170,000. Subsection (2) of Clause 2 enables an Order in Council to be made empowering the Foreign Compensation Commission to determine claims and pay compensation to the successful claimants. This, as I have said, is the primary purpose of the Bill.

The Bill has also the subsidiary purpose of making four amendments to the Foreign Compensation Act 1950 which experience has shown to be desirable. Your Lordships will find these in Clause 2. The first two such amendments are contained in subsections (1) and (3) of the clause which have the effect of broadening the scope of the Act of 1950, especially as it affects Section 3. First of all, by virtue of subsection (1) of Clause 2, it would be possible to use the Foreign Compensation Commission should there be a question of distributing compensation paid by a Commonwealth Government. At present, the scope of the Commission's work is limited to settlements with foreign countries other than Commonwealth Governments. No such compensation settlement with any Commonwealth Government is in fact in prospect at the moment, but it is not out of the question that one might arise and this Amendment would then have a useful effect, for the Commission would have it in its power to deal with that matter.

The second extension of the Foreign Compensation Commission's powers, which is contemplated, is contained in subsection (3) of Clause 2 which would enable an Order in Council to be made for the registration of claims not only when negotiations with other Governments are already in contemplation but also in anticipation of such negotiations. Your Lordships will appreciate that it is sometimes convenient to get the necessary information recorded, without waiting for the other Government concerned to indicate its willingness to negotiate. Subsection (5) would make another small amendment. Its effect is to provide that Section 2(3) of the 1950 Act shall cease to have effect. This subsection provided for the appointment by a Commonwealth Government of additional members to the Foreign Compensation Commission for the purpose of determining applications for compensation received by the United Kingdom Government on behalf of Commonwealth nationals. It was only used once many years ago and the United Kingdom is highly unlikely in future to negotiate on behalf of the nationals of other Commonwealth countries. It is therefore pro posed that that subsection shall cease to have effect. The subsection as it stands is in any case defective in that it enumerates the Governments of those Commonwealth countries which were independent in 1950, and has not since been brought up to date.

Now, my Lords, I come to Clause 2(4). This deals with the fourth amendment, and it is the section which was added during the passage of the Bill in another place. If some of the comment and correspondence in the Press is to be believed there has been a good deal of misunderstanding about this clause. The amendment has been occasioned by the majority judgment delivered on December 17 by your Lordships, sitting in a judicial capacity, in the case of Anisminic Ltd. v. The Foreign Compensation Commission and Another. This judgment has serious implications for the future work of the Foreign Compensation Commission.

It was provided in Section 4, subsection (4), of the Foreign Compensation Act 1950 that: The determination by the, Commission of any application made to them under this Act shall not be called in question in any court of law". This provision was approved at the time without any controversy at all. The then Lord Chancellor explained in this House that the task of the Commission was to "decide, and decide finally", applications for compensation made to it. Parliament's intention in this respect was reaffirmed in 1958 when, during the passage of the Tribunals and Inquiries Act, an Amendment was made in Committee in another place so as to exclude the Foreign Compensation Commission from the operation of certain sections in view of its special character. In the recent judgment of your Lordships' House, to which I have referred, a declaration was upheld that the Commission's Provisional Determination was a nullity. Reversing the Court of Appeal, the majority in your Lordships' House found that the courts were entitled to review the Commission's interpretation of the relevant Order on the ground that the Commission had misconstrued it and had therefore exceeded its jurisdiction, with the result that its determination was a nullity and was therefore not protected from judicial review by Section 4(4) of the Act of 1950.

But in practice, of course, the Commission cannot avoid interpreting the Orders under which it carries out the distributions entrusted to it. This judgment would therefore make it possible, contrary to what the Government believe to have been the intention of Parliament, for the Commission's determinations, made in perfectly good faith and after the most careful deliberation, to be challenged in a wide range of cases. The consequences of this, as I am sure your Lordships appreciate, would be most unfortunate. The task of the Commission, which is of a special character, is to determine claims and to arrange for distribution on a rate-able basis to successful claimants, of what are nearly always finite "lump sums" either received in the form of cash from foreign Governments, or in some cases raised by the disposal of foreign assets in this country, such as those to be made available under Clause 1 of this Bill.

Until all obligations, or at any rate all those of any substance or magnitude, have been disposed of, it is impossible for the Commission to judge with any degree of certainty what will be the share attributable to each successful application and so to pay anything like a final dividend or perhaps any worthwhile dividend at all to them. If there is to be a risk that their determinations may be challenged in the courts and perhaps taken right up to your Lordships' House, the claimants, who have usually already been waiting for a very long time—nearly thirty years, in the case or most of those affected, for instance, by the distribution contemplated by this Bill—may well have to wait a further substantial period before they can touch their awards or at any rate the greater part of them. There is, obviously, another way out of this theoretically. If the Commission were to distribute the funds as expeditiously as possible without having any regard to the risk of successful litigation, judgment might be given against them after the relevant Fund had been exhausted. I think it is obvious at once that this would be bound to bring up the difficult problem of how to satisfy the judgment, and it would certainly lead to pressure for the successful litigant to be paid out of public funds, whereas I think there will be no argument that the source of compensation should be the foreign Govern ment concerned and not the British taxpayer.

We believe, therefore, that Clause 2(4) reaffirms the original intention of Parliament, which was, on strictly practical grounds, in the interests of the claimants as a whole, to exempt determinations of the Foreign Compensation Commission from the normal right of appeal to the courts. It is important to make clear that the subsection is not in any sense retrospective and will apply only to distributions begun after the passing of this Act. For example, it will not affect the case of Anisminic Ltd. which the Foreign Compensation Commission a will consider again in the light of the recent judgment. Neither will it prejudice the exercise of jurisdiction by the courts in the case of an alleged failure to observe the rules of natural justice or a complaint, for example, of some fundamental error of procedure. But it will, we believe, restore to the determinations of the Commission the measure of finality which they must have if the claimants as a whole are to get their money with all practical expedition.

My Lords, I hope I have sufficiently explained the effect of the Bill itself. There is, of course, nothing in the Bill about the distribution of assets, the enabling of which is the primary purpose of the Bill. The terms of this distribution will be contained in an Order in Council which will be made at the earliest opportunity after its passage into law. This will provide for applications to be made in respect of the various categories of claims covered by Articles 1 and 4 of the Anglo-Soviet Agreement to which I referred earlier. This comprises claims in respect of British property affected by nationalisation, or other measures, and of financial losses in the former Baltic States and in the "ceded territories". It also deals with the Government's own shipping claim in relation to shipping services provided under the Anglo-Soviet Ships' Expenses and Freight Agreement of 1942; with British claims in respect of bonds and shares and claims, irrespective of the nationality of the holders, in respect of the unredeemed promissory notes issued by the Soviet Government to two firms, the Lena Goldfields Company and the Tetiuhe Mining Corporation.

These two British companies, as some noble Lords may know, both invested large sums in the Soviet Union in the years after the First World War. Their concessions were terminated and they were receiving compensation, albeit on a somewhat inadequate scale, in the form of promissory notes redeemable at intervals until 1954. But in 1940, in retaliation for Her Majesty's Government's refusal to release the Baltic gold, the Soviet Union refused to redeem the outstanding Lena and Tetiuhe notes. All the note holders alike suffered because of this Soviet retaliation for the British action in defence of British interests and that is why all holders, irrespective of nationality, are entitled to participate in this distribution.

It is impossible to estimate at this stage what dividend will be payable to successful claimants. This can be known only when every claim has been determined by the distribution authority. The capital value of the claims presented on our side in the negotiations amounted to £13½ million, though the Russians accepted liabilities of less than £3 million only. No doubt the capital value of the claims when they have been assessed will lie somewhere between these two figures. It is impossible also to say with certainty at this stage what is the value of the assets available for distribution to claimants but it is likely to be around £6 or £6½ million. There will be a six-months period during which applications must be made. Thereafter the Foreign Compensation Commission will proceed with the distribution as quickly as it can and it is hoped that it will be possible to declare an interim dividend soon after the closing date for applications.

If, as I hope, the House is willing to give this Bill a Second Reading this afternoon it will be providing that former owners of property in the Baltic States and the ceded territories should at last receive some compensation for losses which most of them sustained a great many years ago. I am happy to commend to the House a Bill which, so far as they are concerned, brings appreciably closer the end of a long and wretched story. My Lords, I beg to move that this Bill be now read a second time.

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

3.13 p.m.

THE MARQUESS OF LANSDOWNE

My Lords, the noble Lord, Lord Chalfont, has given your Lordships a careful exposition of the Bill and he has presented the Government's case in support of it. While following it in the OFFICIAL REPORT through all its stages in another place I have grown to like it less and less, and I am bound to say that nothing the Minister has said this afternoon has made me feel one whit better disposed towards it. As we have been told, this is an enabling Bill to implement an Agreement between Her Majesty's Government and the Government of the U.S.S.R. which was signed on January 5 of last year, one particularly objectionable Article of which was immediately acted upon without any reference whatsoever to Parliament. I shall have more to say, later on in my speech, about this insolently high-handed behaviour of Her Majesty's Government.

This Bill, and everything that has led up to it is, as the noble Lord has said, complicated and involved. For this reason, the noble Lord, Lord Chalfont, was good enough to give us a lot of the historical background. I am grateful to him for that. If I may recapitulate what seem to me to be the most essential points in the past history leading up to this Bill, it is because the passage of time can sometimes invest a questionable act with an appearance of respectability which that selfsame act could not possibly have commanded had it been perpetrated many years sooner. Distance, my Lords, adds enchantment to the view. I propose, therefore, first to ask your Lordships to consider some of the background history, then to study the Agreement, and finally to have a look at the Bill itself, and in particular the Amendment to which the noble Lord referred last in his speech, and which was introduced at very short notice on Third Reading.

At the end of the First World War Estonia, Latvia and Lithuania gained their independence, and in 1921 they were admitted to the League of Nations. Between 1922 and 1926 Britain signed commercial treaties or agreements with all three of them. These treaties, I understand, could legally be terminated only after notice had been given. So far as I am aware, no such notice has ever been given, so presumably in law these treaties stand. I wonder whether the noble Lord can enlighten me on this point.

The independent status of these three Baltic States seemed assured by the terms of the treaties signed with Soviet Russia in 1920, when Russia renounced voluntarily and for ever all her rights of sovereignty over them and their peoples. Twenty years later, however, Mr. Molotov was telling the Deputy Prime Minister of Lithuania to take a good look at reality and understand that in future small nations will have to disappear. In the process of their disappearance, between June, 1940, when the Soviet armies invaded the Baltic States, and June, 1941, when the Nazis drove them out, 61,000 Estonians, over 50,000 Lithuanians and over 34,000 Latvians were deported or killed. I must remind your Lordships that the three Baltic States had declared their neutrality at the outbreak of the war.

When war seemed imminent, the Baltic central banks, anxious about the security of their assets deposited with the Bank of England, suggested their transference to the United States of America. They were given assurances that the assets were entirely safe in Britain and a transfer to America was unnecessary. The United States, my Lords, still refuses even de facto recognition of the annexation by the Soviet of the Baltic States. In America, the assets of which Her Majesty's Government are disposing in order to settle claims against the Soviet would have remained safe. My Lords, what price the old, proud adage, "As safe as the Bank of England."?

In July, 1940, the U.S.S.R. and Nazi Germany being technically friends, as a result of the Molotov-Ribbentrop Pact, the Baltic assets in the Bank of England were blocked in order to safeguard British interests. After the Nazi invasion of the Baltic States, and the withdrawal of the Russians, these assets, in accordance with trading with the enemy legislation, were handed over to the Custodian of Enemy Property. Of course the Baltic States were not our enemies. They had started the war as neutrals; they were not our enemies. But the Nazis were in occupation, and it was solely for this reason that the Baltic assets were treated as enemy property. Once the assets had been handed over to the Custodian of Enemy Property it was possible to make a vesting order making the Custodian the legal owner and having the power to sell. Had the Nazis not occupied the Baltic States, the Baltic gold would presumably have remained in the safe keeping of the Bank of England and beyond the reach of the slippery fingers of Her Majesty's present Government.

