Lords Sitting of 16 March 1978

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Oxford.
The Lord Grenfell—Sat first in Parliament after the death of his father.
The Lord Henley (Lord Northington)—Sat first in Parliament after the death of his father.

ARMED FORCES PAY
Earl CATHCART: My Lords, with his permission, I beg leave to ask the Question standing in the name of my noble friend Lord Gray, who is unavoidably prevented from attending your Lordships' House this afternoon:
The Question was as follows:
To ask Her Majesty's Government whether, on receipt of the recommendations of the Pay Review Board, they will as a matter of urgency introduce percentage increases in the pay of the Armed Forces comparable with the increases in earnings recently allowed to the firemen and miners.
Lord WINTERBOTTOM: My Lords, the Government will make their decision on the Forces' 1978 pay award once they have received the Armed Forces' Pay Review Body's report. No purpose is served by speculation at this stage about the content of the Review Body's report or the Government's final decision.
Earl CATHCART: My Lords, I thank the noble Lord for that reply, which of course does not take us very much further forward. Does he remember that on 24th November last a serving officer wrote to The Times saying that morale was low in the Armed Forces and that unless something was done about Forces' pay the numbers applying to leave would reach stampede proportions? Does the noble Lord also remember that in the defence debate which followed, on 7th December, which was initiated by my
1470
noble friend and Leader Lord Carrington, I referred to that letter in The Times and, while I agreed about the stampede, which I said had already begun, I did not accept that the morale of the Armed Forces was in any way impaired, because of their sense of discipline and the fact that their devotion was such as to be able to overcome it? Will the noble Lord give an assurance on behalf of the Government that they will give very detailed consideration to the pay of the Armed Forces to ensure that comparability with important parts of industry is established and that the X factor is given full consideration? I must tell the noble Lord that if this is not done—
Several noble Lords: Question!
Earl CATHCART: My Lords, does the Minister realise that if this is not done a very serious situation will arise in the Armed Forces and that one will not be able to say in future that morale is being maintained?
Lord WINTERBOTTOM: The concern expressed by the noble Earl, my Lords, is shared by all those who concern themselves with the interests of the Armed Forces. I can only repeat what has been said many times; namely, that the Government are pledged to restore the comparability of Service pay as soon as pay policy permits. As to the X factor, the Armed Forces' Pay Review Body may well make recommendations on this element of remuneration.
Lord MURRAY of GRAVESEND: My Lords, would my noble friend not agree that this constant harping by the Opposition on the results of the Pay Review Body before they are made public also helps to lower the morale of the Armed Forces?
Lord WINTERBOTTOM: My Lords, I said—
Earl CATHCART: Does the noble Lord appreciate—
Several noble Lords: Order!
Lord WINTERBOTTOM: I said that no purpose is served by speculation at this moment, my Lords. Noble Lords will not have to wait very long before we can talk about something concrete.
Baroness WARD of NORTH TYNESIDE: My Lords, will the Minister bear in mind—everybody in the country should know this—that most people in this House would like the Armed Forces to get more pay without delay and therefore as quickly as possible?
Lord MACKIE of BENSHIE: My Lords, may we have an assurance from the Minister that the Government will not on this occasion give with one hand and take away with the other? Is he aware that one of the major senses of annoyance to many members of the Forces is that pay rises are ostensibly given and then every form of perquisite—house and so on—is charged for at a higher rate?
Lord WINTERBOTTOM: My Lords, the matter of charges as well as pay will be covered in the Armed Forces' Pay Review Body's report.
Lord CHELWOOD: My Lords, do the Government accept that the number of officers and non-commissioned officers retiring voluntarily during the last six or eight months has reached serious proportions and that this is very worrying?
Lord WINTERBOTTOM: My Lords, this is something we must watch with care.
Lord CLIFFORD of CHUDLEIGH: My Lords, may we have an assurance that the noble Lord and all other Ministers dealing with the Forces have put the case for the Services very strongly to the Pay Review Body? Would the noble Lord take into consideration a suggestion I made in relation to an earlier Question; namely, that one way out of it would be, as one noble Lord intimated, to go back to the previous situation of not charging for rations and quarters?
Lord WINTERBOTTOM: My Lords, the recommendations of the heads of the three Armed Forces to the Pay Review Body must of course be confidential, but, knowing them, I am fairly certain that they have stated their views with some force.
Earl CATHCART: My Lords, is the Minister aware that what the noble Lord, Lord Murray of Gravesend, described as harping would be regarded almost as
1472
divine right if a trade union leader made the same remarks? Is he aware that what I am doing is not pretending to be a trade union leader for the Armed Forces, but trying to get a fair deal for the people with whom I served all my adult life?
Lord HEWLETT: My Lords, assuming, as Her Majesty's Government may do, that they may stay in office for longer than many of us think, surely there must be a target date for the restoration of complete and full comparability. Is the noble Lord aware that only a positive answer in this regard will allay the deepest fears of Servicemen? Will be therefore please state categorically what is the target date for the restoration of comparability?
Lord WINTERBOTTOM: My Lords, I said earlier that both I and others more competent to speak have given an assurance that the Government are pledged to restore the comparability of Service pay as soon as pay policy permits. I am certain that the opportunity will soon be given to your Lordships to discuss the actual proposals of the Pay Review Body and the Government's reaction to them.

THE POST OFFICE: CARTER REPORT
3.14 p.m.
Earl ALEXANDER of TUNIS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action has been taken since the publication of the Carter Report on the Post Office and the debate on the report's recommendations in this House on 16th November 1977.
Lord WINTERBOTTOM: My Lords, the period of public consultation which followed publication of the Carter Report ended in December 1977. All the comments are now being examined, together with the views expressed in the debate in this House, and in due course the Government will publish their conclusions in a White Paper.
Earl ALEXANDER of TUNIS: My Lords, I thank the Minister for that reply, and I should like to ask him one further question, about which I wrote to him yesterday. Should a strike by postal workers occur, could steps be taken to allow private carriers the right to deliver letters immediately the strike takes effect?
Lord WINTERBOTTOM: My Lords, I am grateful to the noble Earl for giving advance notice of his supplementary question. However, it does not really apply to the Carter Report. If the noble Earl will put down another Question, I shall endeavour to answer it.
Baroness BURTON of COVENTRY: My Lords, is my noble friend aware that many people in this House, and a great many of the general public outside, have greatly welcomed the attitude of Sir William Barlow since he became chairman of the Post Office? Is he also aware that I believe I speak for many people when I say that Sir William really seems to have a progressive attitude—and that customers do count?
Lord WINTERBOTTOM: My Lords, I am most grateful to my noble friend for that very helpful remark.
Lord TREFGARNE: My Lords, can the noble Lord explain why the Hull telephone service licence was recently renewed for only six months, and what is the nature of the reconsideration of the position in that connection of which the noble Lord informed me in a Written Answer last week?
Lord WINTERBOTTOM: My Lords, the Carter Report makes no mention of the Hull privately owned telephone exchange. If the noble Lord cares to put down another Question, I shall endeavour to answer it.
Lord TREFGARNE: My Lords, with respect to the noble Lord, I wish to point out that the debate on the 16th November did mention it, and that that is included in the Question on the Order Paper. Does the noble Lord not have the information?
Lord WINTERBOTTOM: My Lords, the Question is on the Carter Report.
Lord ORR-EWING: My Lords, will the noble Lord bear in mind that many conscientious people do a considerable amount of work to produce reports such as the Carter Report, and then there are months and sometimes years of delay before the recommendations are truly considered and implemented? Will he make it possible for a progress report to be given on how many of these recommendations have already been implemented by the admirable Sir William Barlow, and how many are still under consideration? We should like to have some progress after all the work that has been put into this report.
Lord WINTERBOTTOM: My Lords, I am certain that if the noble Lord will have a word with the usual channels we may find an opportunity for making a pr ogress report, but today is not the time.
Lord AIREDALE: My Lords, where the public corporation concerned has no Minister answerable for it to Parliament upon points of detail, is it too much to expect that the corporation, when its affairs are debated in either House, might go through the speeches and write to the individual Members dealing with the points of detail which they have raised in the debate?
Lord WINTERBOTTOM: My Lords, that is a very interesting point because the general philosophy behind the relationship between Parliament and the nationalised industries is that the day-to-day operations of those industries are a matter for the industries themselves. I am certain that if any noble Lord writes to the chairman of a nationalised industry he will receive a courteous reply, and probably an informative one. But the conventions are that the day-to-day running is a job for the boss.
Lord HAWKE: My Lords, in the effort to create more jobs, in which the Government are now engaged, would it not be cheaper to hand money to the Post Office to employ people to provide the service to which we used to be accustomed, rather than spend vast sums of money creating rather unnecessary jobs?
Lord WINTERBOTTOM: My Lords, surely at the moment we see that an attempt is being made to prevent featherbedding in any nationalised industry.

CAMBODIA AND VIETNAM: UN MEDIATION
3.18 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper, and I should like to make a correction of a slip which has occurred. The reference in my Question to "General Secretary" should, of course, read "Secretary-General".
The corrected Question was as follows:
To ask Her Majesty's Government whether they will ask the Security Council of the United Nations to instruct the Secretary-General to use his influence to end the war between Cambodia and Vietnam.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, I do not consider that an initiative would help at this stage, and I note that neither of the parties, nor other countries in the region who are immediately affected, have sought the Security Council's intervention.
Lord BROCKWAY: My Lords, in thanking the Minister for that reply, may I ask whether it is not the case that, since the end of December, Vietnam has proposed the immediate end to all hostilities, the withdrawal of the armies to five kilometres beyond the borders, and negotiations for a treaty recognising the existing borders under international supervision? When that proposal is made, should it not be for the United Nations to support it?
Lord GORONWY-ROBERTS: My Lords, it is perfectly true that the Vietnamese forces have withdrawn from the 30 kilometre line to which they had penetrated by January, and that was a hopeful sign. The Government of Vietnam have also made a three point proposal for the settlement of the dispute. At the moment fighting appears to have died down; it is somewhat intermittent. While the Cambodians have not yet accepted the Vietnamese proposal, there may be hope that they will. I think it is best to await a local settlement of what is, after all, a local dispute, rather than to complicate matters by proceeding to the Security Council at this stage.
Baroness GAITSKELL: My Lords, may I ask the Minister whether it is not unwise, and even misleading, to imply that the UN has the power to do this, or that we or any other Government have the power to instruct the Secretary-General to do such-and-such a thing?
Lord GORONWY-ROBERTS: My Lords, the United Nations is the sum of its members, and to my knowledge no member or group of members so far has decided that it would be helpful to invite the Secretary-General to take the course suggested by my noble friend Lord Brockway. To that extent, certainly, my noble friend Lady Gaitskell is absolutely right.
Lord MACKIE of BENSHIE: My Lords, would the Minister care to define when a war is a war and not a local dispute?
Lord GORONWY-ROBERTS: My Lords, a local dispute qualifies for the description of a war equally with a continental hostility.
Lord BROCKWAY: My Lords, may I ask the Minister whether there is not a danger that other Powers may become involved in what he has described as "a local dispute"?
Lord GORONWY-ROBERTS: My Lords, there is always that danger. Most wide-ranging wars, in the sense that the noble Lord had in mind, have indeed arisen from local disputes. This is local in the sense that it is long-standing and deep-seated as between these two national communities. The fact that they are both Communist countries does not in any way erode the nationalistic hostilities which subsist at present, as they have done for many years in the past. It is local in that sense. If your Lordships would prefer, shall we call it "a regional dispute"?

LOTTERIES: USE OF SURPLUS FUNDS
3.22 p.m.
Lord SHINWELL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many local authorities have initiated lotteries and whether if a surplus remains after meeting expenses it is intended to use it to reduce rates.
Lord WELLS-PESTELL: My Lords, I understand that by 14th March 1978—namely, last Tuesday—246 local authorities had registered lottery schemes with the Gaming Board for Great Britain, and that 87 of these had submitted accounts of lotteries actually held. The Lotteries and Amusements Act 1976 requires a local authority to apply money accruing from a local lottery only to the particular purpose or purposes for which it had been promoted.
Lord SHINWELL: My Lords, I thank my noble friend very much for that information, which is somewhat inadequate. What are these particular purposes to which my noble friend refers? Is it not in order to help to reduce rates, or perhaps provide more amenities, or something of the sort? What does this ambiguous phrase, "particular purposes" mean?
Lord WELLS-PESTELL: My Lords, I do not think there is any ambiguity at all. A local authority can promote a lottery for any purpose in respect of which it has power to incur expenditure under any enactment. It may well be that a local authority would want to run a lottery to construct a swimming pool or open a recreation ground. It can raise money to do all these things because they are purposes for which it has power to incur expenditure under an enactment. It is for the local authority to decide on the various schemes that it wants. It may well be that, having done so, and having got enough money in to erect the particular building that it wants, inevitably that will work towards the reduction of rates because the cost of it would not have to be found out of normal rate income. But it is important that the local authority clearly indicates the purpose. It is not sufficient for a local authority to say, "We want to run a lottery for social, cultural, environmental or recreational facilities, or for the public welfare", or to say "for something not yet determined ". It must clearly decide and indicate the particular project for which it wants the lottery money.
Lord SHINWELL: My Lords, I am now grateful to my noble friend for the information he has given. Why was he keeping it up his sleeve? Why could he not have told me in the first place what he meant by "particular purposes "? Now I will ask him this question: Is there anything improper in using the surplus for the purpose of reducing the rates? Would it not be very desirable to encourage other local authorities to follow the lead to which my noble friend has referred? As a result of these lotteries some people may lose money and some may gain some money, but if the general result leads to some reduction in rates would that not be desirable?
Lord WELLS-PESTELL: My Lords, I do not want to quarrel with my noble friend, but I in fact answered his Question, which was,
"… whether if a surplus remains after meeting expenses it is intended to use it to reduce rates?".
If money has been raised for a specific purpose, I think the implication is that it must be used for that purpose and can be used for some other purpose only if the local authority gets the specific consent of the Secretary of State to apply any surplus for any other purpose.
Lord HALE: My Lords, could the noble Lord say whether the figures of the results of these lotteries, as they are completed from time to time, are going to be published and available for inspection?
Lord WELLS-PESTELL: My Lords, I imagine there will be a responsibility on the local authorities to publish them, but I cannot recall (simply because I cannot remember the Act in its entirety) whether it is an obligation on them. I should have thought that, in the circumstances, there would be an obligation to do so.
Lord SHINWELL: My Lords, perhaps my noble friend would forgive a final question now that he has referred to the Secretary of State. Can we not ask his right honourable friend the Secretary of State to empower the local authorities to use some of the surplus for the purpose of reducing rates?
Lord WELLS-PESTELL: My Lords, I am obliged to my noble friend, and I will bring his remarks to the attention of my right honourable friend.
Lord SKELMERSDALE: My Lords, could the noble Lord say whether to run a lottery for the sole purpose of reducing the rate burden in a particular place would be a proper purpose?
Lord WELLS-PESTELL: My Lords, my understanding—and I will write to the noble Lord if I am wrong—is that it would not be proper to do that, to run a lottery merely to reduce the rates, because as I understand the situation a local authority can run a lottery only for a purpose in respect of which it has power to incur expenditure under any particular enactment.
Lord HAWKE: My Lords, when will Her Majesty's Government pluck up their courage and have a national lottery in aid of the National Health Service, which is so badly in need of money?
Lord WELLS-PESTELL: My Lords, apart from the fact that that is another question, I would want to think very carefully before answering it.
The Earl of KINTORE: My Lords, if there is a surplus on some capital project—a swimming bath, a health centre or something of this sort—would it be legitimate to use that surplus for the annual running costs until such time as the balance was exhausted?
Lord WELLS-PESTELL: My Lords, I do not think I ought to give what would appear to be an authoritative reply, because I just do not know; but if money were raised for the purpose of providing the community with a special facility I should have thought that any money left over could be used for its maintenance.

CIVIL LIABILITY: ROYAL COMMISSION REPORT
3.29 p.m.
Lord STRABOLGI: My Lords, with the leave of the House, at a convenient moment after 3.30 this afternoon my noble and learned friend the Lord
1480
Chancellor will repeat a Statement being made in another place on the Report of the Royal Commission on Civil Liability.

EUROPEAN COMMUNITY COMMITTEE
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, on behalf of the Committee of Selection, that the Earl of Onslow be added to the Select Committee in the place of the Lord Vernon.—(Lord Aberdare.)
On Question, Motion agreed to.

STATE IMMUNITY BILL
3.31 p.m.
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Lord Aberdare in the Chair.]
Clause 1 agreed to.
Clause 2 [Submission to jurisdiction]:
Baroness ELLES Baroness ELLES moved Amendment No. 1:
Page 2, line 1, after (" submit ") insert (" (a)").
The noble Baroness said: With the leave of the Committee, I will discuss Amendments Nos. 1, 2 and 3 together. First, I think it should be clarified that all the Amendments put down in my name on the Marshalled List are on the assumption that the Government will be making a declaration under Article 24 and, therefore, that the provisions of this Bill do not have necessarily to follow within the precise meaning of Articles 1 to 13 of the Convention. Secondly, as the United States' Foreign Service Immunities Act was recently passed by Congress, it has provided guidelines for some of the

1481
clauses which will be considered this afternoon, and therefore some of the Amendments, the ones that I have put down, have been drawn from that Act.
Amendment No. 3—Amendments Nos. 1 and 2 are paving Amendments to Amendment No. 6—concerns the waiver of immunity by a foreign State from the jurisdiction of a United Kingdom court prior to submission. This introduces a welcome change in the law in relation to decisions made in a series of cases such as the Duff Development Company and Kahan v. The Federation of Pakistan. This will be welcomed.
The United States Act in Section 1605A referred to a waiver, "either explicitly or implicitly "; that is, the necessity for a provision in a written agreement specifically referring to waiver would not be necessary in order to remove a State's immunity. Nor would that have to be a written agreement. Not all agreements are concluded in written form and not all dealings with foreign States may contain a written agreement as to waiver. There may be sufficient evidence for a court to conclude that the State had the intention of submitting to a United Kingdom court at the time that the agreement was concluded. As to the manner of concluding agreements, they can be concluded nowadays even on the telephone or by telex. Would the conclusion of an agreement by telex be a written agreement? That would need clarification.
Secondly, on the very nature of agreements between States and foreign individuals or companies, certain types of cases have been established where the intention to submit to the jurisdiction may be implied and not necessarily relating only to the commercial activities which would fall within Clauses 3 and 5 of the Bill as they stand.
Therefore it should be asked whether the fact that a prior agreement to waive immunity is not in writing would protect absolutely a foreign State from submitting to the jurisdiction. It has been said in a work by Professor O'Connell that a waiver can now not only be antecedent but in any form. This is confirmed in the wording of the United States Act. I should be grateful if the noble and learned Lord would comment on these three Amendments. I beg to move.
The LORD CHANCELLOR: As I understand it, we are now discussing Amendments Nos. 1, 2 and 6 and possibly Amendment No. 3 as well. The object of Amendments Nos. 1, 2 and 6, as I understand them, is to ensure that a waiver of immunity cannot later be withdrawn except in accordance with any provisions agreed at the time that the waiver was made. The subsection provides for waiver by written agreement. Where there has been such an agreement, it of course becomes binding on the parties and cannot be altered unilaterally. A waiver of immunity is no different from any other agreement; nor is a State in a better position than an individual which would allow it unilaterally to break its contracts. Accordingly, I do not think that Amendments Nos. 1, 2 and 6 are necessary. Indeed, my respectful submission is that they are otiose for the reasons I have given.
With regard to Amendment No. 3, this seeks to enable States to waive immunity from jurisdiction by prior oral agreement; whereas subsection (2) of Clause 2, as it now stands, requires a written agreement. The subsection accords with Article 2 of the European Convention, which provides that a State cannot claim immunity if it has undertaken to submit to the jurisdiction of a court by an express term contained in a contract in writing. It seems not unreasonable that waiver of immunity should be made in a formal manner, of which writing is normally the best evidence. If the Government's main Amendments (to which we shall be coming in due course) are adopted, immunity will, by and large, remain only in respect of Acts of a sovereign nature. States would expect to be immune in respect of such Acts and the courts which, under our law, accord immunity of their own motion will expect them to have it.
In those circumstances, it is not, I think, unreasonable to expect a plaintiff who wishes to have his proceedings entertained, to be able to produce the State's written agreement. It may be argued, and it has been suggested already, that many international transactions (including those which States may engage in) are habitually made by telex, by telephone, even by word of mouth or in a form which attracts a jurisdiction clause

1483
only indirectly by reference to some standard terms referred to in the contract.
It is true that, for such transactions, written agreements may be inappropriate. Indeed, the United Kingdom has pressed strongly in other international contexts for the recognition of informal agreements on jurisdiction. But all relevant agreements that we are concerned in in the Bill are likely to be of a commercial or similar nature and will come under the new clause in Amendment No. 9, which will greatly limit the sphere of immunity and which I shall be inserting in due course. Amendment No. 9, which will come after Clause 2, defines where States will have no immunity. In the circumstances, therefore, I hope that the noble Baroness may think that what is already provided for in the Bill is reasonable for general and normal purposes.
Lord DENNING: I would support the Amendment. This is a most important part of the Bill because, by a decision in 1954, a State could not give its consent to the jurisdiction of our courts by a prior agreement. It could only be done in the course of the court proceedings by submission to the appearance of the court. Our jurisdiction has been hampered in that way. In the United States, they have a much wider jurisdiction, allowing a State, by agreement, to submit to the jurisdiction of the courts.
We ought to do the same. Otherwise, our city of London may, in some circumstances, not be able to compete with the United States in some of these contractual dealings—loans, and the like. There is no reason whatever, it seems to me, why it should be confined to a written agreement. If there is an agreement, whether it be orally, on the telephone, or whatever, and whether it be in a case of a commercial nature or in a case of another nature, and a person agrees beforehand to submit to the jurisdiction of our courts, I see no reason why that person should not be held to the agreement. Therefore, I would submit the Amendment without the qualifications which the noble and learned Lord the Lord Chancellor has put forward.
3.41 p.m.
Lord WILBERFORCE: My Lords, I, too, ask the noble and learned Lord the
1484
Lord Chancellor whether he will think again about this. I do not believe that this is a question of wording so that what the noble Baroness has proposed is otiose. On the contrary, there is a serious point of principle here which lies near the heart of this Bill. The principle is whether we follow the traditional system which says that the State can submit to the jurisdiction of the court by appearing before it, and so on, and that submission at any one stage does not carry submission at a later stage (you have to submit at every successive stage before you can enforce anything), or whether, on the contrary, you go over to the more modern system which I believe has been followed by the United States. That contemplates that States may, when entering into an agreement, then and there decide to waive their immunity and then provide, as the United States does, and as Amendment No. 6 does, that you cannot withdraw a waiver which you have once given unless you have so provided in the terms of the waiver. That this is not theoretical can be shown by the terms of a typical clause which I am told is used in a great many agreements of a commercial character. This has been supplied to me by those who are familiar with this type of business. This is dealing with loan agreements.
"To the extent that the Borrower may in any jurisdiction in which the proceedings are at any time taken for the enforcement of this Agreement claim for itself or its assets immunity from suit, execution … and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed) "—
Now come the important words—
"the Borrower hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction."
It is that type of clause, which I believe is not at all uncommon, which the noble Baroness is evidently thinking about in her Amendment No. 6. It is a different system, as noble Lords will see, from the traditional one of submitting to jurisdiction as the Bill at present provides. It says that certain things are submissions and certain things are not submissions, and when you submit for one purpose you have to submit for another. It is a different system from that which enables States to waive immunity and says that if they once waive immunity then they are stuck with it unless they reserve the right to resile at a later stage. There are