In a letter to Sir Tufton Beamish dated November 24, 1967, Sir Leslie O'Brien said: Each individual bar remained the property of the customer concerned until it was vested in the Custodian of Enemy Property, in accordance with the relevant United Kingdom legislation… And a little further on in the same letter he wrote: …the gold was placed with us in much the same way as a private individual might place jewellery or other valuables in his bank. It would seem to me that the banks of the Baltic States, who were "the customers concerned", have had their gold stolen from the Bank of England, the theft having been perpetrated by Her Majesty's Government with the assistance of the Trading with the Enemy Act. Section 7 of that Act lays down that vesting orders are carried out with a view to preventing the payment of money to enemies and preserving enemy property in contemplation of arrangements to be made at the conclusion of peace. Finnish assets in this country were also lodged with the Custodian of Enemy Property for the same reason. Finland was overrun by the Nazis, and at the end of the war her assets were quickly restored, the Government of Finland having been given de jure recognition by Britain.

Will the Minister tell the House if it is the opinion of Her Majesty's Government that the gold which had been deposited in 1919 by the Baltic States in the Bank of England was, on January 5, 1968, the property of the British Government, and, if it was the property of Her Majesty's Government on that date, by what legal process had that ownership come about? I hope that the noble Lord who is going to reply will give me an answer to that question. It is of course perfectly clear—it was repeated again this afternoon that Her Majesty's Government do not accept that the U.S.S.R. had any title whatsoever to the Baltic gold. This was confirmed on June 15, 1967, in a letter from the then Minister of State at the Foreign Office to Sir Tufton Beamish, in which he wrote: Shortly before the Baltic States were formally incorporated into the Soviet Union, the Soviet State Bank represented that it had purchased the gold from the Baltic Central Banks. This claim is not one which we have recognised, and the transfer of gold was withheld. That has been confirmed again this afternoon.

I must now ask your Lordships to consider for a few moments the claims and counter claims between Britain and the Soviet Union, in settlement of which the Agreement on January 5, 1968, was made. The claims and counterclaims with which we are concerned in this Bill are only those financial and property claims which arose after January 1, 1939. Assets held in the United Kingdom belonging to nationals and Governments of the Baltic States and those parts of Finland, Poland, Czechoslovakia and Roumania subsequently ceded to the Soviet Union were frozen when Nazi Germany invaded those countries during the Second World War.

The Soviet Union, for its part, had frozen assets belonging to British nationals and others in these territories, and in particular there were outstanding claims by the holders of unredeemed Notes issued by the Government of the Soviet Union to the British joint stock companies, the Tetiuhe Mining Corporation and Lena Goldfields, Limited, of London, both these companies operating in Siberia. The British claims against the Soviet Union, which were the subject of the negotiations started in 1965 and which were settled under the Agreement of January 5, 1968, were approximately—as the noble Lord has told us—£15 million, and the Soviet claims against Britain approximately £10 million. Noble Lords will appreciate that I do not of course criticise the determination of Her Majesty's Government to obtain a settlement of these claims, but I do most strongly object to the manner in which this settlement has been achieved.

My Lords, I come now to the Agreement signed on January 5, 1968. The Minister has explained its content. As I understand it, not only was this a bad bargain but it was also immoral, and included in this shameful settlement there had to be a "tip"—I cannot call it anything else—of half a million pounds sterling to the Soviet Union to induce them to have an agreement at all. I cannot accept that Her Majesty's Government had the moral right to utilise the gold of the Baltic States, deposited in the Bank of England for safe keeping before the war, in order to settle British claims against Russia, and I was glad to see that the honourable member for the Cities of London and Westminster, Mr. John Smith, a banker of some twenty years' experience, described the transaction as "dishonourable and inexpedient". I can give the noble Lord the reference if he wants it. He also said in answer to the Government spokesman's claim that they had done what was "practical": The bank in which I work has rooms full of objects, many of them extremely interesting and many of them to which the title is almost perfect, but not quite. We would not dream of parting with any of them without a perfect title being shown to us. Why is that? It is because we wish to stay in business as bankers; and what applies to us in commerce applies, a fortiori, to this country."—[OFFICIAL REPORT, Commons, 7/11/68; col. 1121.] I have said that I cannot accept that Her Majesty's Government had the moral right so to dispose of the Baltic gold, but if it is possible to make a case in law that Her Majesty's Government were acting within their legal rights, I cannot for the life of me see any justification for handing over to the Soviet Union half a million pounds sterling out of these assets, to which Her Majesty's Government have stated the Soviet have no legal title. Nor why the proceeds from the assets from the Baltic countries should be distributed to meet claims which arose from losses in parts of Czechoslovakia, Finland, Poland or Roumania, ceded to the Soviet Union, or for that matter the Lena Goldfields' creditors and the Tetiuhe Mining Corporation in Siberia. What has this all got to do with the Baltic States? Will the noble Lord explain why Her Majesty's Government gave the Soviet Union this money, and on what possible grounds there is justification for using Baltic funds to meet claims in other countries now part of the Soviet Union? My Lords, it is a bad story, and it is humiliating for a people who have long enjoyed a reputation for fair dealing.

There is another aspect of this Agreement to which I wish to draw your Lordships' attention. I refer to the high-handed treatment of Parliament by the Executive and what appears to me to be broken pledges. In a letter of June 15, 1967, the Minister of State, Foreign Office, informed my honourable friend, the Member for Lewes, that the realisation of the Baltic assets was subject to Parliamentary authority. As it transpired, the gold was in fact sold exactly two weeks later and Parliament was not even informed, let alone asked for its opinion. What is the explanation of this? Will the Minister of State, when he comes to reply, be good enough to give some explanation to this House?

According to the OFFICIAL REPORT of October 23, 1967, col. 1351, the Under-Secretary of State for Foreign Affairs said in another place: It is the case that legislation would be required before the process of distribution took place."—[OFFICIAL REPORT, Commons, 23/10/67; col. 1351.] Yet £500,000 was paid to the Soviet from the Civil Contingency Fund in January, 1968, almost immediately after the signing of the Agreement, and then this transaction was discreetly slipped into page 33 of the Supplementary Civil Estimates for 1967–68, which were not published until February 15, 1968—one month after the money had been placed to the credit of the Soviet Union in the Bank of England. What is the explanation of this?

The Bill, which I shall come to shortly, provided in Clause 1, subsection (5), for the repayment of £500,000 to the Consolidated Fund out of the proceeds of the property which is to be, or has been, realised by the Custodian of Enemy Property. Strictly speaking, therefore, by these devious means it would be possible to advance the legalistic argument that the payment to the Soviet Union was not a direct distribution of the Baltic assets. Is that the argument of Her Majesty's Government in justification of the statement of the Under-Secretary of State for Foreign Affairs which I have just quoted: …legislation would be required before the process of distribution took place"? I noticed that the noble Lord emphasised that there had been no distribution, yet according to the OFFICIAL REPORT in 1968 the then Foreign Secretary said: The Agreement will be subject in due course to Parliamentary approval. If Parliament turns it down, that will be that"—[OFFICIAL REPORT, Commons, 23/1/68; col. 210.] But the £500,000 was deposited in the Bank of England to the credit of the Soviet Union in January of last year, and contracts for British goods to the value of the whole amount had already been signed before ever Parliament was asked to approve the Agreement. So what would happen if Parliament does turn down the Agreement now?

It has been argued that once having decided to take what, in my view, was the dishonourable step of distributing the proceeds of the Baltic assets to our claimants against the Soviet Union, no Agreement with the Soviet Union was necessary. We held the assets and the claimants are here. Furthermore, an additional £500,000 would have been available for distribution. This argument seems to me valid, and I am bound to ask, in view of the noble Lord's remarks about the risk of retaliation and risk of repercussions, what could the retaliation or repercussions have been? Perhaps the noble Lord would be good enough to tell us in his winding-up speech.

The Bill to which the Minister has asked your Lordships to give a Second Reading was first discussed in another place ten months after the Agreement to which it ostensibly is to give effect was signed by the then Foreign Secretary and the Russian Ambassador. No doubt Her Majesty's Government allowed hopes of an Anglo-Russian détente to influence them when considering a solution to the question of outstanding financial and property claims. The tragic and monstrous treatment of Czechoslovakia by the Soviet and the horror with which we have read of young patriots driven to despair by the brutal suppression of the small measure of freedom their country had so painfully won has not unnaturally made this tardy request to approve a completely gratuitous gift of half a million pounds to Russia particularly repugnant, but I should hope that in any circumstances and in dealings with any Government noble Lords would feel a sense of deep humiliation at being asked to approve a most blatant bribe, and a bribe carried out with moneys which, by any normal standards of morality, could not in my opinion be consider ours to give away.

This mortifying piece of legislation has, alas! passed through all its stages another place, where determined and carefully reasoned arguments were deployed against it, without avail, and all Opposition Amendments rejected. The attitude of Her Majesty's Opposition in this House will be determined by certain proposals that we shall have to make at a later stage and by the satisfaction or otherwise which we receive to-day from the answers to questions addressed to the Minister. I sincerely hope that the noble Lord will reconsider the suggestion made in another place by my right honourable friend the Member for Bridlington, Mr. Richard Wood, that Her Majesty's Government should undertake to make a full restitution of these Baltic assets to their appropriate owners should the opportunity arise. Will Her Majesty's Government now give such an undertaking?

In the course of my remarks I have avoided so far as possible complicated points of law, leaving these to other noble and learned Lords better qualified to deal with them. Despite this, I cannot refrain from expressing my own anxiety concerning the Amendment to Clause 2 of the Bill which was introduced at very short notice at Third Reading and now forms subsection (4) of Clause 2. This provision is, as I understand it, in order to enable the Foreign Compensation Commission to carry out its work expeditiously and, like anyone else, I would regret that claimants, often in great need, should have to wait any longer than was absolutely necessary. But this provision would mean that it would be impossible for a claimant to secure redress if the Commission were to make a mistake. There could be no appeal to the Parliamentary Commissioner or to the courts. I hope that noble and learned Lords will consider this point very carefully, for it seems to me that though it is probably desirable to preserve the substance of the Commission's decisions from subsequent appeal, it is undesirable to remove from a claimant any means of questioning the validity of a decision.

Your Lordships will have noticed—and the noble Lord referred to it—in The Times of Saturday, February 1, a letter from Professor Wade on this subject, in which he said: The law's delay, like its uncertainty and expense, is a tempting reason for sacrificing justice to speed, but if the courts are prevented from protecting legal rights, the remedy is much worse than the disease. That is an argument quite comprehensible to the layman and, subject to what I hear from learned Lords on the subject, I shall be inclined to accept it. The Times to-day publishes, across three columns, a letter signed by the Chairman of the General Council of the Bar and the President of the Law Society. The combination of the arguments and the eminence of these learned gentlemen has almost convinced me. However, from past experience I have learnt that legal luminaries often disagree, so I shall wait and listen and then make up my mind. It rather looks as though this mean-spirited and dishonourable little Bill has sired a real monster. I hope that, in considering the possible destruction of the offspring, noble Lords will not lose sight of the thoroughly objectionable qualities of the parent.

3.37 p.m.

LORD TREVELYAN

My Lords, I must declare my interest as President of the Council of Foreign Bondholders. As early as 1959, Her Majesty's Government agreed with the Soviet Government that particulars of outstanding claims which had arisen since 1939 should be collected with a view to negotiations for a comprehensive settlement. It has taken nearly ten years for an Agreement to be concluded and for the consequent Bill to reach your Lordships' House. It having been decided in 1959 that the settlement of these claims should be by way of an Agreement with the Soviet Government, there was a pressing need for this Agreement to be concluded in order that the claimants should obtain some compensation after so long.

There are some features of the Agreement which certainly cannot be welcomed. We surely all regret that it was found necessary, in order to get the Agreement, to pay the Russians £500,000 since even before this payment, apart altogether from other considerations which have been put forward by the noble Marquess, Lord Lansdowne, the assets available for distribution were not expected to be sufficient to satisfy the legitimate claims.