1485
important consequences later on when one deals with enforcement. I want to show my hand completely on this matter: I know that the noble and learned Lord does not think the same as some of us about it.
This has important consequences when one tries to get enforcement against assets under the Amendment of the noble Baroness as provided in other Amendments. This paves the way for possible enforcement of judgments against States unless, in the initial waiver of jurisdiction, they have expressly provided that the waiver does not extend to enforcement, or whatever it is. Fully recognising that this is a question of principle and not of drafting, I would, with great respect, ask the noble and learned Lord to see whether he can come some way to meet the proposed Amendment, whether the waiver is written or not. I have nothing to add to what my noble and learned friend Lord Denning and the noble Baroness have said.
The LORD CHANCELLOR: While I submit that nearly all the agreements that we are talking about are likely to be of a commercial or similar nature, and by reason of the considerable limitations which the Bill, with the proposed Amendments, will impose on State immunity, I still doubt whether these Amendments are really necessary. However, in the light of the submissions which have been made, I am very willing to consider them again. Perhaps we can return to them at a later stage if the noble Baroness is disposed not to press Amendments Nos. 1, 2, 3 and 6.
Baroness ELLES: I thank the noble and learned Lord for the way in which he has dealt with these particular Amendments. I am happy to withdraw them, by leave of the Committee, if he will reconsider them in the light of the statements of the noble and learned Lords, Lord Denning and Lord Wilberforce.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 and 3 not moved.]
Lord STRABOLGI: My Lords, with the leave of the Committee, I suggest that this may be a good moment to hear the Statement which is being made in another place. I beg to move that the House do now resume.
1486
Moved, that the House do now resume.—(Lord Strabolgi.)
On Question, Motion agreed to.
House resumed.

CIVIL LIABILITY: ROYAL COMMISSION REPORT
3.46 p.m.
The LORD CHANCELLOR: My Lords, with the leave of the House I wish to repeat a Statement being made in another place by my right honourable friend the Prime Minister. The report of the Royal Commission on Civil Liability and Compensation for Personal Injury has been published today and copies are now available in the Printed Paper Office. The Statement reads as follows:
"The Royal Commission was established five years ago to examine our present practice for compensation for personal injuries, including the particular concern felt about children injured through thalidomide.
"The Government are grateful to Lord Pearson and his colleagues for the work and for the comprehensive report which they have now produced. It contains numerous recommendations for change. The main ones are that:
the two systems of compensation for personal injury through civil liability and through social security should continue to exist side-by-side but with an altered relationship, and that social security should be recognised as the principal means of compensation;
a no fault scheme of State compensation should be introduced for road accidents, to be financed by a levy on petrol: this would provide benefit in respect of injuries, irrespective of blame;
manufacturers should be strictly liable (that is, without proof of negligence) for injuries caused by defective products;
a new State benefit should be introduced for all severely handicapped children whatever the cause of their handicap;

1487
the Government or local authority concerned should be strictly liable for severe damage caused by vaccination where vaccination was recommended in the interests of the community;
the industrial injuries scheme should be extended to cover the self-employed and certain benefits of the scheme should be increased at the expense of employers; and
social security benefits should be fully offset in assessing damages awarded by the courts for personal injuries.
"The Royal Commission's proposals are far-reaching and have important implications. Their implementation would affect consumers, manufacturers, employers, employees, trade unions, motorists, insurers and handicapped children. The Government will therefore study the recommendations with care and urgency and consult interested organisations as appropriate. In reaching their decisions, the Government will have regard to the public expenditure cost of implementing the proposals, which could be considerable.
"As the House will recall, the Government have already announced their commitment to introduce a scheme of payments for severe damage caused by vaccination. Decisions on the form of the scheme have been awaiting the Royal Commission's report. As soon as the relevant recommendations have been considered—and this will be done as a matter of urgency—my right honourable friend the Secretary of State for Social Services will make a further Statement."
That ends the Prime Minister's Statement.
3.52 p.m.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I know the House will wish me to thank the noble and learned Lord the Lord Chancellor, for that very important Statement and to congratulate the Commission on the conclusion of five very strenuous years' work. I was in a sense—I do not think I am being unduly egotistical in saying this—the parent of this inquiry, because it was set up during Mr. Heath's Government and
1488
it was carried through very largely on my recommendation and despite departmental opposition from other Departments; so I think that the Lord Chancellor's office also deserves a word of praise about it.
I do not quite agree with the statement that it was primarily set off by the thalidomide damage. That was one factor, but only one among others which led the Government to set up the inquiry. It was intended from the first to have the wide-ranging scope that it evidently has had from the nature of the Statement which has been made. I can well understand why the Government wish to reflect upon the importance of these recommendations before acting on any except that to which they are already committed to act upon; namely, the vaccination State benefit. I believe that has already been made the subject of a Government pledge, which I personally welcome. Obviously, that will be the position of the Opposition Parties, too; they will want to reflect upon these wide-ranging recommendations. Of course, they are to some extent independent of one another—for instance, the scheme concerning product liability is independent of the scheme for motorists, as is the scheme for extending social security benefits to the self-employed.
I should like to ask the noble and learned Lord whether the report contains any estimate of the net cost to the motorist of the road accident scheme. Obviously, to the extent that the cost to the motorist is now to be financed out of a levy on petrol, the insurance premium ought to go down in so far as that risk is insured from another source. On the other hand, we do not know from what the noble and learned Lord has said—and perhaps he could tell us about this—whether the basis of compensation is going to remain the same; that is to say, that there is to be the same standard of damages or compensation as is now awarded by the civil courts. It might be that the scheme would be very restricted, and perhaps the noble and learned Lord could tell us about that.
I personally welcome these proposals. I cannot say, of course, what I or my Party will do about them because the implications are so very wide and the legal profession will be profoundly affected by what is proposed, if these proposals were to be put into law. A great deal of the income of the practising members of the

1489
solicitors' and barristers' professions comes from certain types of liability. Will the noble and learned Lord perhaps confirm my impression, gained from a first reading, that the employer's liability remains more or less the same?—that is to say, Factory Act cases and employers' negligence do not seem to be affected, at first sight; nor, I think, is professional liability or negligence.
I should like to have the answers to these questions. If the noble and learned Lord feels that I am pressing him too hard, he knows I shall not persist in harassing him; but these may be questions to which he has an answer.
Lord BANKS: My Lords, I, too, should like to thank the noble and learned Lord for repeating the Statement which was made in the other place. We on these Benches welcome the publication of the report of the Royal Commission and, like the noble and learned Lord, Lord Hailsham of Saint Marylebone, we shall want to consider these proposals most carefully; but the general tone of the report, as expressed in the Statement, is acceptable to us.
The altered relationship which is proposed between civil liability and social security, with social security as the principal means of compensation, is something which we would welcome. I should also like to welcome two other proposals: first, that there should be a new State benefit for all severely handicapped children; and, secondly, the proposal that the industrial injuries scheme should be extended to the self-employed. We shall certainly await with great interest the proposals which the Government will bring forward eventually. I should like to ask the noble and learned Lord whether the Government have any timetable for consultations and for the eventual production of proposals.
3.56 p.m.
The LORD CHANCELLOR: My Lords, I am grateful to the noble Lords for speaking; and for their expressions of gratitude to the members of the Royal Commission for undertaking this monumental task and for producing a report which, as the noble and learned Lord, Lord Hailsham, said, is one of great importance and significance. Indeed, it
1490
is happy that he is here today, as being in a sense the father of the proposals, although, as he has said, he is not committing himself to accepting them all. We shall have to examine them all in detail and with considerable care. I assure the noble Lord, Lord Banks, that this work will be done as a matter of urgency, particularly of course as regards the proposals in respect of the children who have suffered vaccine damage. I am afraid I cannot give a time estimate on this, but clearly a great deal of the work is of great importance. I assure noble Lords that we shall waste no time in examining the proposals and reaching conclusions upon them. A number of Departments are of course concerned, and co-ordination between the Ministers responsible is being provided for and the machinery is being set up.
I cannot undertake to answer all the questions put to me by the noble and learned Lord, Lord Hailsham, but with regard to the cost of the proposals in respect of road injuries it may well be that an estimate is to be found in volume 2 of the report. Unhappily, I do not have that in my immediate possession, so I cannot give an answer about it. However, I can say that the no-fault compensation scheme recommended for motor vehicle injuries should be modelled, so the Royal Commission recommend, on the scheme proposed for work injuries, with benefits fixed at broadly the same level. They recommend that special provision should be made for children and non-earners, including housewives and retirement pensioners. The scheme they recommend should be administered by the Department of Health and Social Security and should be financed by a levy of about I penny a gallon on petrol. I can see that that will not be regarded as an uncontroversial suggestion.
The improved industrial injury scheme recommended in the report is proposed as the basis for the no-fault scheme for road injuries, but we will no doubt have an opportunity of considering all these matters in detail when an opportunity for further examination arises. The position with regard to injuries in the course of employment is that the basic structure of the current systems of compensation would be retained. I do not think there is to be any substantial departure from that. I have little doubt that when your

1491
Lordships, and indeed, if I may say so, I myself, have had greater opportunity of considering this great report which has only just come into my hands, not only shall I be able to answer the questions more, I hope, effectively but we shall be able to have a full discussion of what is proposed.

EMPLOYMENT SUBSIDIES BILL
Brought from the Commons; read 1a, and to be printed

STATE IMMUNITY BILL [H.L.]
4.3 p.m.
House again in Committee.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 4:
Page 2, line 2, leave out from (" agreement ") to (" but ") in line 3.
The noble and learned Lord said: I was venturing to say that I myself had in mind applying for a mobility allowance after my recent movements. The purpose of this Amendment is to delete the requirement that the prior written agreement to the waiver of immunity by the State must be between the parties to the dispute. The written agreement to waiver could have been made between the State concerned and the parties to the original contract. The right in that contract could have been acquired by another person either by assignment or succession, and that person might wish to sue the State on the basis of the original waiver. We now think that there is no reason, as a matter either of general principle or under the Convention, why this waiver must be contained in an agreement between the parties.
As to leaving out the words, "or by an international agreement ", the qualifying phrase in Clause 2 (2) is more likely to apply to ordinary written agreements rather than international agreements. Therefore, it is better to bring that qualifying phrase into closer proximity with the type of written agreement to which it is intended to refer. It is also awkward to retain the reference in subsection (2) to an international agreement since it is itself a written agreement. Consequently, we now think it better to delete the reference to an international agreement in subsection
1492
(2) and have a further subsection at the end of Clause 18(1), providing that in Clauses 2(2) and 14(4) the word "agreement" includes an international agreement to which the State concerned is a party. When we come to it we will see that this has been sought to be done in Amendment 34 to Clause 18. Although international agreements are normally between States they can, of course, be between international organisations and States. I do not think it has more significance than being merely a tidying up provision. I beg to move.
Lord WILBERFORCE: I am not sure whether what I want to say arises under this Amendment or under Amendment No. 34, but since the words "international agreement" appear in Clause 2(2) perhaps I might ask the noble and learned Lord the Lord Chancellor what the expression means. I confess I find it puzzling. An agreement between States I can see as an international agreement, but from what the noble and learned Lord just said it seemed that he was including within international agreements agreements other than those between States. If so, I find the words a little lacking in precision. If the noble and learned Lord prefers to help me when we come to Amendment No. 34 I shall be equally happy.
The LORD CHANCELLOR: Perhaps we can revert to the point when we come to Amendment No. 34.
On Question, Amendment agreed to.
Baroness ELLES Baroness ELLES moved Amendment No. 5:
Page 2, line 3, leave out from ("agreement;") to end of line 5.
The noble Baroness said: The words that this Amendment seeks to delete refer to a provision in an agreement which has been governed by the law of the United Kingdom which is not to be regarded as a submission. In my submission these two lines are retrogressive and no longer reflective of the current position in international law. Provision for an agreement to be governed by a particular legal system—and we are, after all, discussing agreements which will be governed by municipal law and not by national law—may not be identical with or subsumed to submission to the jurisdiction of the courts applying that law, but it surely may be one of the elements

1493
that the court may take into account when considering the intentions of the parties as to interpretation, jurisdiction or validity of an agreement.
If the words which the Amendment seeks to delete remain in the Bill it seems to me—and of course I may be wrong—that it would mean that where there is a choice of clause the State party to the agreement may not be sued in an English court unless the agreement falls within Clauses 3 to 5 of the Bill as it now stands. Surely that cannot be the intended effect. A more helpful view in the light of current international practice would be to include a new conditional clause governing prior agreement or prior written agreement by which it is expressly understood that where an agreement is to be governed by the law of the United Kingdom that would be an implied waiver of immunity from suit. I think this would be very much more in line with current practice, and I would welcome the consideration of the noble and learned Lord to that suggestion. If we are to follow the less narrow concept of the United States Act which refers to a prior agreement to submit, whether explicit or implicit, the choice of law governing the agreement must be one of the conditions which will be taken into account. Surely this is a reasonable concept or assumption for a court to make.
Finally, is it not time that if a State trading company is going to engage as a private individual it should be treated as any other private individual in the English courts? I refer now to the provision of Order 11, rule 1(f)(iii) of the Supreme Court where it is written:
"It is within the court's jurisdiction to order service abroad of a writ where a contract is by its terms or by implication to be governed by English law."
Every contract has a proper law. It is a law which the parties, either expressly or implied, have chosen to govern their contractual relationships. It would seem right that these words to which I have referred should be deleted, and either no comment is made in the Bill, or some alternative, such as I have proposed, should be considered. I beg to move.
The LORD CHANCELLOR: As the noble Baroness, Lady Elles, has said, the Amendment seeks to omit from Clause 2(2), which deals with waiver of immunity, words which provide that a term in a
1494
contract that it is to be governed by United Kingdom law are not to be regarded as a submission to United Kingdom jurisdiction. The effect of the Amendment is, I imagine, intended to be that an agreement by a foreign State that a contract is to be governed by the law of the United Kingdom is to be treated as an agreement to waive immunity from the jurisdiction of United Kingdom courts. It is doubtful whether the Amendment would have that effect. The mere omission of the words in Clause 2(2), which at present provide that such an agreement is not to be regarded as a submission, would not, I think, by itself turn such an agreement into a submission. But perhaps that point could be looked at.
But looking at it as a matter of principle, English law treats a provision in a contract that it is to be governed by English law as an implied agreement that the contract is to be adjudicated upon by English courts. However, I am advised that that rule is a peculiarity of English law which is not widely found elsewhere. There is not an equivalent rule in Scotland—and I say this in fear and trembling, in the presence of the Solicitor-General for Scotland. The assumption of jurisdiction by English courts, on the basis of such a contractual term—for instance, as the noble Baroness said, under Order 11, rule 1(1)(f) of the Rules of the Supreme Court—is apparently widely regarded abroad as an excessive assumption of jurisdiction.
The proposed Amendment, which has been moved, would go a step further and imply that an agreement that a contract is to be governed by English law is not only to be treated as an agreement to the jurisdiction of our courts but is to be treated as such by a State which would otherwise be immune from that jurisdiction. Internationally, we feel that this would be difficult to justify, more particularly since, if the Government Amendment No. 9, which is the crucial Amendment of those in my name and which I shall be moving before long, is accepted, immunity will in practice apply only to certain sovereign acts, and the waiver of immunity from jurisdiction would accordingly be inferred in relation to such a sovereign act. My submission is that where a foreign State acts in a sovereign capacity, and not in a commercial capacity, nothing less than an express waiver of its immunity from

1495
jurisdiction should be effective. I am sorry to sound so unpatriotic and unloyal in my commitment to the English view on this but we are dealing here very much with the international scene and the need for international comity.
Lord DENNING: I would join forces with the Amendment. I do not agree with the noble and learned Lord the Lord Chancellor when he says that, when an agreement is to be governed by English law, it necessarily means that the parties submit to the jurisdiction of the English courts—quite the contrary. We have had cases in which there was an agreement to be governed by English law, which would not necessarily be by arbitration in London. So I do not agree with the premise on which the noble and learned Lord makes his objection. But apart from that, it is surely sufficient just to have an agreement to submit to the English courts. That is good enough without having this qualification that it is not to be a submission; it is to be governed by English law. I see no reason whatever for this qualification. If it is, expressedly or impliedly, a submission to the jurisdiction, that should be good enough. So that I support the Amendment.
Lord WILBERFORCE: I find myself in agreement with the noble and learned Lord, Lord Denning. There is liable to be confusion on this subject, between jurisdiction and immunity. They are two quite different things. Order 11, to which the noble and learned Lord the Lord Chancellor referred, is not dealing with immunity; it is dealing with conditions by which foreigners, foreign States or individuals can be brought by service before English courts. Even when that order has been complied with, it is still possible for the person concerned to raise the question of immunity. The two questions are quite different.
Therefore, I rather agree that the last two lines of subsection (2) are inappropriate here. They are words appropriate to jurisdiction, but not to immunity. They are tied up, to a very large extent, with the bigger question of waiver and submission. If the noble and learned Lord is not able to accept the Amendment, perhaps he will, at least, be willing to say that he will take account of what has been said
1496
in his reconsideration of the waiver submission argument, which we have already had.
The LORD CHANCELLOR: Of course, I am willing to consider that. In the face of such a barrage of legal authority, who am I to refuse even to consider what is suggested? Of course, I will willingly consider it; and, indeed, it might have been very helpful if I had had a conference with noble and learned Lords, before I embarked upon these Amendments.
Baroness ELLES: Here, again, I think that it would be advisable for me to withdraw my Amendment, in order for the noble and learned Lord the Lord Chancellor to consult with his colleagues inside or outside of the Supreme Court of the House of Lords, and perhaps we can come to a conclusion on this matter at the next stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 6 not moved.]
4.17 p.m.
Lord WILBERFORCE Lord WILBERFORCE moved Amendment No. 7:
Page 2, line 16, leave out subsection (5).
The noble and learned Lord said: This is really a probing Amendment, simply because, no doubt through some frailty, I do not understand subsection (5). It relates back to subsection (3)(b), which deals with intervening or taking steps in the proceedings, which is normally treated as a submission. It then states that that does not apply if the State is in ignorance of facts entitling it to immunity. I do not understand how a State can be in ignorance of the facts. A State is entitled to immunity, in principle, under Clause 1, and then there are certain exceptions. Though, of course, one does not want anybody to be prejudiced by something of which he is reasonably not aware, I do not see how a State, an organ of a State or a Department of State can fall within this subsection. It may be that it is based upon some case of which I am unaware, or some doctrine of which I am ignorant, and I should be very grateful for enlightenment. I beg to move.
The LORD CHANCELLOR: Subsection (5) of Clause 2 provides that a State

1497
shall not be deemed to have submitted if it has taken any step in the proceedings in ignorance of facts entitling it to immunity if those facts could not reasonably have been ascertained and immunity is claimed as soon as reasonably practicable. I am advised that it is based on the second sentence in Article 3, paragraph 1, of the European Convention, which reads as follows:
"However, if the State satisfies the court that it could not have acquired knowledge of facts on which a claim to immunity can be based until after it has taken such a step, it can claim immunity based on these facts if it does so at the earliest possible moment."
As State immunity will be considerably curtailed by the new clause which is found in Amendment No. 9, the incidence of cases where this subsection is invoked will be very rare. Therefore, its importance is marginal. On the other hand, the immunity which will be at stake will almost certainly be that in respect of acts done in the exercise of sovereign authority.
Whether it is necessary to provide for this expressly in the clause is a matter which I should be very willing to consider—and, of course, to consider the Amendment that has been moved. In the absence of subsection (5), the common law would probably continue to apply and to determine what constitutes an effective submission. It may be that the existing common law is sufficient for most cases. At common law, for instance, an authorised appearance entered by an agent is not sufficient. That was the decision in the case of The Jassy. In the case of the Republic of Bolivia Exploration Syndicate Limited and Baccus—a most attractive title for litigation—v. Servicio Nacional Del Trigo, immunity was successfully claimed after an unconditional appearance. In the Baccus case, it was held that the entry of an unconditional appearance did not necessarily imply a waiver, except with the full authority of the sovereign, and in this case the entry was made by a subordinate officer who wrongly believed that he had authority to do so without consulting his superiors. The case is not conclusive, as it could be argued to be concerned with ignorance of legal rights rather than ignorance of material facts, but I am advised that it is thought to point strongly to the existence of a doctrine in our law that reasonably justifiable ignorance of relevant factors vitiates a submission.
1498
These are interesting matters and there are a number of cases. However, time is short and Spring is nearly here. I shall certainly be willing to consider the Amendment again.
Lord DENNING: May I say that I thought and have said that the Baccus case was wrongly decided. Therefore I should like to support the Amendment by saying that it is much better to leave it to the common law than to read in these matters.
Lord WILBERFORCE: My Lords, I am very grateful to the noble and learned Lord for his reply, which has been extremely full. I had not appreciated that it came from Article 3 of the Strasbourg Convention. I yield to nobody in my desire to fall in with international agreements and to be full of an international spirit. If the noble and learned Lord believes that our relations with other European States would be improved by keeping it in, even though to me it is incomprehensible and unnecsesary, I am quite willing to leave the matter there and not to press the Amendment. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.23 p.m.
Baroness ELLES Baroness ELLES moved Amendment No. 8:
Page 2, line 21, leave out from ("appeal") to end of line 22 and insert ("and to any counter-claim—

(a) which may arise where if the proceedings had been instituted against a State as a principal claim that State would not have been immune in accordance with the provisions of this Act; or

(b) which arises out of the transaction or occurrence which s the subject matter of the claim of the State").

The noble Baroness said: This Amendment seeks to widen the grounds upon which a counterclaim may be made by a defendant. The subsection is considerably narrower than the Convention which we are seeking to be able to ratify If I may quote from page 3, under Article 1(2)(b) the Convention allows a counterclaim to be made,
"if, according to the provisions of this Convention, it would not have been entitled to invoke immunity in respect of that counterclaim had separate proceedings been brought against it in those courts."