Another feature of the Agreement against which objection can be validly raised is that the Agreement covers all holders of the Lena and Tetiuhe State Notes, but only those Baltic Bonds in British ownership. It has therefore admitted the right of the Soviet Government to prescribe in some degree how the British Government should distribute the Baltic assets to which the Soviet Government renounce their claim under this Agreement. I can have no objection of principle to the inclusion of foreign holders of the Lena and Tetiuhe State Notes, since these notes were a sterling issue. On the other hand, the Council of Foreign Bondholders endeavour to maintain the same principle in their settlements that sterling bonds should be settled on an issue rather than on a national basis. There is something to be said for the settlement of both the Sterling Bonds and the Sterling Notes on a national basis. There is something to be said for settling both on an issues basis, even if the British claimants get rather less compensation. There is nothing to be said for settling them on different principles.

I am not sympathetic to the argument that the Baltic assets should not have been brought into the Agreement on the ground which was put forward very eloquently by the noble Marquess, Lord Lansdowne, that we have not recognized the Baltic States de jure as part of the Soviet Union. I think we must look at the matter from a practical point of view, and it is quite time that these assets which are lying with us were made available to British claimants who have been deprived of compensation for so long.

It is a logical argument that the use of Baltic assets should have been limited to Baltic claims, which would have excluded the holders of the Lena and Tetiuhe State Notes and those with claims relating to other territories annexed by the Soviet Union from Czechoslovakia, Poland, Finland and Rumania. I would not, however, press this point, since there would have been no agreement on this basis and these are the only assets which are ever likely to be available for meeting these claims.

It has been suggested that a rider should be added to the Bill that the Government should restore the value of the Baltic assets if the Baltic States became independent again. We should, I suggest, leave this question to be dealt with in accordance with developments of the future. We are all naturally concerned at the legal and moral implications of the appropriation of these assets. I cannot, however, regard it as desirable to provide for a hypothetical situation in this way. It is, I fear, a very unlikely contingency. Moreover, in the highly unlikely event that the Baltic States should become independent again the British Government would surely not agree to pay those Governments these assets without any comparable obligation on them to meet the legitimate claims against the Baltic States.

Since the principles of distribution, which are to be set out in the Order in Council, have been already discussed by Ministers in the other House and, briefly, by the noble Lord, Lord Chalfont, in your Lordships' House to-day, I trust that your Lordships will bear with me if I make brief comments on them at this stage. I have at no time sought absolute priority for the bondholders over other claimants, though this could be theoretically justified. Obviously, there must be some element of equity in the division of the assets. The Government have agreed that the Baltic Bonds should rank for nominal capital plus contractual interest from the date of default, which maintains the important principle for the treatment of Sterling Bond issues in default.

However, it is in my opinion wrong that notional interest at the rate of 4 percent. should be allowed on all other claims, including the non-interest-bearing Lena and Tetiuhe State Notes. This does not recognise the superior status of the Baltic Bonds, which are claims carrying contractual interest against a Government and for payment in sterling, compared with commercial claims with no contractual interest for payment in local currency which would have been transferable into sterling, if at all, only at a loss, and State Notes which were specifically non-interest-bearing. I trust that these considerations will still be taken into account by the Government in deciding the principles on which the distribution will be based.

Much time has passed since the Agreement with the Soviet Government was announced. There is much work still to be done before the distribution can be made, particularly in a full inquiry into the validity of the commercial claims, which will surely be found in some cases to have been inflated. The bondholders have no opportunity to inflate their claims. I hope that this work will be carried out urgently, so that the claimants will not have to wait much longer before receiving that proportion of their claims which can be provided from these assets after the various categories of claims have been established and proportionately scaled down.

Finally, may I take this opportunity to say that I welcome the Statement made by the Minister of State for Foreign Affairs in the other House on December 16, that Her Majesty's Embassy in Moscow have informed the Soviet Government that they hope it will be possible to initiate discussions with the Soviet Government on the pre-1939 Anglo-Soviet claims. This matter has been outstanding too long. It will be an added argument in favour of the Agreement made between Her Majesty's Government and the Soviet Government if it paves the way to a settlement of the old claims. Subject to these comments, I support in general the Bill before your Lordships' House, without supporting all the details in it.

3.45 p.m.

VISCOUNT DILHORNE

My Lords, the noble Lord who has just resumed his seat said that he was not sympathetic to the objection to bringing in Baltic assets to meet the claims of foreign bondholders, wherever they might arise. He went on to say that he was naturally concerned with legal and moral obligations, and then he put the stress on what he considered to be practicable. I hope it is the case that the noble Lord has first regard to moral and legal obligations. I should have been more interested if he could have explained to me how he reconciled distribution of these Baltic assets to creditors, foreign bondholders, who never have had a shred of right to these assets at all.

When listening to the speech made by the noble Lord, Lord Chalfont, in introducing this Bill, anyone who had not briefed himself with the background to it would not, I think, have realised the very great issues to which this Bill gives rise. The noble Lord made a very attractive speech. He dealt to some extent with the historical background, but he omitted to deal, and very wisely, with a number of points, and, in particular, with the main points made by my noble friend Lord Lansdowne. He has frequently been put into bat on a sticky wicket, and I sympathise with him in that respect. But I am very glad to-day that he has the assistance and support, as one speaking in this debate, of the noble and learned Lord, the Lord Chancellor, for I think that the issues raised here concern matters of great legal importance, and not merely matters of morality.

We know that the Agreement of January, 1968, came into force on the day on which it was signed—January 5, 1968. But on January 23, 1968, the then Foreign Secretary said that it was very good business to get this Agreement; and also, as my noble friend has said, that the Agreement would be subject in due course to Parliamentary approval. "If Parliament turns it down," he said, "that will be that." But the Agreement came into force on signature. It was partially implemented without recourse to Parliament immediately after signature. It was never subject, in any respect at all, to Parliamentary approval. Now, all we are asked to do is to approve this Bill, and if Parliament were to reject it that would have, as I see it, not the slightest effect on the Agreement, which would remain in full force and binding on this country and the Soviet Union.

I think that an explanation is called for. Although Foreign Secretaries have changed, this was a statement for which other members of the Government have collective responsibility. The Government would appear to me to have broken their word. Either that should be frankly admitted or we should be told in clear language how an Agreement which came into force on January 5, 1968, and was not subject to ratification is subject to Parliamentary approval. I think that that would tax the ingenuity of the noble and learned Lord the Lord Chancellor. But before this Bill gets a Second Reading, this matter, I suggest, should be dealt with and should be dealt with clearly.

Speaking for myself, despite the statement of the Foreign Secretary I take the view that in considering this Bill one must proceed on the basis that the Agreement is binding, and that whatever we do with regard to the Bill will not affect the Agreement at all. If the noble and learned Lord the Lord Chancellor thinks that I am wrong about that, I will willingly give way to him, for when considering this Bill we ought to know where we stand with regard to the Agreement. My Lords, I have read carefully—and some parts more than once—all through the debates that took place on this Bill in another place, and I wish I could agree that it was good business to get this Agreement. I cannot. I think it an astonishing document, and it reveals an attitude of mind which really shocks me. I propose to speak first about the Agreement and the provisions of the Bill relating to it, and then to say something about Clause 2(4), to which the closest attention should be given at a later stage in our proceedings.

My Lords, the noble Lord, Lord Chalfont, made some reference to the history at the back of this Agreement. I think it is worth bearing in mind that these three banks to whom the gold belonged—the Bank of Estonia, the Bank of Latvia and the Bank of Lithuania—were all, in a sense, private banks. Two of them were joint stock companies; the third, the Bank of Latvia, was held by the Supreme Court of Latvia to be an autonomous and separate State enterprise and not an agency of the State. So none of this gold which we are now considering distributing was in fact the property of a Baltic State: it was all the property of individual concerns in those States. It was entrusted, as my noble friend has said, to the Bank of England; and, as the Governor of the Bank of England has said in writing, it was entrusted to the Bank of England "for physical safe custody".

In 1940, after the Soviet troops had entered those territories, puppet Governments were formed which purported to nationalise these banks without compensation. The view has been expressed, I understand, that under International Law nationalisation without compensation, although amounting to confiscation of the assets within the territories concerned, does not affect the ownership of assets outside. I should be interested to know whether the noble and learned Lord the Lord Chancellor agrees that that is the position under International Law; for if it is then the Soviet Union can have no claim to that gold arising out of the nationalisation of those banks. As I understand it, the claim made by the Soviet Union in relation to that gold has been put forward on two hardly consistent grounds: first, that the banks which owned the gold were nationalised and the Soviet Union became entitled to the gold on the incorporation of those territories in the Soviet Union; and, secondly, on the inconsistent ground that the Soviet Union had bought it. I should like it confirmed (I think it is the case) that neither argument has ever been accepted by any British Government as having the least validity.

It was because of that that a Defence Regulation was made on July 24, 1940, in the following terms. It is quite short. It was later amended when, I think, the Soviet Union became our allies, but it starts with these words: Where the Treasury are satisfied that any state is exposed to pressure from another state"— and these three States clearly were— and in consequence action is being, or is likely to be, taken to the detriment of the economic position of the United Kingdom, the Treasury may give general or special directions prohibiting, either absolutely or to such extent as may be specified in the directions, the carrying out, except with permission granted by or on behalf of the Treasury, of any order given by or on behalf of … the first-mentioned state or the Sovereign thereof or any person resident therein, or … any body corporate which is incorporated … therein … I will not read the rest, but under that Defence Regulation these assets of these Baltic States were frozen; the ownership of them was not transferred to anyone else. It was only after the German occupation of those territories, as my noble friend Lord Lansdowne has said, that it became possible to make any order in relation to those assets under the Trading with the Enemy Act 1939.

My Lords, the object of Section 7(1) of that Act was expressed to be: With a view to preventing the payment of money to enemies and of preserving enemy property in contemplation of arrangements to be made at the conclusion of peace". The owners of this gold and of the other property vested in the Custodian were enemies only by virtue of the definition in that Act. Any individual resident in enemy territory was defined as an enemy, and "enemy territory" is defined in the Act as including: any area … in the occupation of a Power with whom His Majesty is at war". I am not sure whether I correctly caught all that my noble friend Lord Lansdowne said on this, but I rather thought he made some criticism of the making of the order vesting these assets in the Custodian. I may have misunderstood him; but in my view there was nothing wrong in those circumstances, once the Germans had occupied the territory, in making an order under the Trading with the Enemy Act vesting these assets in the Custodian of Enemy Property. There was clearly power to do so. But, my Lords, what was the property that was vested? Was it property of the States? Was it property of the ceded territories? The Under-Secretary of State said in another place, on November 19, 1968, that: the vast majority of this property was reported to the Custodian in the names of individuals and companies and hardly any of it was reported in the names of the Baltic Republics. In particular the gold was reported in the names of the three Central Banks And these were not in fact enemies: they were treated as such only by virtue of the German occupation.

My Lords, it is only because that order was made that the present Government now have control over these assets. That being the position, is it not our duty, our moral duty, to secure the return of those assets to the owners, where they can come forward and establish that they are the owners? Have we any right to dispose of this property, vested in the Custodian by our Act of Parliament, to discharge any liabilities of this country to the Soviet Union, or to discharge any liabilities that the Russian Government may have to shareholders of a company which operated in Siberia? That is the question which is really raised by this Agreement. The Under-Secretary has told us that the Soviet claims amounted to £10 million, being claims for this gold, which was sold for £5.8 million just before, I think, devaluation. Had it not been sold then, it would presumably have been worth a great deal more now.

The noble Lord, Lord Chalfont, told us that the assets for distribution were expected to realise £6 million to £6½ million. Am I not right in thinking that all these assets really come from the Baltic States; that they comprise interest upon the assets vested in the Custodian and that no property of any magnitude at all came from the other ceded territories? We were told that the claim by the Soviet Union was in respect of this gold —sold, as I said, for £5.8 million—and also in respect of Baltic ships requisitioned by us. Presumably that means ships which are the property of these three Baltic countries or of individuals resident therein. He said that there were also some miscellaneous property claims.