1499
The first part of the Amendment seeks to paraphrase that provision. I accept that it may need to be redrafted or reworded, but I should like the noble and learned Lord at least to consider the spirit in which the Amendment is put forward.
As the Bill now stands, it seems to me that it is not possible for a counterclaim on a separate issue to be made available. That is in line with a decision in a case which took place some years ago and which I submit is no longer relevant. Under the Crown Proceedings Act 1947, a person may, with leave of the court, avail himself under Section 35(1)(g) of a counterclaim in a very wide number of circumstances. There are no grounds for treating a foreign State any better or any worse than our own State in our own courts, in particular when the cause of action arises from an activity which could be carried out by an individual who would not in similar circumstances be prevented from seeking to bring such a counterclaim.
Paragraph (b) seeks to avert the difficulty caused by the term "the same legal relationship" in subsection (6). The words proposed follow closely those, used in paragraph 1607B of the United States Act. I should be grateful if the noble and learned Lord would consider the Amendment in that spirit and give an explanation of what is meant by the term "the same legal relationship" in subsection (6). I accept that there is another condition which is common to counterclaims in this kind of situation; namely that the relief demanded should not exceed the amount of the original claim. If the Amendment is accepted in either an amended or a reworded form, perhaps my last comment could be taken into account. I beg to move.
The LORD CHANCELLOR: The object of the Amendment appears to be to widen the classes of counterclaim to which a State is taken to have submitted by taking certain procedural steps, like instituting proceedings or intervening in them. By so doing, the State, in accordance with Clause 2(6), also submits to any counterclaim but only, as the subsection stands, if it arises out of the same legal relationship or facts as the claim. The Amendment would expose the State to any counterclaim which either (a) relates
1500
to a matter in respect of which the State is not immune from jurisdiction or (b) arises out of the transaction or occurrence which is the subject matter of the claim. That is the Amendment which is proposed.
As the noble Baroness has said, the second proposition, (b), seems to be a rephrasing of what is already contained in the subsection. However, it is in a slightly narrower form than that which is contained in the subsection, and this may well be unintended. The noble Baroness seeks not to narrow but rather to widen the subsection. However, the effect of what the noble Baroness has proposed is to narrow it. At present, the subsection covers counterclaims arising out of the same legal relationship—for example, agency or a course of trading—which would not be covered by the Amendment words "transaction or occurrence which is the subject matter of the claim".
As to paragraph (a) of the Amendment, I venture to submit that it is unnecessary. If a counterclaim relates to a matter as regards which the State enjoys no immunity from jurisdiction, then the State is clearly subjected to it, just like any other litigant. Clause 2(6) is concerned with circumstances where, in order to establish jurisdiction against a State, the plaintiff needs to rely upon the State's voluntary submission to the jurisdiction. That, I submit, cannot arise under proposal (a) where the counterclaim relates to matters in respect of which the State would not have been immune, in accordance with the provisions of the Bill. Therefore, I venture to submit, if I may do so without impertinence, that perhaps these Amendments do not quite achieve the purpose which is intended.
Baroness ELLES: I thank the noble and learned Lord for that explanation. I am not sure that the words of which I sought to find the meaning, "the same legal relationship", have been fully explained, but I will study the noble and learned Lord's words carefully. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 2, as amended, agreed to.
4.30 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 9:
After Clause 2, insert the following new clause:
Commercial transactions and contracts to be performed in United Kingdom
(".—(1) A State is not immune as respects proceedings relating to—

(a) a commercial transaction entered into by the State; or

(b) an obligation of the State which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom.

(2) This section does not apply if the parties to the dispute are States or have otherwise agreed in writing; and subsection (1)(b) above does not apply if the contract (not being a commercial transaction) was made in the territory of the State concerned and the obligation in question is governed by its administrative law.
(3) In this section "commercial transaction" means any transaction or activity (whether of a commercial, industrial, financial or other similar character) in which a State engages otherwise than in the exercise of sovereign authority and, in particular, includes—

(a) any contract for the supply of goods or services to a State irrespective of the purposes for which the goods or services are required; and

(b) any loan raised by a State irrespective of the purposes for which the borrowed money is to be applied;

but neither paragraph of subsection (1) above applies to a contract of employment between a State and an individual.")
The noble and learned Lord said: This is probably the most important Amendment that my noble and learned friend and I will move. Its purpose is to meet the very substantial criticisms that were made by the noble and learned Lords, Lord Denning and Lord Wilberforce, during the Second Reading debate in your Lordships' House on 17th January of this year. It was said that it was important in a commercial context not to give any greater immunity in our courts to foreign States or foreign States' trading agencies than is recognised by international law generally. In the Trendtex case the Court of Appeal found that in international law a State did not enjoy immunity in respect of commercial transactions. In the circumstances, the noble and learned Lords that I have mentioned thought it was a mistake to limit the cases of non-immunity to those where the jurisdictional links set out in the European Convention were satisfied. Such links, although they
1502
might be acceptable in a European context, were, it was pointed out, not acceptable on a worldwide basis.
There was some pressure to defer the Bill until your Lordships' House had given a decision in Trendtex, but I ventured then, and I take the same view now, to suggest that it is inadvisable to do so for various reasons. The Bill, for instance, does deal with a number of matters which are not likely to be dealt with in any judgment which noble and learned Lords would give in the Trendtex case; for example, the circumstances in which there should not be immunity even in noncommercial transactions—and these are dealt with in Clauses 5 to 11 of the Bill.
There is also strong pressure for early legislation because the United Kingdom is now—as was pointed out then, and I think it is so—at a distinct disadvantage compared with the United States, which has recently passed the Foreign Sovereign Immunities Act 1976. This is particularly apparent in financial and commodity markets. It has been urged on the Government that bankers and traders who deal with States want to have the assurance that any dispute will be capable of litigation in the courts. They now have that assurance in the United States, but will not have it in the United Kingdom until this Bill is passed. Meanwhile, I am advised that important business could pass from London to New York. Unless the present Bill reaches another place early after the Easter Recess the Bill is not likely to complete its course in another place, and it is difficult to see, frankly, when it could again be reintroduced. The decision in Trendtex is not expected until, at the earliest, the end of May 1978, and in any event it is not impossible—I will not put it higher than that—that the case may be settled and may never come before your Lordships' House at all.
The general effect of the Amendment, which I hope will now give noble and learned Lords, and indeed the Committee generally, more confidence in supporting the Bill, is that it substitutes a new clause for the clause removing immunity from commercial activities conducted through establishments in the United Kingdom (Clause 3) and the clause which removes it from contracts to be performed in the United Kingdom (Clause 4). The range of commercial transactions which are

1503
no longer immune is accordingly greatly widened by the removal of the requirement of an establishment in the United Kingdom and the addition of a definition, in subsection (3) of the new clause, which covers all activities not done in the exercise of sovereign authority. State loans are singled out for express inclusion in the definition in subsection (3)(b), and by implication so are supplies for the Armed Forces. Lastly, the exceptions which are presently found in Clause 3(2) and Clause 4(2) for contrary agreements of contracts between States or governed by administrative law are preserved in subsection (2) of the new clause.
So far as the detailed provisions are concerned—and I apologise for taking a little time over this important Amendment—subsection (1)(a), as your Lordships will see, provides that
"A State is not immune as respects proceedings relating to a commercial transaction entered into by the State."
That is stated boldly and clearly. The term "commercial transaction" is defined in the new subsection (3). After consultations with City and other interests, it has been decided that it would be best now to provide by Statute that a State is not immune in respect of any commercial transactions. That is the view apparently of the City. In this respect, at any rate, the new clause does accord with the majority view in the Court of Appeal in Trendtex. No qualifications, no jurisdictional links with the United Kingdom are to be required.
Subsection (1)(b) provides that,
"A State is not immune as respects proceedings relating to—an obligation of the State which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom".
This is the old Clause 4(1), which in turn reflects Article 4, paragraph 1 of the European Convention. It seems appropriate to retain the jurisdictional links here, because the paragraph will be invoked mainly in relation to contracts made in the exercise of sovereign authority, all others being also covered by paragraph (1)(a). It is not so easy to justify internationally the assumption of jurisdiction over contracts which are not to be performed here.
The jurisdiction with regard to contracts which may be exercised on other grounds
1504
under Order 11 of the Rules of the Supreme Court is considered in many foreign countries to be excessive. It is not without doubt whether we could justify the assumption of jurisdiction so widely over contracts of a sovereign nature. There will, for instance, be no immunity if the contract is to build a fighter plane or a battleship and the construction takes place in the United Kingdom. But, I submit, there would be no basis in public international law for the assumption of jurisdiction where the construction was to take place elsewhere, unless the foreign State had agreed on jurisdiction by the United Kingdom courts. Contracts not included in the exercise of sovereign authority will in the main be commercial transactions as defined in subsection (3), for which, I submit, no jurisdictional link is necessary.
Subsection (2) provides that the clause does not apply
"if the parties to the dispute are States or have otherwise agreed in writing."
This qualification appeared in the original Clause 3(2) and Clause 4(2). Subsection (3) defines what is meant by "commercial transaction". It means:
"Any transaction or activity (whether of a commercial, industrial, financial or other similar character) in which a State engages otherwise than in the exercise of sovereign authority".
As your Lordships will see, the term includes in particular:
"(a) any contract for the supply of goods or services to a State irrespective of the purposes for which the goods or services are required; and
(b) any loan raised by a State irrespective of the purposes for which the borrowed money is to be applied".
That wide definition of "commercial transaction" will mean that the clause will cover practically all the cases where a State can be said to be acting jure gestionis, that is to say, in the same manner as a private person. Subsection 3(a) and (b) are intended to remove possible doubt from the classes of transactions of common occurrence which can be argued to fall into either class—sovereign or non-sovereign—and about which, indeed, the courts of different countries have come to different conclusions.
The subsection equates all non-sovereign acts of a commercial, industrial, financial or similar character with commercial activities. It is thus the nature of the

1505
exercise of the activity which is to determine whether there should be immunity or not. It will be for the courts to decide in any particular circumstances, having regard to criteria laid down in the Bill, whether a particular transaction is "commercial" or not and thus its immunity from the jurisdiction or otherwise. That, I am advised, is similar to the approach adopted in the United States' Sovereign Immunities Act 1976, which provides that the commercial character of an activity is to be determined by its nature rather than by its purpose.
Subsection (3) also provides that neither paragraph of subsection (1) applies to a contract of employment between a State and an individual. A similar exception was found in Clause 4(1), but it is now confined to employment of individuals. Contracts of employment between a State and an individual are dealt with in Clause 5 of the Bill, and are intended to be excluded from the new clause.
I apologise for the length of that explanation, but I greatly hope that we have now, by this endeavour, met at any rate the major criticisms that were so effectively addressed to me on Second Reading. I beg to move.
4.43 p.m.
Lord DENNING: I should like to thank the noble and learned Lord the Lord Chancellor very much for this Amendment. We had many misgivings about the Bill when it was first introduced to the House. Indeed, it seemed to be on a retrograde line because 100 years ago, and right up until recently, a State could claim immunity for not only sovereign acts but also commercial acts, and in these days, when so many States engage in commercial transactions, it is very important that they should not be immune from the jurisdiction of the courts. For the past 20 or 30 years judges have been gradually working that way, not only in this country but in many others.
The clause, as it now stands, seems to me to bring our international law on this subject very much in line with the international law of so many other great countries of the world. It clears up many outstanding points, such as, what kind of contracts may be of sovereign authority—
1506
for example, the supply of boots for the Forces and so forth. All such matters have been cleared up. I very much support the Amendment and I thank the noble and learned Lord the Lord Chancellor for introducing it.
Lord WILBERFORCE: I entirely endorse what my noble and learned friend Lord Denning has said, We are very grateful to the noble and learned Lord the Lord Chancellor, and to those who help him in his Department, for the trouble they have taken to get this clause in order. I welcome it without any reservation except one which the noble and learned Lord will see reflected in my proposed Amendment No. 10. I shall discuss the matter now very briefly, because the noble and learned Lord has dealt with it by anticipation.
I still think that subsection 1(b) of the new clause is too narrowly expressed and is based upon the jurisdictional confusion to which I have already referred, because
"performed wholly or partly in the United Kingdom"
is a jurisdictional concept and not an immunity concept. I fear that the clause may leave out a certain number of obligations which fall neither within (a) nor within (b). However, the noble and learned Lord has come so very far to meet the representations we made on Second Reading that I would propose—unless other noble Lords wish to take up my Amendment—to rest satisfied with the new Clause 9 as it is, and not to gild the lily too much by pressing my Amendment No. 10 which, however unrepentantly, I think would be an improvement to the noble and learned Lord's subsection (1)(b).
4.46 p.m.
Lord O'BRIEN of LOTHBURY: I confess that I rise with some trepidation believing myself to be the only Member of this Committee totally unlearned in the law who has so far ventured to intervene in this debate or, indeed, in the debate on Second Reading. I was by chance present during the Second Reading debate and I was elevated, as no doubt everyone else was, by the erudite contributions by all the noble and learned Lords who took part in that debate. However, at the end I felt that it was pity that there was no one who had some connection with the people