My Lords, what is the position with regard to the claims in relation to the Baltic ships? We have always rejected the claim for the gold. Have we ever admitted that there is any entitlement to the Soviet Union for compensation for the requisitioning of Baltic ships? If we have not, what right have we now to settle that claim by the payment of money which does not belong to this country? If it is a liability of Great Britain, what can be the justification for using Baltic assets for discharging it?

As I have already said, we have paid the Soviet Union £500,000 which is going to be paid out of the property vested in the Custodian. As my noble friend has said, the money was, in fact, paid immediately after the Agreement was entered into; but the provision is contained in this Bill for its repayment to the Treasury by the Custodian out of these assets. I shall be very interested to hear what the noble and learned Lord the Lord Chancellor may say to justify the expenditure of that money which does not belong to us. For if the expenditure of that money out of these Baltic assets cannot be justified, it seems to me that we might well consider whether subsection (5) of Clause 2 ought not to be taken out of the Bill.

My Lords, I pose this question. It may be very practicable to give this money to foreign bondholders, and so on, and distribute it; but what moral or legal right can there be to use any of it to meet our liabilities? We are told that this payment out to the Soviet Union was "very well worth doing". All we have from it, according to the Under-Secretary, is the making of this Agreement. Are there any other benefits that flow from it? I should be interested to know. Surely it cannot be argued that this payment of £500,000 was "very well worth doing" because of the string attached that the money should be spent on goods purchased in this country. Could that justify the use by us of money that did not belong to us?

In the circumstances that now exist I should not object to the disposal of this property to those who can establish either that they had the right to it before it was vested in the Custodian or that they had suffered financial losses in those territories as a result of the German occupation; but this Agreement goes far beyond that. Not only have we paid the £500,000 to the Soviet Union but we have also relieved them of liability in respect of the unredeemed notes issued by the Soviet Government to the Lena Goldfields and Tetiuhe companies. Your Lordships may recollect that the Lena Goldfields company was awarded £30 million compensation in arbitration in 1930 but that the Soviet Government did not accept that award. Some years later they agreed to pay £3 million, mostly by the issue of notes. And when we refused to meet their claim to the Baltic gold they defaulted on the payment of those notes.

Now we have agreed that the Soviet obligations on those notes are to be cancelled and that the holders of the notes will be able to claim against property which belonged to individuals and companies of these Baltic States and which is vested in the Custodian. Again, I ask: what moral or legal justification can there be for that? At the moment, I must confess that I see none. We have thus, in addition to the payment of £500,000, undertaken to discharge certain Russian liabilities out of this property. The result appears to be that although we have rejected the Russian claims to the gold, we have really agreed to treat part of it as theirs and to use it to meet, to some extent, their obligations; to act, to a certain extent, as their bankers. The amount of the property that will be available for distribution among those who have lost assets in consequence of the occupation of the Baltic States will be diminished. We are treating this property as if it belonged to us and as if the rights of the individuals and companies to whom it belonged had been extinguished.

My Lords, I can see no grounds for calling this a good Agreement. I cannot see any need to have entered into an Agreement of this kind. The noble Lord, Lord Chalfont, said that there were two courses open to us: either to make this Agreement or to leave these assets inviolable. He said that there was a third possibility: that, having these assets in this country, we should ourselves distribute them (they have been here for a very long time) to those whom we thought entitled, to those who had a claim on them, without agreement with the Soviet Union. That course he rejected because of the possibility of retaliation. I think those were his words. He spoke of "repercussions". My Lords, are we to be deterred from a proper course of conduct by the possibility that there might be some further defaults—defaults like those on payment of the notes issued by the Soviet Government on the Lena Goldfields Company? Surely we should not deal in this way with this property just for fear of what might be done. This Agreement could be justified only on moral and legal grounds; not on grounds of expediency.

I was disappointed to find that the noble Lord, Lord Chalfont, said very little about the rights of the matter. I think we could have, and should have, distributed this money to those who could show they had a claim in relation to these assets; either a claim to ownership of them (though there may be few who could now establish that) or, where the assets remain without owners coming forward, a claim on the basis of having suffered losses in those Baltic territories. I can see no grounds for saying that those assets, or any part of them, should go to other people.

My Lords, if this Bill gets a Second Reading it will be left to the Foreign Compensation Commission to go into the claims; and it is now intended, if I understand it aright, really to make this Foreign Compensation Commission above the law; to make it master of its own fate and in complete control of its own jurisdiction. We shall examine this proposal in more detail in Committee. I think the noble Lord said that even with Clause 2(4) in the Bill it was still possible, on matters of procedure, for the Foreign Compensation Commission to be brought before the courts. So recourse to the courts is not completely excluded, and it is right that that should be said. But what is much more important is that questions of jurisdiction should come before the courts.

My Lords, much has been said about the delay which claimants would suffer if there was any litigation. I appreciate the force of those arguments but at the same time it does not seem to me right that there should be no recourse to a superior tribunal on the question of the construction of an Order. I am not at all sure that I agree with the noble Lord, Lord Chalfont, when he says that Parliament had always intended that those questions should be removed from the courts. Because my impression was—and I shall read what he said with care —that what Parliament really intended was that the Commission's decision on questions of fact should be final and not open to appeal. I know that it is not expressed quite in that way, but I think that was the intention The Orders lay down who can claim and in what circumstances they will be entitled to have their claims accepted, and if you leave the Foreign Compensation Commission completely in control of the interpretation of those Orders, the same thing may happen as happened in the recent case in the House of Lords where the Foreign Compensation Commission rejected a claim on grounds on which they were not entitled to reject it; because they required proof on grounds additional to those contained in the Order in Council. The claim being rejected meant that more was available for distribution among the other claimants. But the converse could equally apply. The Foreign Compensation Commission might, quite wrongly, on the construction of the document accept a large claim which would reduce the share of the other claimants.

It seems to me, my Lords, that where you get a difficult question of construction, the Foreign Compensation Commission might itself welcome a ruling from a judicial body. But the real problem—and it is a real problem—is to devise a way in which that ruling could be secured and finally secured without such a delay as would be intolerable. In the case which went to the Lords, I gather that the litigation started after the provisional determination and before the final review by the Foreign Compensation Commission. I am wondering—I mention this now because I should like some thought to be given to it before the Committee stage—whether it would not be possible to provide that there should be an appeal to a court. It might conceivably be to the Court of Appeal direct. It might be provided that the determination of the Court of Appeal should be final but that the notice to start the litigation must be given within a short period after the provisional determination. I do not believe that that would involve such great delay, because in the circumstances of all the other claimants being held up I believe that the courts might grant facilities for a speedy trial. I believe that some such procedure is wanted and would be very much better than the present subsection of Clause 2.

My Lords, I fear that I have spoken for too great a length. I feel very unhappy about this Bill and very unhappy about this Agreement which was entered into. I hope that it will not be a precedent which will be followed in future. I do not believe that the Agreement should have been made. I do not think it possible to find a good word for it.

4.15 p.m.

THE LORD CHANCELLOR (LORD GARDINER)

My Lords, the noble Marquess, Lord Lansdowne, referred in his speech to a letter in The Times this morning, signed by the Chairman of the Bar Council and the President of the Law Society, on Clause 2(4). My noble friend Lord Chalfont will reply to the debate, but I thought your Lordships would expect me to say something on that and accordingly I shall apply myself entirely to Clause 2(4).

My Lords, there has, I think, been a certain amount of misunderstanding about this subsection. In the first place, it does not change anything. It does not actually do anything. All it does is to provide that an Order in Council may be made at a later date and that Order in Council will itself be subject to Parliamentary control. Secondly, there is nothing retrospective about it, and it cannot be made to apply either to the Anisminic case or to any Egyptian case at all. That case, and any others which are in the same position, will of course be reopened before, and reconsidered by, the Commission according to the law as laid down in your Lordships' House. So it cannot affect Egyptian claims at all. It can apply only to the future, including the Baltic, and if such an Order is made, and when it is made, it will be subject to Parliamentary control.

The next thing I should like to make quite clear about this subsection is this. The Government have nothing to gain by providing that there shall be no appeal from the Commission, or by providing that there shall be an appeal. It does not affect the Government at all whether this subsection is there or not. We shall not have a penny more money or a penny less money. We are concerned solely with what is best from the point of view of the claimants. There always has to be a level of final decision, and it is a pure question of opinion according to the nature of the proceedings whether it is a good thing to have no appeal, or four appeals.

Your Lordships may remember that recently on the Administration of Justice Bill I did not conceal from your Lordships my view that it was not really in the interests of the taxpayer or the Government that in tax matters one had first to argue the whole thing before the Special or General Commissioners of Income Tax and get a decision from them; then, secondly, re-argue the whole thing, if taken to appeal, before a Judge of the High Court and get a decision there; then another anneal to the Court of Appeal and then perhaps another appeal to the House of Lords. It is very much a matter of opinion.

In the first Judicature Act, of 1873, Parliament expressed the view that it would be better to remove your Lordships' judicial powers and create a Court of Appeal from which there would be no further right of appeal. Then, two years later, Parliament changed its mind. Thus, how far there should be an appeal, or several appeals, or what is a thing which ought to be decided in the interest of the litigant. Whilst it is usually thought in the interest of the litigant to have an appeal, it is very doubtful whether, having regard to the desire for certainty, the desire to arrive at a decision within a given time, more than one appeal is really in the litigant's interest.

What happened here is simply this. As your Lordships know, it has always been open to anybody here with money to invest his money at home or abroad. If he invests it abroad, he may get a higher rate, but that higher rate may reflect the fact that he is running some risk of losing his capital which he would not run if he invested it here. A country declares war and swallows up another country in which you have property, and your property has simply gone. You get to the point where you have to admit yourself that the swallowed-up country no longer exists.

Or your property may be confiscated without any compensation at all. We all know that there are parts of the world where experience has shown that this is particularly a danger—Russia during the whole of this century; some States in South America; the Middle East. If in the result you do lose your money, you cannot expect the taxpayer to recompense you. There is no reason why the taxpayer should recompense you if you choose to invest your money abroad, particularly in area s of that kind. Naturally our Government have always done their best to get what money they can out of foreign Governments to recompense those who have lost money in this way. But when they do so, they do not do so as agents.

This situation has been going on for most of the last century. In 1876 our merchants had lost about three million dollars as a result of the actions of Chinese merchants. The Government found out what the claims amounted to and got that sum from the Government of China. Apparently there was some delay in distribution and someone started an action to get compensation. But where the British Government are paid money by a foreign Government in these circumstances, claimants have no legal right. In that case the Court of Appeal held that the Government do not act as agents of the claimants, and that even when they get the money it is not trust money, in a legal sense. Of course, it would be dishonest if the Government were to put this money into their own pockets (as it were) to reduce income tax. Obviously they have a moral duty to distribute it in a way that they think fair. But Governments are responsible only to Parliament. There is no legal right.

That decision was approved by the Court of Appeal in 1912, and right up to 1950 distribution was always done by the civil servants in the Foreign Office as a matter of discretion. No doubt the civil servants did what they thought was fair. It was difficult to do and different methods of distribution were used. Either a flat rate was accepted or they said that claims up to £10,000 would be paid 100 per cent., with a decreasing proportion for larger sums. There is no doubt that they did what they thought to be fair. No doubt they did their best to decide which people properly qualified as claimants. This has never been easy. The longer these cases go back (and this applies particularly to Baltic cases) the greater the likelihood that there is no evidence now available: all the documents have gone. Therefore, at the end of the day, if a claimant says that 35 years ago he owned a house and that it was worth so much, there is nothing to support it and nothing to contradict it.

In 1950 the then Government thought that on the whole it might be better to have a Commission to deal with the distribution, instead of leaving it to civil servants, because the number of cases were increasing and it was getting a great deal for the Civil Service to handle. There was debate as to whether, the civil servants having had the last word, this new Commission should have the last word or whether there should be some right of appeal. Parliament thought that claimants would be much happier with an independent board than with civil servants. Questions of time and cost had also to be taken into account. Governments have always deducted costs of distribution from the fund. If there are going to be law cases up to the House of Lords, somebody has to pay the lawyers; and this all has to come out of the fund, so that the money available for distribution becomes less.

Rightly or wrongly, it was thought that it would be in the interests of the claimants to have finality rather than what I might call a perfect decision. In law, of course, your Lordships' House cannot be wrong, but I do not know whether, from a common sense or layman's point of view, there is any real reason to suppose that if you take a case higher and higher, particularly on questions of construction, one decision will be right rather than another. In this very case, the 1950 Act provides, in fairly simple words, that The determination by the Commission of any application made to them under this Act shall not be called in question in any court of law. Eight Judges in our superior Courts considered that provision. Five said that it meant what it says: that a determination by the Commission, though it might be a wrong determination, based on a wrong construction, was a determination and the Court could not consider it. Three thought otherwise. They took the view that if the Commission's determination was based on a wrong construction, then it was a nullity and not a determination. This is largely a play of words, but because three of the Judges were in your Lordships' House and, of the other five, three were in the Court of Appeal and two in your Lordships' House, of course the view of the three prevailed.

Is it not really in the interests of people who have been waiting for some years for some money that when at last, after previous Governments have tried desperately hard to get an agreement with the Russians so that something can be done but have failed to do so (and when I say "failed" this is no criticism because it takes two to make an agreement), agreement is reached and the money is there, a finality should be reached. These things happened mainly thirty years ago and those who are still alive are pretty old. We get the most pathetic letters from them, saying, "What is the earliest date on which I might possibly get something, because it is no good getting it after I am dead?" That, my Lords, was what the Government thought about this problem in 1950.

It was reconsidered by Parliament in 1958, after the Franks Committee Report had been presented, when a large number of provisions taking things away from the courts were repealed by the Tribunals and Inquiries Act. Parliament specifically considered this particular case and by an Amendment excluded it from the Act, because, it said, when dealing with these foreign claim compensation cases it was important not to delay things more than necessary. The money was never enough to meet the claims in full, and distribution of the money available could not be made until the total amount of claims was decided, and if towards the end of the period of assessment somebody could start a case and go on appealing this was not in the interests of the claimants.

In the case we are discussing the determination was in May, 1963; and the case did not reach your Lordships' House until December, 1968—five and a half years later; and, of course, nothing could be distributed until finality was achieved. Therefore, I am grateful to noble Lords for having raised the question of this subsection, because the Government still have an open mind and want to know what everybody thinks about it. This is not just a matter for lawyers. Naturally lawyers prefer to have everything decided by lawyers—as many lawyers as possible. But I think that this matter ought to be decided on this basis. Would a claimant want his money as soon as he can have it by letting this Board of three distinguished lawyers decide, in finality; or would he wish, if they were wrong on a matter of construction, to send the case to the House of Lords which, after five and a half years and the expenditure of a lot of money, might decide one way or the other?

My Lords, what it ought to depend on is what the claimant would want. Would he want finality or one, two, three of four appeals? It was because I thought, from what I read in The Times, that there was a good deal of misapprehension about this subsection that I have ventured to say what I have.

4.30 p.m.

LORD CONESFORD

My Lords, I am slightly relieved that the noble and learned Lord on the Woolsack, whose formidable intervention I thought might cause me some difficulty, has dealt exclusively with a question which I am prepared to leave to the Committee stage. I would comment on only one point he made. He said that claims have waited for thirty years. I think there is a point there, one that the Government might well have kept in mind when they decided that this controversial Agreement made with Russia could not wait for any Parliamentary consideration at all. The claimants had waited for thirty years, but Parliament must not have a word to say on the Agreement: that had to come into force on signature. No reason has been given for that indecent haste, and I do not believe any reason can he given.

I was grateful to the noble Lord, Lord Chalfont, for his outline with dates of some important events, which was supple- mented by my noble friend Lord Lansdowne in making the first speech from these Benches. Those two noble Lords have given the main facts so clearly that I only revert to the matter of what happened in June and July, 1940, for this reason: that I thought that even the noble Lord, Lord Chalfont, made a slight suggestion that there was some difference in the responsibility of the Governments of these three Baltic States in the short period before the official takeover by the Russians and afterwards.

I merely wish to give a few quotations, with which I think the noble Lord will not differ, which show that during the whole period of that summer of 1940 these three Governments were subjected to the most brutal duress. I do not ask the House to accept any version given by any citizen of the Baltic States, and still less any description that I shall give. I want to quote from our own official historian, in the work British Foreign Policy in the Second World War, by Sir Llewellyn Woodward. Most of these quotations were rightly given during the Committee stage in another place by my gallant friend Colonel Sir Tufton Beamish. Dealing with the period between June 14 and 17, 1940, the official history says that the Russians compelled Lithuania, Latvia and Estonia to change their governments and to allow the entry of Soviet troops. It goes on to say that on July 21 new puppet governments in the three Baltic States, with the support of a popular vote secured by the usual Russian methods, asked for the incorporation of their respective countries in the U.S.S.R. The account goes on as follows: There was no doubt about the methods of fraud and force used by the Soviet Government in securing a vote in favour of incorporation into the Soviet Union…The Foreign Office regarded the Russian action as of the same nature as the German conquests of Austria and Czechoslovakia. Then there were the so-called elections, which resulted in the request to be incorported in Russia. The puppet Governments asked for incorporation in the U.S.S.R. after these elections. What happened at these elections? The leaders of all Parties, apart from the approved Communist Party of collaborators, were deported, killed or imprisoned. The only people who could stand for election were Communists approved beforehand by the Russians. Voting took place under duress. The results of the count were announced in foreign countries before the count had in fact been completed, and it was not astonishing that the usual result of a 90 per cent. Communist vote was obtained without much difficulty. Russian action resulted in the nationalisation measures which are the origin of many of the British claims.

British property was seized without compensation and the external debts of these States were repudiated. None of these things was the fault of the Baltic States. Then in June, 1941, the territories were overrun by the German forces. As your Lordships have heard, before the incorporation the Government of this country had blocked the Baltic assets under our war legislation—actually I think it was Regulation 2A of the Defence (Finance) Regulations. When the overrunning of these countries by the German troops took place, that made them enemy terri[...] under the Trading with the Enemy Act. Here I find myself, as indeed throughout, in complete agreement with my noble and learned friend Lord Dilhorne. That gave the authorities here ownership and control of the gold.

There are those who think that the British Government should not in any circumstances have realised the gold. Having regard to what has been the practice and the law of this country, I do not take that extreme view. In many wars, where enemy property, defined geographically, has been taken by the authorities, normally its fate has awaited the Peace Treaty that has followed the war, when an Agreement has been made between two lawful de jure Governments. What happened here was that there was no lawful de jure Government with whom such an agreement could be made.

I can appreciate the argument that that made it impossible to have lawful dealings with this gold, but I do not wish to take so extreme and strict a view. I think, however, it is quite obvious—here I am strongly with my noble and learned friend Lord Dilhorne—that the gold should not have been used for purposes quite outside the compensation of British nationals who had suffered damage in the Baltic States. Above all, not a penny should have been used as a tip to the State that had brutally invaded and destroyed the Baltic States.

As has been pointed out, there are claims, or nominal claims, by both parties. Roughly, our claim amounted to £15 million—and I agree with the noble Lord, Lord Chalfont, that on investigation that may prove to have been too much. The Soviet so-called claim amounted to £10 million—and that definitely is fantastically too much, because the main part of that claim is for the gold itself, and nothing is more obvious to a lawyer, and I should have thought to a non-lawyer, than that the Soviet Government has not any claim, in morals or in law, to one penny of that gold. No claim which they could put forward for this gold could stand up in any court whatsoever; nor have they been so foolish as to attempt to establish such a claim in any international court.

Here I should like to draw the attention of the House to the contrast between what happens when the British Government or British nationals have claims against the Communists and what happens when Communists put forward claims against the British Government. Let me take the Lena Goldfields as an example. As my noble and learned friend Lord Dilhorne pointed out, under the arbitration clause in their agreement this matter went to international arbitration and they secured an award of £30 million. The Soviet Government did not recognise this award. Later the company had to be content with £3 million, which was later received by the Lena company mainly in promissory notes, on which the Soviet Government ceased to pay when we blocked, quite rightly, the Baltic gold in that summer of 1940. But, my Lords, not only has this company lost the £30 million award; not only did it not get the £3 million, but now the British Government are going to pay it, and pay it out of the Baltic assets. If some writer of fiction had put this forward as a possible agreement, or had it been presented as a comic work on the B.B.C., people would have said that this was too extravagant a parody about what any British Government could do. But they did it.

I remember another case in which the British Government were involved against a Communist Government—I mention this only in passing. I happened to be at The Hague at the time the Corfu Channel case was being heard by The Hague Court, and I went to the Court and had the pleasure of hearing the then Sir Frank Soskice, now the noble Lord, Lord Stow Hill, arguing the case for the British Government. In due course we got a judgment against Albania for the repayment costs of the "Saumarez" valued at over £700,000, We did not r[...]e a penny. That is what happens which the British Government establish in tribunals valid claims against Communists. But when a chief Communist Government puts forward an entirely bogus claim for the Baltic gold, what do we do? In order to get them to come to an agreement to withdraw their bogus claim we pay them £500,000. Nor is that all. That is not the limit of what we pay under this Agreement. We pay that £500,000; we also release them, under Article 1(b), from over £1 million owed to the British Government under the Ships' Expenses and Freights Agreement. My Lords, this absolutely unjustifiable giving of tips to the Soviet Government—what good result is it designed to bring about?

My noble and learned friend Lord Dilhorne has discussed, and I think proved, the immorality and unprincipled nature of this Agreement. I am astonished by something slightly different. I think even its immorality is surpassed by its stupidity. Do the British Government really think that yielding to unprincipled and groundless claims will improve their relations with the Russian Government? It will not improve those relations; it will make those relations worse. Russia respects strength and not least, perhaps, strength of character. By giving them half a million pounds raised from the Baltic gold, we incur not their good will, but their contempt. It is wholly untrue that the British Government's choices in this matter were either this Agreement or leaving the gold unused indefinitely, profiting nobody. Both the claimants of compensation for what they had suffered in the Baltic States, and the assets, were here. We could dispose of those assets to the claimants by our own legislation without any agreement with the Russians at all. This point was put with great force at all stages by my learned friend Sir John Foster in another place. Incidentally, I should like to say that when the much disputed subsection of Clause 2 was introduced at the final stage in another place, Sir John Foster immediately got up and delivered a most able speech, maintaining the view that has subsequently been put forward by eminent lawyers in the Press.

I fear—in fact, I am certain—that the Russians will use the fact that we yielded to a groundless claim to boost the legend that they seek to spread about what happened in 1940. I do riot know whether there are many Members to-day in this House who remember the Question that I asked on December 18, 1962, just over six years ago. They may care perhaps to look it up. In a Parliamentary Question I drew attention to a disgraceful publication by UNESCO of a booklet called Equality of Rights between Races and Nationalities in the U.S.S.R. This was a piece of perfectly unscrupulous and lying Communist propaganda and was published by UNESCO. The authors said this about the annexation of the Baltic States, which at the beginning of my speech I described in the words of the official historian: In 1940 the Soviet regime was restored in the Baltic Republics, which voluntarily joined the Union. If that could be put forward at a time when the British Government had done nothing to boost these absurd claims, what will they do now?

My Lords, we cannot, of course, oppose the Second Reading of this Bill because the great mischief of it is not in this Bill but in the Agreement. Had that Agreement come before Parliament, I do not think it could have lived in either House of Parliament. I believe that is why it did not come before Parliament. There was no reason of any kind why that Agreement should not have been made subject to ratification by Parliament.

My Lords, it was a sorry day when this Agreement was concluded. It will harm our good name at home and abroad, but on Second Reading of this Bill we can do nothing about it. When it comes to the Committee stage there are some possible Amendments which perhaps could be considered. One obvious Amendment concerns the subsection dealt with by the noble and learned Lord on the Woolsack, and there is another on which I believe my noble and learned friend Lord Dilhorne may have something to say. There is not very much we can do with the Bill, but I do not think it should go through this House (as it did not go through another House) without the strongest condemnation of an unprincipled and foolish Agreement.