1507
mainly affected by the proposed Bill who could say how they would feel about it.
After the Second Reading debate I consulted some of my friends in the City. They did not feel very happy about the Bill as then drafted, although they were very much in favour of the proposal to have an Act in due course on this subject. I understand that since that time they have been received with great courtesy by the noble and learned Lord the Lord Chancellor, and by his officers, who have listened to their representations with great sympathy and understanding. I believe that as a result of those consultations and many others, and what has been said in your Lordships' House, we now have the revised clause to the Bill.
As the noble and learned Lord the Lord Chancellor has said, I am sure that this is the most important Amendment of the draft which first appeared before us. I am glad to know that it is welcomed by noble and learned Lords because I certainly welcome it very much indeed. I should like to take up a moment of your Lordships' time by pointing out how it affects the banking institutions, in particular in the City of London.
The development of the international capital markets over the past 15 years has probably been the most striking development in the financial world in my more than 50 years in the City. Although it has produced problems for national authorities and for others, its beneficent effect, generally speaking, is every great indeed. In those markets very large sums have been raised for many borrowers of all kinds and in particular for States, for parastatal organisations and for organisations that States are prepared to guarantee. Most of the obligations are denominated in US dollars, to some substantial extent in other currencies, but only very little in sterling. So, it is business which is, in effect, carried on outside the United Kingdom, although despite the economic troubles through which this country has passed during the past 15 years, the City of London has, to a very large extent, monopolised the business. Its expertise has been quite outstanding and the banking community has been enormously enlarged by important banks coming to London to participate in the work which is done here. The only other rival is
1508
New York. One cannot say which is the greater, but it does not matter because they are two great centres.
As the noble and learned Lord the Lord Chancellor has said, these contracts which, are very large must be governed by law. I think that most of those who take part in them would prefer them to be governed by English law, which is fair, sophisticated, and administered impartially, and the practititioners of the law have great expertise. But, with the passing of the United States Sovereign Immunities Act 1976, we have undoubtedly been placed at a great disadvantage, because, whereas the position of State immunity in this country and under British law is at best a matter of great uncertainty, it is now certain in America and the American legal profession has not hesitated to point out to people wanting to enter into these very large contracts that they can secure their position with greater certainty if they make American law the law which governs them.
American banks, which play a large part in this business and which perhaps have more reason to fear their stockholders than British banks, have endorsed these feelings. So the business is already passing. Once it has passed, it is very difficult to get back. Therefore, the passage of this Bill is extremely important to the City of London. One must remember that in the future we shall have to rely more, not less, on the invisible earnings of the City of London—which, despite our other troubles, are growing—especially at a time when the difficulty of making our manufacturing products competitive in the outside world is growing because of the competition of cheaper and more productive labour in many other countries, some of them under-developed.
Therefore, I believe that this Bill is a very important Bill for the practitioners in the City of London who bring great benefits to this country. I strongly endorse what the noble and learned Lord the Lord Chancellor has said: the passing of the Bill is not only important, but its early passing is very important indeed, otherwise a great deal of business will be lost, not to return. I very much welcome the response so far in favour of the Amendments made to the Bill and thank the noble and learned Lord the Lord Chancellor again for this particular Amendment

1509
which is so important, particularly to the City. I hope that the Bill will have an easy and swift passage.
Although it is perhaps not germane to this particular Amendment, I should like to make one final point. Later on, there is a provision that the Bill should be made retrospective. I wonder whether that is wise, given the repugnance which one normally feels for the use of retrospection, and the fact that respect for British law might be harmed if this provision were included.
Lord DENNING: I should like to add a few words because my noble and learned friend Lord Wilberforce mentioned Amendment No. 10. In view of what my noble friend Lord O'Brien has just said, it would be very useful to have Amendment No. 10 which states:
"which is governed by the law of the United Kingdom".
As we have just heard, many of these transactions are, in fact, governed by the law of the United Kingdom; in their terms they often strike out
"governed by the law of the United States"
and insert
"governed by the law of the United Kingdom".
I did not know whether this would be mentioned again, but I should like to support what my noble and learned friend Lord Wilberforce said about it.
Baroness ELLES: May I join with the noble and learned Lords who have spoken in thanking the noble and learned Lord the Lord Chancellor, and particularly the members of his Office who have been extremely helpful in drafting and redrafting the Amendments to the Bill. I certainly support Amendment No. 9 as it is at present drafted.
There is only one minor point that I should like to raise and I hope that the noble and learned Lord will not consider it churlish if I mention it, considering how we have received this new Amendment. It is a point that has been mentioned to me by our friends in the City and relates to subsection (3), line 3, where there are the words:
"in which a State engages".
It has been brought to my notice that a State may intend to engage in a commercial activity, and may thereby undertake
1510
certain contractual obligations in the City—such as employing legal services, documentation and suchlike, which involve expenses—and then may possibly withdraw from the actual commercial activity because for some reason or other it decides that it is not practicable. Nevertheless, obligations of a contractual and financial kind have been involved, although the commercial activity within the definition of subsection (3) would not, I think, cover this particular situation. I am not asking the noble and learned Lord to reply immediately, but I should be most grateful if he would be good enough to write to me on this point so that I can take it up again on the next stage of the Bill.
The LORD CHANCELLOR: I am most grateful to noble Lords who have expressed gratitude to the members of my staff who, if I may say so, will feel compensated for all the arduous work that they have done at rather short notice by the observations that have fallen from the noble Lord, Lord O'Brien. I am grateful for the importance which the noble Lord, with his great expertise and wide experience not only of the City but of the rest of the world, attaches not only to this Bill becoming law, but to it becoming law as timelessly as the procedures of Parliament will permit. I hope that when the matter comes before the House on Report there will not be too many complaints if that Report stage takes place before the Easter Recess. However, that is really the motivation behind it, and I thought it right to include that little bit of prejudice in favour of speaking at this point in time.
I am most grateful for and gratified by the encouragement that the noble Lord, Lord O'Brien, has given. I certainly share the gratitude that has been expressed to those advising me. I shall certainly look carefully at the point which the noble Lord made about the later provision in the Bill which has a retrospective element, because what might be gained on the swings might well be lost on the roundabouts of lack of respect or confidence in us. I shall certainly approach that with an open mind when we come to it.
I shall look at the word "engages" once again in case it may be possible to

1511
find a more engaging word for the purposes of the situation to which the noble Baroness, Lady Elles, referred. As to Amendment No. 10, which the noble and learned Lord, Lord Wilberforce, did not seek to press, I shall certainly look at that again, particularly as it was supported by the noble and learned Lord, the Master of the Rolls.
Lord WILBERFORCE: with the noble and learned Lord's permission, may I say that he cited an example about building battleships which I thought very picturesque as I did not know that any were being built nowadays. I have some examples here about other recondite types of contract in which I am sure the noble Lord, Lord O'Brien will be interested. I do not think it right to inflict them on the House at this stage, but perhaps I may send them to the noble and learned Lord to compare with his battleships and we might see whether or not my Amendment is necessary.
On Question, Amendment agreed to.
[Amendment No. 10 not moved.]
Clause 3 [Commercial, industrial and financial activities]:
On Question, Clause 3 disagreed to.
Clause 4 [Contracts to be performed in United Kingdom]:
On Question, Clause 4 disagreed to.
Clause 5 [Contracts of employment]:
5 p.m.
Baroness ELLES Baroness ELLES moved Amendment No. 11:
Page 3, line 7, at end insert ("or where the employee was recruited in the United Kingdom and was ordinarily resident there when recruited or where the contract of employment was made in the United Kingdom.").
The noble Baroness said: As it is now worded the clause only covers contracts of employment which are wholly, or partly, performed in the United Kingdom. But there is an increasing number of cases of contracts of employment, generally made in the United Kingdom and involving British citizens, where British citizens are being recruited by reason of their special scientific or technological knowledge or administrative capability, or for any other specific reason, and are invited to undertake
1512
employment abroad and to perform their duties in another country outside the United Kingdom, and particularly, I should add, in less developed countries.
If the United Kingdom is being asked to contribute to the development of these areas of the world, and I think it is right that it should be, it is not for the United Kingdom to consider that its citizens are expendable and not be prepared to give them adequate protection when they undertake this kind of work. Diplomatic protection in these cases is not an adequate safeguard in the circumstances we are now considering.
I wonder, with the permission of your Lordships' Committee, whether I could quote briefly the kind of case I have in mind, where somebody is employed, for instance, in one of the Services and is pressed by the head of, say, Ruritania, to undertake a job at £20,000 a year, and a house to be provided with a car and all the "perks" which go with this kind of job. The officer concerned has doubts because he has to give up the chance of getting a redundancy payment and even has to lose part of his pension, but he is persuaded that the job is pressing and that the job is waiting for him. He therefore leaves the Forces, loses his right to part of a pension, and certainly his right to redundancy pay, and goes abroad to the State concerned, in this case Ruritania.
When he gets there there is no house, and he has to stay in an hotel. The Head of State refuses to see him and puts it off for about three months. At the end of the three months, during which time the officer has run up a very large bill in this, or another hotel, the officer is then told that there is no job after all because the State cannot afford that salary. The officer, therefore, obviously has no right of redress in that State because that State would not entertain such an action. But is it right that the United Kingdom should allow anybody, whether he is an officer of the Forces or whoever he may be, who is ordinarily resident in this country and recruited in this country, not to have any right of redress against that State?
This is a case where the United Kingdom should insist that a State must waive its immunity and come before United Kingdom courts to honour that particular contract, or to give adequate damages in compensation. I have quoted a particular

1513
case but, as noble Lords will know from their own experience, there are many similar cases which have arisen. We will have known personally many people who have gone out to less developed parts of the world, believing that they are contributing to the betterment of mankind and their economic development, and who find themselves in similar situations; but the only link with the United Kingdom is the fact that they have been recruited here. I beg to move this Amendment, and earnestly ask the noble and learned Lord the Lord Chancellor to consider it.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): May I answer the noble Baroness. First, I am grateful for the explanation she has given. In the course of it she has shattered one of my illusions. I always thought that Ruritania was an attractive place, and I shall have to rethink that.
At the present time, if the defendant is not in the United Kingdom, as a foreign State never could be, I am advised that English courts will assume jurisdiction over a contract if it is made in the jurisdiction, broken within the jurisdiction, or by its terms or implication governed by English law (Rules of the Supreme Court, Order 11, Rule 1(1)(f) and (g)). Scottish law is similar though not the same. The first part of the Amendment therefore covers a case where the English and Scottish courts have no jurisdiction. The fact that in a contract of employment the employee was recruited in the United Kingdom at a time when resident there does not give our courts jurisdiction over the case. It therefore seems pointless to enact that in such circumstances there is to be immunity from jurisdiction. If the noble Baroness, Lady Elles, intends that our courts should actually assume jurisdiction in such circumstances, that would appear to require a change of our general law which it would not be possible to justify. Therefore, we are not disposed to accept the Amendment in relation to that aspect of it.
As regards the second part, where the contract of employment was made in the United Kingdom, the fact that a contract (whether of employment or otherwise) was made in the United Kingdom is a ground on which United Kingdom courts will assume jurisdiction over that contract. It is not, however, a ground which is
1514
internationally recognised. The courts of most countries, at any rate outside the common law area, do not assume jurisdiction on this ground. United Kingdom judgments based on such an assumption of jurisdiction are generally not recognised abroad. Under the EEC Jurisdiction and Judgments Convention we will have to give up this basis of jurisdiction in relation to the rest of the EEC. That is not, however, a compelling reason for preserving the immunity of foreign States in relation to such proceedings. They do he against private individuals and it can be argued that foreign States should be in no better position in this respect than private individuals. Accordingly, in relation to that, I am able to say that we shall be happy to consider that aspect of the Amendment.
Baroness ELLES: I thank the noble and learned Lord for that reply, and for agreeing to consider the second aspect of my Amendment. As he will have realised, I feel very much more strongly about the first part of the Amendment. I shall study his reply carefully and see whether I can raise it again at the next stage of the Bill.
Amendment, by leave, withdrawn.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 12:
Page 3, line 17, leave out from ("for") to ("subsection") in line 18 and insert ("an office, agency or establishment maintained by the State in the United Kingdom for commercial purposes")
The noble and learned Lord said: Amendment No. 12 is consequential on the deletion of Clause 3 from the Bill. I beg to move.
On Question, Amendment agreed to.
Clause 5, as amended, agreed to.
Clause 6 [Personal injuries and damage to property]:
5.8 p.m.
Lord WILBERFORCE Lord WILBERFORCE moved Amendment No. 13:
Page 3, line 39, after ("to") insert ("or loss of")
The noble and learned Lord said: This is a very modest Amendment which almost speaks for itself. Clause 6, which I think is based on the European Convention, is in any case an unscientific

1515
section because it talks about an act or omission in the United Kingdom, whereas a great many acts or omissions are composite and sometimes occur partly inside and partly outside. I have not sought to clarify or clear that because it would involve too radical a reconstruction. I did, however, venture to suggest that one should not limit this to damage to tangible property but should extend it to loss. It is either right or wrong, but it does not need a speech in support of it. I beg to move.
The LORD CHANCELLOR: I think that this is a helpful improvement, and I am happy to accept the Amendment.
On Question, Amendment agreed to.
Clause 6, as amended, agreed to.
Clause 7 [Ownership, possession and use of property]:
5.10 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 14:
Page 4, line 15, leave out ("except in a case where the State is trustee").
The noble and learned Lord said: Clause 7(3) provides that a court is not to be prevented from exercising any jurisdiction in relation
"to the estates of deceased persons or persons of unsound mind or to insolvency, the winding up of companies or, except in a case where the State is trustee, the administration of trusts"
by the fact that the State has a claim to some interest in the property concerned. The subsection enacts the existing law in the United Kingdom. The immunity enjoyed by States is not allowed to stand in the way of the exercise of any such jurisdiction, since the court would otherwise be prevented from dealing with a property altogether and determining the rights and duties not only of the State concerned but of all other persons who have an interest in it. But there is authority to the effect that where the State itself is the trustee, proceedings cannot be brought against it in that capacity.
Article 14 of the European Convention similarly preserves the ability of courts of Contracting States to administer property of this kind, but does not contain an express exception where the foreign State
1516
is trustee. Although such cases will be rare, representations received from City solicitors indicate that there are instances where property in the United Kingdom is held by foreign States as trustees, or where the trust is expressly governed by English law. There is no sufficient reason for preserving the immunity of a foreign State in such a case and the deletion of the exception of the case where the State is trustee has the further advantage of bringing the text more completely into line with Article 14 of the Convention.
On Question, Amendment agreed to.
On Question, Whether Clause 7, as amended, shall stand part of the Bill?
Lord WILBERFORCE: Just before we dispose of this clause I cannot forbear from registering a little regret that subsection (4) is in the clause. It aims at preserving in effect the decision of this House in Dolfus Mieg v. the Bank of England, a case in which I had a certain interest at one time. I know there have been discussions about this and that representations have been made to the effect that the rule should be changed, but that the noble and learned Lord has hardened his heart against it. I simply wish to register regret that this provision is included, but I suppose it is a waste of all our time to try to bring about a change at this point.
Clause 7, as amended, agreed to.
Clauses 8 and 9 agreed to.
Clause 10 [Arbitrations]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 15:
Page 5, line 13, leave out subsection (2).
The noble and learned Lord said: This Amendment is intended to remove the immunity currently enjoyed by States from proceedings to enforce arbitration awards given against them. Clause 10(1) removes immunity from proceedings relating to arbitration where the State had submitted to the arbitration in the United Kingdom, or according to United Kingdom law, but by subsection (2) enforcement proceedings are excepted; that exception is now to be removed. If the Government Amendments to Clause 14 are accepted, the property of a State which is for the time being in use or

1517
intended for commercial purposes will become amenable to execution to satisfy an arbitration award. However, it would not be possible to proceed to such execution without first bringing enforcement proceedings to turn the award into an order of the court on which the execution could be levied, and unless the State had waived its immunity to enforcement, Clause 10(2) would prevent the necessary steps being taken. This Amendment will delete the subsection.
On Question, Amendment agreed to.
Clause 10, as amended, agreed to.
Clause 11 [Ships used for commercial purposes]:
5.15 p.m.
Lord MCCLUSKEY Lord MCCLUSKEY moved Amendments Nos. 16 to 20:
Page 5, line 22, leave out from ("respects") to ("was") in line 24 and insert—
("(a) an action in rem against a ship belonging to that State;
(b) an action in personam for enforcing a claim in connection with such a ship, if, at the time when the cause of action arose, the ship")
Page 5, line 26, leave out from ("ship") to ("both") in line 29 and insert ("belonging to a State for enforcing a claim in connection with another ship belonging to that State, subsection (2)(a) above does not apply as respects the first-mentioned ship unless, at the time when the cause of action relating to the other ship arose")
Page 5, line 31, leave out from ("respects") to ("both") in line 33 and insert—
("(a) an action in rem against a cargo belonging to that State if")
Page 5, line 35, leave out from ("purposes") to end of line 38 and insert—
("(b) an action in personam for enforcing a claim in connection with such a cargo if the ship carrying it was then in use or intended for use as aforesaid.")
Page 5, line 39, leave out ("Subject") and insert ("In the foregoing provisions references to a ship or cargo belonging to a State include references to a ship or cargo in its possession or control or in which it claims an interest; and, subject.").
The noble and learned Lord said: The drafting of Clause 11 has been particularly difficult because of the desire to achieve a number of different objectives, which objectives are not always easy to reconcile, and I will list them. First, that ships used for commercial purposes should not be immune; secondly that the provisions should be such as would enable the United Kingdom to ratify the Brussels Convention for the unification of certain
1518
rules concerning the immunity of State-owned ships, a Convention which is of unusual complexity and involved language; thirdly, that immunity should not be accorded even to State-owned ships used for non-commercial purposes where immunity could be denied in accordance with both the Brussels Convention and the European Convention; fourthly, to ensure that the working is wide enough to cover not only ships owned by States but also any interests which States might have in ships; and, fifthly, to apply these principles to actions in rem and actions in personam alike, and to apply them to cargoes in the complex circumstances stipulated in the Brussels Convention.
The drafting in Clause 11 was adopted in an attempt to satisfy thse objectives, but it is open to a number of criticisms. The Amendments do not make any changes of substance to the provision but are intended to achieve greater precision and clearer effects, and I will list these as briefly as I can: exemptions from immunity in Clause 11 should be as respects proceedings in connection with a ship or cargo and not as respects the ship or cargo itself; the consequences which flow from writs and judgments in actions in rem and in personam respectively are so different that separate treatment is needed to produce precision; subsection (2) could be interpreted to be wide enough to cover proceedings against a sister ship, in which event it overlaps with subsection (3); and there is an inelegance in Clause 11(4) where lines 31 to 32 and 36 to 37 read consecutively produce a contradiction. The Amendments, it is thought, will improve the clause in all these respects and should provide a clearer text, while still meeting the complex objectives we seek to achieve.
Baroness ELLES: I wish at the outset to raise a minor point which seems to have escaped the draftsman, though I may be wrong about it. Under Amendment No. 19 the word "or" would be left out so that provisions (a) and (b) would appear with no "or" between them. Perhaps the noble and learned Lord would look at what is obviously a minor drafting point.
The LORD CHANCELLOR: I thank the noble Baroness for raising that matter.
Baroness ELLES: The next point I wish to raise concerns the words "intended for use for commercial purposes" in subsection (3):
"ships were in use or intended for use for commercial purposes".
My argument here applies wherever those words are used. The noble and learned Lord said it had been extremely difficult to draft this clause to meet the obligations under the Brussels Convention. There seems to be a lacuna in this drafting because it appears possible for a ship to have been intended to be used as a passenger ship but it is in fact being used as a troop ship. Under the Brussels Convention if it is a troop ship it would be immune from suit, and that surely is not the intention of the Bill—to achieve the objective which it has in fact achieved. Can the noble and learned Lord look at this point, and see whether it needs redrafting, or whether there is something which I have missed, so that it means in fact what it is intended to mean.
Lord McCLUSKEY: I am grateful to the noble Baroness for her assistance in this matter. We shall certainly look at both points.
On Question, Amendments agreed to.
Clause 11, as amended, agreed to.
Clause 12 agreed to.
Clause 13 [Service of process and judgments in default of appearance]:
5.20 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 21:
Page 6, line 32, at end insert—
("( ) Subsection (1) above does not prevent the service of a writ or other document in any manner to which the State has agreed and subsections (2) and (4) above do not apply where service is effected in any such manner.").
The noble and learned Lord said: Clause 13 provides a special method for serving process on foreign States. The Amendment adds as an alternative to the method of service there set out, any other manner of service to which the State has agreed. I beg to move.
Lord WILBERFORCE: This is a very beneficial Amendment. It is undoubtedly greatly desired by those who work in this field, by solicitors, and by the City. In
1520
fact, they provide always for their own method of service, and that gets rid of all the complicated rules which apply only if they have not agreed. I very much welcome the Amendment and thank the Lord Chancellor for introducing it.
On Question, Amendment agreed to.
Clause 13, as amended, agreed to.
Clause 14 [Other procedural privileges]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 22:
Page 6, line 38, leave out subsection (1).
The noble and learned Lord said: Subsection (14)(1), as it now stands, provides that a State shall not be required to give security for costs. That was thought to be in accordance with the requirements of Article 17 of the Convention. Under the common law a foreign State may be required to furnish security for costs. In the Second Reading debate, the noble Baroness said, as reported at column 62 of the Official Report of 17th January, in relation to security of costs:
"In the European Convention, the Article dealing with this particular matter leaves the question open, and I think that the Bill should take a more robust line on this particular aspect."
I am always open to take advice on robustness from the noble Baroness, and we have therefore gone to the extremity of robustness in this Amendment by leaving the subsection out altogether. I beg to move.
Baroness ELLES: I wish to express my gratitude to the noble and learned Lord for being robust, and for the Amendment which he has proposed.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 23:
Page 7, line 1, leave out subsections (3) to (5) and insert—
("(3) Subject to subsections (4) and (5) below—

(a) relief shall not be given against a State by way of injunction or order for specific performance or for the recovery of land or other property; and

(b) the property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale;