4.51 p.m.

LORD BALFOUR OF INCHRYE

My Lords, I find this Bill distasteful in the extreme. It is a Bill of expediency, supported by dubious arguments and very carefully phrased justifications. Many noble Lords, including myself, knew between the wars the States of Lithuania, Latvia and Estonia. We learned to respect them as proud, small nations, well governed and well administered, and we were shocked at the ruthless seizure by Russia of these small countries in the year 1940. What appals me is that the rape of these gallant little nations is now described in such a gentle manner, free from any condemnation, by Ministers of Her Majesty's Government.

In another place the Under-Secretary of State for Foreign Affairs described that horrid transaction of Soviet Russia in these words: … many honourable members will recall, in 1940 Soviet influence was established over the Baltic states …" [OFFICIAL REPORT, Commons, 7/11/68, col. 1096.] The noble Lord, Lord Chalfont, has said to-day that in 1940 these nations ceased to be free agents My Lords, has a dastardly crime of crushing three little nations ever been described in such gentle terms by a Government before? I trust not, and I am ashamed that Her Majesty's Government should not have used one phrase of condemnation for the acts which took place in 1940.

I need not elaborate on the Agreement, because that has already been done by other noble Lords. But then, in order to get the agreement on claims and counterclaims with Russia arising from their annexation by force and seizure of the assets, personal and Government, of the Balts; in order to get the agreement of the two parties, the Government give away the treasure of the third, and then they add a "tip"—£500,000 of noble Lords' and of my money, of the taxpayers' money—as a sweetener. If I may use the expression of West Africa, the Government have "dashed" the Soviet Government £500,000.

This dubious act is dressed up as being a further purchase of consumer goods, but there is absolutely no guarantee or indication anywhere that Russia is buying one pound's worth more of goods than she would under our normal trade. Her Majesty's Government admit that this little sweetener was slipped in in order to obtain that agreement. Let us look for a moment [...] the admission of that from Her Majesty's Government. The Under-Secretary of State said that it would have been impossible to obtain the agreement, and [...] added: Then the £500,000 which was made available to the Soviet Union came into the picture and clinched the deal. Without that £500,000 there would have been no settlement."—[OFFICIAL REPORT, Commons, 7/11/68, col. 1134.] My Lords, it would have been far better that there had been no settlement.

The Government have refused to be drawn in another place, and so far the noble Lord, Lord Chalfont, has refused to be drawn in your Lordships' House, on any undertaking, specific or in general terms, that if and when these Baltic States revive, and their sovereignty is re-established, there will be an admission of claim for a repayment of these moneys of which they have been robbed. Noble Lords know that curious things happen in Eastern Europe. It is not beyond the bounds of possibility that that may happen in the future.

The Government's own description of this Agreement does not seem to me to be very satisfactory. Let me see how they described it, perhaps in an unguarded moment. The Minister described it thus (col. 1106): The agreement with the Soviet Union, and the measures to give effect to it which are now submitted to the House, are to be judged by the criterion of what is practicable rather than by ideal standards of justice. What a terrible admission for a Minister to make! The Government make great moral gestures in regard to the alleged oppressed majority in Rhodesia but they raise not one finger and show not a flicker of interest for the interests, moral or material, of the oppressed minority of the Baits, who are suffering under Soviet rule at the present time. Perhaps Her Majesty's Government think that this Agreement will build a bridge of good will between ourselves and Soviet Russia. Let me remind the noble Lord, Lord Chalfont, that since this Agreement was put forward Russia has invaded, in a cruel and heartless way, Czechoslovakia. Let me remind him of the Note to this country of December 2. Let me remind him of the abuse of this country, of the B.B.C. and the Press, which flows constantly from Soviet Russia. "Appeasement" has now become a dirty word in politics, but to-day it is the appeasers of Russia who sit on the Benches opposite.

At any rate let me say this: in 1938 appeasement gave us something—it gave us a year of time. I will not go into this further, but in 1938 we could not have fought, qualitatively or quantitatively, the Luftwaffe. We could not have won the war. But in 1939 we were harvesting the seed of Hurricanes and Spitfires laid down by my noble friend Lord Swinton in the years 1935 and 1936. So Mr. Chamberlain's appeasement, whatever one may say, gave us a year of time. But the Wilson appeasement of Russia gives nothing except surrender of other people's property—half a million pounds cash of the taxpayers' money and something of our national honour, which many of us deplore seeing given away by the present Government.

5.0 p.m.

LORD DENNING

My Lords, I am sorry that, because my duties elsewhere prevented me from coming before this moment, I was not here earlier to hear the discussion on this Bill. I should like to say a word on the clause which is being introduced, and quite deliberately introduced, to reverse the decision in this House sitting judicially in the Anisminic case. That case came before the Court of Appeal, in which I sat I suppose some two years ago, in which the Foreign Compensation Commission sought to strike out a claim at the earliest stage, saying that there was no cause of action whatsoever and that the decision of the Commission could not be challenged in the courts of law. We said that at least there was something to be argued out; and how gratifying it was when this House established in the Anisminic case that even that tribunal was subject to control by the courts of law! This clause which is being put in at the latest stage means that that tribunal is, so to speak, a law unto itself; that it can interpret an Order in Council and if it interprets it wrongly there is no one to correct it, not even our courts of law.

My Lords, I thought that question had been discussed and determined when we had the Tribunals and Inquiries Act in 1958. Previously tribunals had been setting themselves up above the law and saying that the courts of law had no jurisdiction over them; that we could not control them even when they went wrong on points of law. That Act did a great deal of good. I may tell your Lordships that we have in my Court from day to day appeals to us on points of law from nearly all the tribunals throughout the land—the Lands Tribunal, the rent tribunals, industrial tribunals and all the rest. Is this tribunal to be the only one, or virtually the only one, to be exempt from the rule of law? My Lords, I suggest that this proposal should not be allowed to be introduced.

What is the argument on the other side? It is the length of time which it is said it would take for a decision to be obtained from the courts, from one series of appeals to another, up to the House of Lords; and, it is said, further, that a long time would elapse before funds could be distributed. I would ask your Lordships not to be swayed by such considerations. It is the simplest matter for an appeal to be simply to a single judge, with no appeal further. In all the pensions appeals we had I was the final and ultimate judge.

VISCOUNT DILHORNE

My Lords, may I intervene to ask my noble and learned friend a question? Would he not think it better that there should be an appeal direct to the Court of Appeal?

LORD DENNING

My Lords, I should think it infinitely better, because that is what we normally have; nearly all the appeals come from the Lands Tribunal, and so on, direct to me. I had not the benefit of hearing what my noble and learned friend had said. Certainly with matters of this size, which may involve several millions of pounds, the appeal should be direct to the Court of Appeal, or controlled by the Court of Appeal; it would surely be better than allowing the tribunal to be judge in its own case. In any event, we could always expedite matters if need be.

It is said also that there are distinguished lawyers already on this Commission. That may be so; but there is a great temptation, if there is no appeal from you, to do just what you like. I have known it myself. The existence of a possibility of revision by a separate court does a world of good for all tribunals. My Lords, it is, as I understand it, one of the cardinal features of the rule of law in this country that tribunals and other bodies, of whatever description, should, in the last resort, be controlled by the Judges of the High Court or of the Court of Appeal, who in saying what the law is should have the last word or the interpretation of Orders in Council. For that reason, I hope that your Lordships will not allow the Bill to go through with this clause in it.

5.5 p.m.

LORD WILBERFORCE

My Lords, I venture to add a few words after what my noble and learned friend Lord Denning has said, simply because he was not present at the earlier stages of the debate and there were one or two points raised by earlier speakers on the legal aspect of the Bill to which I should like very shortly to reply. It is important, I suggest to noble Lords, that we in this House should be quite clear what Parliament is being asked to enact in this Bill. There are two aspects of this matter. In the first place, it is necessary that we should get the law right in the Bill itself. The noble and learned Lord the Lord Chancellor said, quite justly of course, that Clause 2(4) does not itself do anything; it awaits the enactment of an Order in Council. But he knows quite well that an Order in Council, if one were to be enacted conferring these very large powers upon the Foreign Compensation Commission, cannot, if it comes up, be amended in this House; we have to take it or leave it, and very soon we shall have to take it. So that what we have to do is to get the law right in the Bill itself.

Secondly, as speakers have pointed out, this clause received very scanty discussion in another place. Only one legal speech was made on the Third Reading in the House of Commons, and that by Sir John Foster, the Member for North-wich, and he was strongly critical of the clause. So it is right that we should give careful attention to it here. One need not get tied up with a lot of legal difficulties and technicalities. The point is a perfectly simple one for anyone to understand. This Foreign Compensation Commission is one of a number of judicial bodies set up by Parliament to discharge specialised tasks. There are a great many of them; there are over 1,000 in the country at this time. And when Parliament sets up such a tribunal, it—Parliament—lays down in the Act or in the Order in Council, as the case may be, what is to be the area within which the tribunal is to operate; it defines the sphere of competence of the tribunal concerned. It may give it a very large responsibility indeed; it may give it a very slight responsibility, to fix a figure. Or it may give it very large adjudicatory powers, as it has done here.

But the question in every case, great or small, must arise and does arise quite often: what is to happen when the tribunal departs outside the area which Parliament has laid down for it? And what happens in such a case up till now—and this is a consequence of a long series of decisions going back for about a hundred years—is that the question whether the tribunal is inside its area or outside its area is a matter for the courts. There is no question here of this House or anybody having decided that the Commission's decisions of substance (I take the expression from the noble Marquess's speech) shall be reviewed by any court. To take the example of a man who owned a house in Riga 35 years ago, and his establishing his claim, there is no question of decisions on a point of that sort being challenged or of its not being covered by this exclusionary clause.

There is equally no question of depriving the Commission of power to decide finally and definitely, even on questions of construction to which the noble and learned Lord the Lord Chancellor referred. If anybody thinks the contrary is the case they have only to read our judgments in the Anisminic case. I am quite prepared to believe that that has not been done, because the clause was introduced so rapidly. The ink was hardly dry on our judgments before the clause was brought in, and I have to say that our judgments were rather long. But those points are perfectly clear: the Commission may decide questions of fact; the Commission may decide even questions of construction. All that was said was that if the question of competence of area arises, that i3 a matter for the courts ultimately to review. It has normally been thought, and thought for many years, that the courts are impartial and suitable arbiters between Parliament, when it lays down what a tribunal is to do, and the tribunal itself. It has normally been thought that the tribunal should not in such a matter be a judge of its own powers, be the ultimate judge in its own cause. That is all that is meant by conferring supervisory powers on the courts of justice, and that is, in the end and in its ultimate essence, what is meant by the rule of law.

Just a little closer to the actual situation with which we are now faced, these questions arise not, as your Lordships know, under the Act of Parliament but under the Order in Council which ultimately lays down how the assets are to be distributed. Those Orders in Council are of great complexity. Your Lordships have not the one which dealt with the distribution of the Egyptian compensation claim, but I can assure your Lordships that this was a most elaborate document, amended a number of times, and if I may respectfully say so, not very skilfully drafted in all its respects. One is not to blame the Foreign Compensation Commission for getting the interpretation of it wrong. Everybody is human. It was easy enough to take a different view on what the Order in Council said.

But now one comes to the question put by the noble and learned Lord the Lord Chancellor: what about the individual litigant who has a claim? Is he going to be satisfied with no appeal whatever from this body which is going to decide what the Order in Council means and whether his claim is shut out? Is he going to be satisfied because this is an eminent body with lawyers sitting on it? The Commission does not even have to give any reasons for its decisions, no reasons at all; and the reasons have had to be dragged out of it on a number of occasions. Even a learned member of the Court of Appeal has said that there may be something to be said for reasons not being given. At any rate, it does not have to give reasons; it can decide the claim without telling the litigant why, and there may be large sums involved. In the Anisminic case the amount of the claim was £4 million. How large are going to be the claims here?

At any rate, from what has been said we know that the Order in Council here is going to be one of great detail and complexity. It is going to segregate claimants into different classes, some on a national basis, some on an issue basis, a contractual interest in some cases, a legal interest in other cases. All these matters have been settled by Her Majesty's Government, normally approved, or at any rate rubber stamped, by Parliament; and surely if the Commission is not to respect those guide-lines laid down in the Order in Council there should be room for an ultimate review of their decision by the local legal courts of justice.

I am very appreciative indeed, and understanding of the need to avoid a delay. It is not only the case of the individual claimant that one has to consider. An individual claimant's claim affects all other claims; so that delay in one may have repercussions on the others, and undoubtedly it is most desirable to try to avoid that so far as possible. The Commission takes its time. Reference has been made to how slow the courts are, but I notice that this Commission took just about four years to deal with the original claim before it in the Anisminic case, before ever the courts got going on it at all. I say that not by way of criticism of the Commission, but to underline the necessity for avoiding delay. But does it follow from that that we must accept a clause so exclusionary, so drastic as that which is contained in the Bill?

I should like to ask the noble Lord, Lord Chalfont, this question. Since 1950, when this Act came into force, how many cases have been dealt with by the Foreign Compensation Commission, on the one hand, and, on the other hand, how many appeals have been taken to the courts? I know of two cases which have come to the courts, one in which there was a failure of natural justice in which the Commission itself had to agree that its decision could not stand. The other is the Anisminic case. If there are others, I should be interested to hear of them. But is it really necessary, in the light of that and of the many hundreds of cases which the Commission has dealt with and which have been thought to be covered quite rightly by the exclusionary clause, to introduce something so radical as Clause 2(4)? Is it not a matter, as my noble friends have suggested, for some much more moderate procedure, some single appeal, one appeal to a court of law? Whether it is a judge alone or the Court of Appeal matters not, but in principle, in view of the importance of the sum concerned, I would myself think that the Court of Appeal was the right tribunal. One appeal and no more, possibly even with a time limit within which the appeal has to be brought. That is the proposal put forward in the joint letter of the President of the Law Society and the Chairman of the Bar Council to The Times to-day, and it surely deserves careful consideration by Her Majesty's Government. I hope that it will be considered before the Committee stage, and that this House will support those who are in favour of as little interference as possible with the normal rule of law.

5.17 p.m.

LORD CHALFONT

My Lords, I fear that we have spent a good deal of your Lordships' time already on this Second Reading, but I think we have had a number of extremely interesting points of view put forward on both the moral and the legal aspects of this Bill and the Agreement from which it springs. Of course, if, as I hope and believe, the Bill is given a Second Reading, then in the light of what has been said here this afternoon, we shall have to give close attention to those points in the later stages. I cannot, and at this stage I would not try to, take up all the arguments that have been made in your Lordships' House this afternoon. That would take up far too much time. I feel that already in dealing with the principal arguments I shall have to ask your Lordships to bear with me for rather longer than I should have hoped initially to speak.

I was taken to task by one noble Lord for expressing the fate of the Baltic States in terms which he clearly thought were under-stated and objective. I can only say that my aim in the opening speech on the Second Reading was simply to lay the historical facts before the House, and had I turned aside to deal one way or the other with the morals of this or that particular course of international action twenty, thirty or more years ago, I might indeed have kept your Lordships here until well into the night.

Perhaps I may deal first of all with the question raised by the noble Marquess opposite, about the status of the three commercial treaties. He asked a specific question about these, to the effect that he wished to know whether they were valid or not and, if not, when they terminated. The facts are that in the Government's view the treaties ceased to be in operation for two main reasons. The first was that British property was seized without any compensation being paid. This would amount prima facie to a material breach of the treaties entitling us to suspend their operation. Secondly, the treaties ceased to be in operation in August, 1940, when the independent Baltic Republics were "incorporated", if I may use that rather euphemistic phrase, into the Soviet Union de facto. From that time, there have been no independent Governments recognised by Her Majesty's Government with whom the treaties could operate. Clearly, there is no need to give notice to the other side that a treaty is no longer in operation when the reason is that the other side has disappeared. The treaties, therefore, in our view, have ceased to operate in accordance with law; that is to say, the International Law on treaties.

The need for an Agreement with the Soviet Union about this has been the subject of a good deal of comment by noble Lords who have spoken. The noble Lord, Lord Conesford, I think took the Government most severely to task for this. I thought that he, if I may say so, damaged an interesting case, as he so often does, by some notable exaggeration. One need do no more than refer to his hilariously predictable identification of UNESCO with the spread of Communist propaganda. In my view this is rather like the 13th stroke of a clock; not only is it incredible in itself, but it invalidates all previous utterances.

LORD CONESFORD

My Lords, I did nothing of the sort. I pointed out that that particular bit of propaganda had been published by UNESCO, and I referred the noble Lord to the Question. If he likes to look at the Foreign Office reply (probably the branch of the Foreign Office that is briefing him to-day may have briefed the Minister who replied) he will see that the reply was that this was much deplored, and that Her Majesty's Government had in fact written to UNESCO complaining of this publication.

LORD CHALFONT

My Lords, I am not resisting that statement at all. I am simply saying that I thought it was predictable that the noble Lord should have brought this up in this context. As I said, it demonstrated what I thought was a somewhat predictable strain in his views on international relations generally.

I think that on this question of the need for an Agreement—why we wanted an Agreement and why it was necessary to pay half a million pounds to the Soviet Union as part of this Agreement—one might say, first of all, that this attempt to reach agreement has not been entirely the business of the present Government. It has been pursued by previous Governments. I know that speculation about the reasons for the actions of previous Administrations is not always a profitable activity, but I can think of several reasons why no previous Government, like this one, have thought it right to embark on a unilateral distribution of assets. For one thing, as I have said earlier this afternoon, I do not believe that any British Government could have assumed that there would not have been a Soviet reaction to the unilateral distribution of the assets.

Some noble Lords have asked: "What about it? What could such a reaction be? What are these repercussions and retaliations that we are so afraid of?" I think I need only mention the Soviet Union's arbitrary retaliation for the original blocking of the gold in 1940, when it suspended payments on the Soviet State Notes, which had no connection with the Baltic States. In the last twenty years or so there have been various points—and the noble and learned Viscount will know this—at which the Soviet Union, if it had been so minded, could have retaliated against Her Majesty's Government for distributing the Baltic assets without its consent.

VISCOUNT DILHORNE

My Lords, so we may take it that one of the reasons we gave the £500,000 was that we thought the Russians might dishonour some of their other Notes?

LORD CHALFONT

My Lords, if the noble Viscount will allow me to continue, I will deal with just that point. I should like first to give a concrete example of the kind of retaliation that might be made, so that noble Lords will not think this is some kind of vague threat left hanging in the air. One such example is the Anglo-Soviet Civil Supplies Agreement of 1947, in terms of which the Soviet Union undertook to pay Her Majesty's Government a sum of £45 million by instalments, the last of which was payable only last year. I believe that noble Lords will agree that no Government could lightly put this sum at hazard, even in the interests of the British post-1939 claimants. I am simply making the point that if we had proceeded with unilateral distribution to meet these claims there could have been retaliation of a substantial and serious kind.

Quite apart from the question of retaliation, there is of course the whole general area of our commercial and political relations with the Soviet Government. I think it is perverse to suggest, as some noble Lords have suggested, that in their attitude and policy towards the Soviet Government Her Majesty's Government are engaging in some form of appeasement. What we are attempting to engage in with the Soviet Government, and have been so attempting for many years, is a civilised policy of friendly relations with a sovereign foreign State of a kind which will enable us to move forward with that State towards a world that has some element of peace, equity and stability in it. This is not appeasement.

THE MARQUESS OF LANSDOWNE

My Lords, is the noble Lord really saying that he thinks it civilised to indulge in bribery?

LORD CHALFONT

My Lords, no; I did not say that it was civilised to indulge in bribery. Indeed, what I am contesting is the fact that this is bribery at all. This is an extremely emotive and not altogether accurate phrase which comes from the noble Marquess and not from me. I have not referred to this sum of money as a bribe, nor do I believe that it is. I am simply saying that we are endeavouring, not to appease the Soviet Union but to conduct our international relations in a civilised and friendly way with countries with whom we are in diplomatic relations. This seems to me to be a fairly unexceptionable view of foreign policy.

Before I deal with the sum of half a million pounds, which seems to have generated such vivid emotion in your Lordships' House, I would deal briefly with the legal considerations in favour of settling the matter by agreement rather than by unilateral action. I have said repeatedly that the Government have not recognised, and do not recognise, as a matter of law, that the Soviet Union has a right to the Baltic assets, or to any part of them. On the other hand, it is a fact—and it might be as well if we addressed ourselves occasionally to the facts in this case—that until February, 1967, the Soviet Union itself pursued a claim to these assets, and in particular to the gold; and in favour of this claim it produced legal arguments. Now, even if we do not regard these legal arguments as valid (and I have had occasion to say this in your Lordships' House about other questions), even if we do not regard them as valid, the Soviet Government certainly did.

What would have happened if we had realised those assets and distributed the proceeds to our claimants without the consent of the Soviet Government? However confident we may have been about our legal grounds for doing so, we certainly would not have been 100 per cent. sure that we should not be open to challenge by, or on behalf of, Soviet interests, either in the British courts or before some international tribunal. But now, by the Agreement, this position is put beyond challenge because the Agreement provides that each Government shall be solely responsible for the settlement of claims and the distribution to its own nationals of the assets which it holds. My Lords, I think that it is against this kind of background that we have to look at the necessity for securing an Agreement on this subject. I have no doubt at all that it was right for this Government, and indeed for successive Governments—and I emphasise this: for successive Govern- ments—to seek to settle the matter in the way that we have now settled it, rather than by unilateral action.

I come now to this question of the half a million pounds and the reason why the payment was made. We have heard it referred to in emotional and exaggerated terms as a "tip" and a "bribe". Well, this is all good political "knockabout", but we are dealing here with the simple facts of an international Agreement. I have already explained, I hope adequately, why it was important and essential to secure such an Agreement. Some time before Mr. Kosygin came to this country it had in fact become clear from the negotiations with the Soviet Government that the very best we could hope to secure from them was an Agreement on the basis that each side, without admitting liability, would undertake not to pursue its claims against the other.

I am afraid that the arguments about the balance of money—the £15 million against the £10 million—are irrelevant, because we were negotiating with the Soviet Union, and this was not the way the Soviet negotiators saw the question.

After the negotiations, which had begun formally in 1959 and in earnest in 1965, there still was not the ghost of an acceptable agreement between the two sides, either on the valuation of the claims or on the question of legal liability. This was the situation when the two Prime Ministers met in February, 1967. The Agreement which resulted from these meetings was much closer to our previous position in the negotiations than to the Soviet one. Whatever noble Lords opposite may say, I do not believe that £500,000 was too great a price to pay for the advantages of an Agreement. I talk now of the advantages to the claimants, as well as in terms of the broader relationships between this countary and the Soviet Union. It is a very modest sum in relation to the total value of the assets which, at I said in my opening speech, were probably somewhere between £6 million and £7 million.

VISCOUNT DILHORNE

My Lords, the noble Lord said £6 million and £6½ million. Has it gone up half a million?

LORD CHALFONT

My Lords, £6 million and £6½ million is still between £6 million and £7 million, the noble Viscount will be delighted to know. It did not involve the recognition of the Soviet title to any part of the assets nor the recognition de jure of Soviet sovereignty over the Baltic States. I believe that this was a small price to pay for an Agreement which I hope is going to result in the end of this long and wretched story for the claimants concerned in this case. I must repudiate any suggestion in this connection that the claimants, or any group of them, have any prescriptive legal right to the assets. This bargain involved a concession, but, as I have said, it was a relatively small one. My view—and I think that many noble Lords will agree—is that most claimants will be much more content at the prospect of receiving some compensation after 28 years. They will be more concerned with that, than with the fact that the total capital sum available for distribution has had to be abated by this relatively small amount.

LORD BALFOUR OF INCHRYE

My Lords, the noble Lord said that it was a small price to pay. Does he mean that we have bought the Agreement for half a million pounds? Is that what he is saying?

LORD CHALFONT

My Lords, it is easy to turn the facts of a case by the use of emotive words. If you wish to say that we "bought" an Agreement, the fact is that we agreed with the Soviet Union that in return for this small and modest sum of money, which I pointed out in my earlier remarks was to be resolved in terms of trade between the two countries, we were able to obtain an Agreement which I think was in the interests of international relations and in the interests of the claimants concerned. This is a matter—and it has been the Government's concern throughout—of satisfying these claims after they have been hanging about for nearly thirty years with the depressing results which were mentioned earlier by my noble and learned friend on the Woolsack.

THE MARQUESS OF LANSDOWNE

My Lords, before the noble Lord leaves the point, is he going to give me an answer as to whom this money belonged; and, if it did belong to Her Majesty's Government, by what legal process? I think this matter fits in here.

LORD CHALFONT

My Lords, perhaps the point fits in here, though I in- tended to come to it later. However, since the noble Marquess asks me now, may I say that this is really a question of what authority Her Majesty's Government had to realise these assets and then to use them in the way they did. I do not think that the question is as obscure as the noble Lord might think, but in order to clarify the matter I shall need briefly to give a little history.

THE MARQUESS OF LANSDOWNE

My Lords, the question is not obscure; it is the answer that I want.

LORD CHALFONT

My Lords, the answer has not yet been given, so I fail to see how the noble Marquess can characterise it as obscure. I think that the position must be obscure to the noble Marquess or he would not have asked the question. I shall now attempt to clarify it. If I am to do so, it is necessary for me to sketch briefly the history of the matter. In 1940, when the Baltic States were occupied by Soviet forces, the Bank of England held the gold to the account of the former central banks of the three countries concerned, Latvia, Lithuania and Estonia. Shortly before the formal incorporation of the Baltic States into the Soviet Union (I am sorry to go on using this objective phrase, but there is nothing sinister about it), the Soviet State Bank represented that it had bought the gold from the Baltic banks. Transfer to the Soviet State Bank was withheld, as your Lordships will know, and the gold was blocked under Regulation 2A of the Defence (Finance) Regulations on July 24, 1940.

Subsequently, when the Baltic States were overrun by Germany in 1941, the provisions of the Trading with the Enemy legislation were applied to the gold, and it was eventually the subject of a formal order vesting it in the Custodian of Enemy Property, with power to sell, under the Trading With the Enemy Act 1939 and the Trading with the Enemy (Custodian) Order 1939. As the noble Marquess will realise, the effect of vesting is to make the Custodian the legal owner of the property. Once the gold had been vested in the Custodian, he was legally entitled to sell it and realise the asset under exactly the same powers. I hope that I have made the position clear whence springs the authority to sell the gold and realise the assets.

VISCOUNT DILHORNE

My Lords, the noble Lord agrees that if the Germans had not occupied these territories Her Majesty's Government would have had no power to dispose of this gold.

LORD CHALFONT

My Lords, the noble Viscount is extremely good at casting hypothetical flies over the Government Front Bench. I am not going to rise to that one at this stage of the debate.

It has also been suggested by noble Lords opposite that we should not have a common pool of assets. I cannot see much force in the arguments adduced in support of this. The assets have separate territorial origins, encompassing both the Baltic States and Ceded Territories, but these separate origins are not now represented by separate sovereign States. This may be regrettable, but it is a fact. Our claim was against the Soviet Union as the de facto Government of the territories concerned. The claims were for payment in full in each and every case, and the Soviet Union in turn laid claim to the assets held in this country, whatever their origin. We did not hold separate negotiations or reach separate agreements about each category of claims in turn. The settlement which we did reach was a global one, and I repeat that it was one in which each side agreed not to pursue its claims against the other. Her Majesty's Government have now to decide what is the best method of compensating all the United Kingdom claimants out of the assets which the Soviet Union no longer claims.

The noble Lord, Lord Trevelyan, asked the question, why are foreign holders of the notes but not of the external bonds to be included? This is a complicated question and it would take a long time to answer in full, but I might say that whilst the Council of Foreign Bondholders, which the noble Lord represents with such great distinction, is competent to represent sterling bondholders, irrespective of their nationality, in pressing foreign Governments to carry out contractual obligations under bond issues, Her Majesty's Government are in a rather different position. We can present claims to other Governments only in respect of British losses, and this is what was done in the case of the Baltic bonds. A State, as your Lordships will know, is not entitled to put forward a claim to another Government—

LORD TREVELYAN

My Lords, may I ask whether we are entitled to accept proposals from the other Government that foreign nationals should be included in those beneficiaries who claim?

LORD CHALFONT

My Lords, I will finish answering the question, and I hope that the point will be clear to the noble Lord. The scope of the negotiations with the Soviet Government was laid down in 1959. The Registration Order in Council of November of that year made provision only for British-held bonds. The fact is that the Soviet Government would not negotiate about foreign holdings of the bonds. They have conducted negotiations with a number of Governments about Baltic claims and always on a basis of nationality. We shall be providing in the distribution to admit bonds in British ownership in November, 1959, when the Registration Order came into force, and not at the dates in 1940 when service of the bonds ceased.

The history of the bonds and the notes is in a number of respects quite different. As regards the notes, in 1959 we were pressing the Soviet Government, as we did throughout the negotiations, to resume service of all these notes—which, unlike the bonds, were obligations contracted directly by the Soviet Union. The Soviet Government did not deny their obligations, but they sought to make resumed service dependent upon the return of the Baltic gold. Clearly, this no British Government could have agreed to. As part of the final terms of the settlement we agreed to make a settlement of the notes, and the position is made clear in the Agreement of January 5.

Article 1 covers the bonds owned by nationals of the United Kingdom. Article 4 provides an undertaking by Her Majesty's Government to settle the notes irrespective of the nationality of the holders. There is, I think, justification for this. The two companies were British companies and all the note-holders suffered loss as a result of Soviet retaliation for British action in blocking the gold. This, as I said earlier, was done in defence of British interests and there is every reason to suppose that, but for this British action, all the notes would have been redeemed by the Soviet Government many years ago. I should have liked, in all fairness, to go further into the points made by the noble Lord, Lord Trevelyan, about the distribution proposals, but if, as I hope, the Bill is given a Second Reading, the noble Lord and I could discuss this at greater length later. Certainly, I can guarantee that if, as I hope, the Bill is given its Second Reading, we shall look closely at all his points, and, indeed, at all the suggestions that have been made this afternoon in your Lordships' House.

There is perhaps one point that I should make, because it is one that has been made with a good deal of feeling by noble Lords opposite. It concerns the question of ratification of the Agreement with the Soviet Union. A good deal of concern, and indeed some violent criticism, was expressed of the fact that this Agreement was reached without being subject to ratification. Perhaps at the outset I should say that neither side in the negotiations wanted to make this Agreement of 1968 subject to ratification. This, of course, is not an answer to the question; but the broad terms of the settlement were reached, as I said, during Mr. Kosygin's visit in 1967 and that settlement was definitive. Both sides were anxious to resolve the question, once and for all. On our side it had been the policy of successive Governments to work for this settlement before disposing of the assets, and in our view—a view which we still hold—an agreement which was subject to ratification would not have formed a sufficiently firm basis from which to dispose of these assets.

VISCOUNT DILHORNE

My Lords, could the noble Lord then explain why on January 23 the Foreign Secretary said that the Agreement would be subject to Parliamentary approval?

LORD CHALFONT

My Lords, the Bill that springs from the Agreement will, of course, be subject to Parliamentary approval. It is the Bill that we are—

VISCOUNT DILHORNE

My Lords, the Foreign Secretary specifically referred to the Agreement. That is quite a different thing from the Bill. We can pass the Bill without having any effect on the Agreement. The Foreign Secretary said that the Agreement would be subject to Parliamentary approval. I asked the noble Lord to say specifically whether that was wrong, and if it was not wrong how does he justify it?

LORD CHALFONT

My Lords, I take the noble and learned Viscount's point. I admit that I cannot answer that question now. I was not aware of the circumstances in which that was said; perhaps I should have been. I will look into the question and will certainly take the earliest opportunity to answer the question, either to the noble and learned Viscount directly or in your Lordships' House.

VISCOUNT DILHORNE

My Lords, I raised this particular point in the course of my speech. I raised it at the very outset of my speech and I was hoping for a reply to it now. It really should not have come as very fresh to the Foreign Office, as the particular statement made by the Foreign Secretary was quoted in another place.

LORD CHALFONT

Then, my Lords, I can only apologise for the fact that I did not realise the exact point of the question when the noble and learned Viscount put it in his speech. I can only say that it was never the intention during these negotiations to have an Agreement subject to ratification. If it had been subject to ratification, there is one very important consideration. This is that after the Agreement had been made the Russians might have failed to ratify it, which would have held up the proceedings still further. However, now that I am clear about the point made by the noble and learned Viscount I will certainly address my mind to it and will let him have an answer, and will let the House have an answer, as soon as I possibly can.

Of the major points that have been raised this afternoon, this leaves only the important question—perhaps the most important one, if the drift of this afternoon's debate is to be an indication—of Clause 2(4). My noble and learned friend who sits on the Woolsack dealt with this clause at some length earlier in the debate, and I am sorry that the noble and learned Lord, Lord Denning, who made a characteristically good-humoured and modest contribution to the debate, was not here to hear my noble and learned friend. As he addressed himself in his customarily authoritative way to the legal aspects of this clause, I shall not attempt to follow him; I should only, I think, make one or two brief points about this question.

It has been said several times in your Lordships' House this afternoon that Clause 2(4) threatens the rule of law, and that is a suggestion which, on behalf of Her Majesty's Government, I must immediately contest. In our view, the establishment of the Commission itself in 1950 was a strengthening of the rule of law. These points have been made by my noble and learned friend. Before 1950 distribution was entirely administrative. Now there is a special tribunal; and, indeed, one manned by lawyers. The question now at issue is: how far is the Commission—charged with this special, indeed one might almost say unique, task—to be subject to judicial review? The noble and learned Lord will know that Lord Justice Russell said in the Court of Appeal: … the Executive is dealing broadly with matters not strictly matters of right, and the time-consuming precision of the ordinary judicial processes may well be out of place. That is also the Government's view. The general power of the courts to supervise inferior tribunals of course remains. What this amendment does is simply to define more precisely the field which is remitted to the Foreign Compensation Commission.

Finally, I should like to underline as emphatically as I can the point made by my noble and learned friend. The interest of the claimants is really what is at stake here. That is what is at issue. It is this that Her Majesty's Government have had at heart throughout these negotiations, throughout the drafting of this Bill and when arriving at the decision to propose this amendment. What the claimants want is for their claims to be resolved as quickly as possible. As I have said several times this afternoon, they have been waiting thirty years for this. Given the high standing of the members appointed by the Lord Chancellor to the Foreign Compensation Commission, we think it appropriate that the final decision should be taken at that level. Whatever the noble and learned Viscount may say, it is our view that this was the intention embodied in the Foreign Compensation Act 1950 and the Tribunals and Inquiries Act 1958, and the amendment does no more than give effect more clearly and emphatically to that intention. As I have said, Clause 2(4) simply deals with that one aspect of the case and is meant in the long run to address itself to the possibility of further delay in the settlement of these claims.

The primary purpose of the rest of the Bill which is now before your Lordships' House is to create circumstances in which after this long and miserable story following the wretched history of the Baltic States, the claims of these people can be settled is equitably as possible. We should like to do this in a way that springs naturally out of the settlement which we reached with the Soviet Union while Mr. Kosygin was here.

I believe the Agreement to be right, and I believe that the Bill which now springs from it is the right and just way to meet the legitimate preoccupations of these claimants. Therefore, as I say, I hope and believe that your Lordships' House will give the Bill a Second Reading, so that we may address ourselves closely and assiduously at later stages of the Bill to the various proposals and ideas that have been put forward in your Lordships' House this afternoon.

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