1521
and for the purposes of paragraph (b) above funds belonging to a State's central bank or other monetary authority shall be regarded as property of the State.
(4) Subsection (3) above does not prevent the giving of any relief or the issue of any process with the written consent of the State concerned; and any such consent (which may be contained in a prior agreement) may be expressed so as to apply to a limited extent or generally; but a provision merely submitting to the jurisdiction of the courts is not to be regarded as a consent for the purposes of this subsection.
(5) Subsection (3)(b) above does not prevent the issue of any process in respect of property (not being funds belcnging to a central bank or monetary authority) which is for the time being in use or intended for use for commercial purposes; but, in a case not falling within section 11 above, this subsection applies to property of a State party to the European Convention on State Immunity only if the State has made a declaration under Article 24 of the Convention and the process is for enforcing a judgment which is final within the meaning of section 19(1)(b) below.").
The noble and learned Lord said: This another important Amendment on execution. Subsections (3) to (5) of Clause 14 prevent the issue of injunctions, orders for specific performance, orders for the recovery of property, and of any process of execution, except in proceedings relating to ships or cargoes. In all other cases, therefore, as it stands, States will remain immune from execution being levied against their property. These provisions were very strongly criticised from almost all quarters in the Second Reading debate, and so this Amendment is now moved.
In one respect the critics have suggested that the Bill goes too far. There should be a provision in the Bill that funds belonging to a State central bank, or other monetary authority, should be immune from execution, except with the State's consent. The United States Foreign Sovereign Immunities Act exempts such property from execution. The Amendment is intended to meet the criticisms made on Second Reading.
The new subsection (3) restates the general rule that injunctions and similar orders, and processes of execution, do not lie against States, and spells out especially that the funds of central State banks are to be regarded as State property, against which execution may not be levied. But this general rule of immunity is made subject to the important exceptions in subsections (4) and (5). It will be noted that subsection (3)(a) is similar to the present
1522
subsection (3), but the rest of the subsection is new. Whereas the present subsection (4) provides that no persons shall be issued for enforcing a judgment against the State, subsection (3)(b) provides that the property of a State shall not be subject to any such process. This formulation is chosen to fit all kinds of judgments, those given against the State (in actions in personam) and those given against property (like actions in rem against ships). Arbitration awards are also now expressly provided for.
Subsection (4) concerns what may nevertheless be done with the State's consent. It resembles the present Clause 14(4)(a), but goes much further, to provide that the general rule against injunctions, execution, and other process against States in subsection (3) is not to prevent the giving of any relief, or the issue of any process, with the written consent of the State concerned, and any such consent (which may be contained in the prior agreement) may be expressed so as to apply to a limited extent or generally.
Subsection (4) enables the relief or process to be given or issued with the written consent of the State concerned. It emphasises that the consent may be contained in a prior agreement. In this connection I draw attention to Amendment No. 34, to Clause 18, which provides that a reference to an agreement includes reference to an international agreement to which the State concerned is a party. It is also intended to ensure that agreements containing general waiver clauses covering consent to execution or other relief can be invoked against any claim to immunity under subsection (3).
Subsection (5) presents an important and major change in our law. It in effect permits execution against property of a State which is used, or intended for use, for commercial purposes. That was the matter which was most strongly pressed for in the earlier debate. The new subsection states that subsection (3)(b) is not to prevent
"… the issue of any process in respect of property (not being funds belonging to a central bank or monetary authority) which is for the time being in use or intended for use for commercial purposes …".
It then goes on to make special provision for the property of States which are parties to the European Convention.
The power to enforce judgments and arbitral awards against the property of a State will be very wide, wider even than that under the United States Act. I hope accordingly that this considerable change, which has again been introduced to meet the criticisms raised on an earlier occasion, will be welcome to your Lordships. I beg to move.
The DEPUTY CHAIRMAN of COMMITTEES (Earl Cathcart): The question is that this Amendment be agreed to?—
Lord WILBERFORCE: I wonder whether the noble Earl is to call my Amendments Nos. 24 and 25 at this point, or later.
Lord HAILSHAM of SAINT MARYLEBONE: I think that the correct procedure may be if the noble Earl in the Chair were now to call Amendment No. 24, because that involves omitting words from Amendment No. 23, and if Amendment No. 23 were now passed the other Amendment would fall.
The DEPUTY CHAIRMAN of COMMITTEES: I now call Amendment No. 24.
Lord WILBERFORCE Lord WILBERFORCE moved, as an Amendment to the Amendment, Amendment No. 24:
Line 13, leave out from ("process") to end of subsection (4) and insert ("where the State concerned has waived immunity in accordance with section 2(2)(b) except in accordance with the terms of the waiver.").
The noble and learned Lord said: Fortunately, I shall not have to detain the Committee for long on this matter. This relates to subsection (4) of the amended clause, and it would have the effect that that would read:
"Subsection (3) … does not prevent the giving of … relief or the issue of any process …";
and then we go to my Amendment—
"where the State concerned has waived immunity in accordance with section 2(2)(b) except in accordance with the terms of the waiver."
That, of course, was drafted on the assumption that the noble Baroness's Amendment to Clause 2 would be carried. But it has not been carried; the noble and learned Lord has agreed to reconsider this question of "waiver" versus "submission".
Therefore, I would be quite prepared to have this Amendment dealt with in the
1524
same way, although the noble and learned Lord might be able to persuade me that the existing draft of his subsection (4) is sufficient, because it does say "with the written consent of the State concerned" and that any such consent "may be contained in a prior agreement". So we may be reaching for the same objective by the use of different words; but the substance of what I am trying to do in my Amendment is to enable process to be issued in a case in which a State has waived immunity unless at the time of waiving immunity it has declared that it does not waive immunity to execution, and that is part of the general philosophy concerning waiver about which I have already spoken. I certainly attach importance to the principle of it, but I am rather in the hands of the noble and learned Lord the Lord Chancellor as to how to deal with it at this time. I beg to move.
The LORD CHANCELLOR: This Amendment attributes effects to a waiver of immunity from jurisdiction which would often go far beyond what the State intended. I question whether it is right that waiver of immunity from execution should be implied, especially since, as the new clause is drafted, it could apply only to property held for sovereign purposes. Under the new subsection (5), execution will lie against property which is for the time being in use or intended for use for commercial purposes, at least so far as States which are not parties to the European Convention are concerned.
I am advised that the effect of this Amendment would mean that execution could also take place against State property which is not in use or intended for use for commercial purposes if the State had agreed to submit to the jurisdiction of the court and had not made any express reservation with regard to execution. I think the better course for me to follow is to say that I will look at the Amendment again—I think we are after the same objective—and, if the noble and learned Lord is content that I should do that, then I shall be glad to do so; but I have certainly had no encouragement from those advising me that I should accept the Amendment.
Baroness ELLES: I should like to express my gratitude to the noble and learned Lord for the Amendment, which

1525
has gone a very long way to meet the objections to what is contained in the Bill; and, once again, I should like to express my gratitude to those in the noble and learned Lord's Department who have been so helpful in this matter. There are just two points which I should like to raise. There may be a satisfactory answer to them, but I would be glad if the noble and learned Lord would consider them. In the first place, after referring to "the property of a State" in subsection (3)(b), it goes on:
"… for the purposes of paragraph (b) above funds belonging to a State's central bank or other monetary authority shall be regarded as property of the State."
There is no mention of funds which are retained by a foreign State for diplomatic purposes; that is, for the maintenance of an embassy or for their diplomatic staff. There was, I understand, a recent case in Germany where there was some considerable difficulty over identifying funds held in a bank in the name of a State. Obviously, those funds which are held for diplomatic purposes would, by normal standards, be immune. I wondered whether the noble and learned Lord would consider whether there should be express mention in this clause, or whether it is covered later on in the Bill.
The second point I should like to raise concerns the fourth line of subsection (5) of the Amendment, where reference is made to
"in use or intended for use for commercial purposes".
There are, as the noble and learned Lord will know, and doubtless your Lordships will know, many foreign Heads of State who in fact have houses in this country for purely social purposes. They undoubtedly should be considered as being available for attachment or execution in any case which is brought against these particular individuals in a matter where immunity has been waived and where they come within the jurisdiction of the United Kingdom courts. There may be a way round this, and any Amendment need not be necessary, but I would be grateful if the noble and learned Lord would give some answer to this, either in writing or at the next stage of the Bill.
The LORD CHANCELLOR: On the question of funds held for diplomatic purposes, these are immune under the
1526
provisions of Clause 17(1) of the Bill, but I will certainly look at the other point. As I have said in relation to Amendment No. 24, which we are immediately discussing, I will certainly look at it again, and perhaps we can return to it at a later stage. I am grateful for the welcome which has been given to Amendment No. 23.
Lord WILBERFORCE: I am very grateful to the noble and learned Lord. On that understanding, I am happy to withdraw Amendment No. 24. I hope that the noble Earl in the Chair will not forget that I have Amendment No. 25 before we pass from this clause.
Amendment to the Amendment, by leave, withdrawn.
5.36 p.m.
Lord WILBERFORCE Lord WILBERFORCE moved, as an Amendment to the Amendment, Amendment No. 25:
Line 19, after ("(3)") insert ("(a)or").
The noble and learned Lord said: This Amendment looks innocuous, but it is in fact not so at all. It perhaps raises a point of some importance. It relates to the top line on page 5 of the Marshalled List of Amendments, which at the moment reads:
"Subsection (3)(b) above does not prevent the issue of any process in respect of property"
held for commercial purposes. My Amendment proposes to insert "(a)or", so that it would read:
"Subsection (3)(a) or (b) above does not prevent the issue of any process …".
That throws one back to subsection (3)(a), which says that
"relief shall not be given against a State by way of injunction,"
and goes on,
or order for specific performance …".
The essential object of my Amendment is to enable injunctions to be given against State property used for commercial purposes and not, of course, being funds belonging to a central bank or monetary authority.
My noble and learned friend Lord Denning is a much greater authority on injunctions than I am, but it clearly is a very important part of the armoury of British courts that they should be able to issue injunctions, holding in this country

1527
property of a State or of a State agency which is in use or intended for use for commercial purposes, of course in a case where jurisdiction exists and not just in a case in order to create jurisdiction. I know that there are these frightening injunctions called Mareva injunctions, which the noble and learned Lord the Master of the Rolls has been using with great skill recently, and I know that they create apprehension in some circles. But apart from that particular kind of injunction, I would suggest that it is important, if English courts are to have jurisdiction over assets used for commercial purposes and are to be able ultimately to lay hands on them at the suit of a British company, that in a suitable case, and of course subject to reservations, jurisdiction should exist to grant injunctions. That is excluded by the new subsection (5) as drafted, and the object of my Amendment is to give to the courts the power in a suitable case, which may not be very common but which may be quite important when it arises, to grant an injunction. I beg to move.
Lord DENNING: I should like to support this. As my noble and learned friend has said, we grant injunctions, and if we have jurisdiction over a State and can grant injunctions we ought to be able to enforce them. Otherwise, our order is a useless order.
Lord WILBERFORCE: Interlocutory ones, too.
Lord DENNING: Interlocutory ones we quite often grant, and usually they are obeyed, or we hope they are. But if they are not, we ought to have this power to our elbow, given us by way of execution. Therefore, I certainly support what my noble and learned friend has said. Let us have paragraph (a) in as well as paragraph (b).
Lord McCLUSKEY: If I may answer on this particular matter, I think it will be well understood by noble and learned Lords, and indeed others, that remedies of a personal nature like injunctions or orders for specific performance are not appropriate against States. The ultimate sanction for such orders lies in contempt. Clearly the processes for punishing contempt cannot be used against a foreign
1528
State. As we know, such remedies are not available in proceedings against the Crown and are no more appropriate against a foreign State. However, having regard to what has been said about Mareva injunctions, I think the appropriate course here is to reconsider this particular matter and I would ask the noble and learned Lord, Lord Wilberforce, not to press the matter at this time and to withdraw his Amendment so that it may be reconsidered in the light of what he has said.
Lord WILBERFORCE: I am grateful to the noble and learned Lord for what he has said. I would venture to point out that subsection (5) is drafted in a very circumspect way:
"the issue of any process in respect of property";
and that what very often would be possible would be to grant an injunction against someone holding an asset without an order directly against a sovereign State. As well as sovereign States, there is also the case of State agencies or State trading bodies which, although they have immunity under this Convention and under general law, are not themselves States and therefore one has not got the prospect of dragging an ambassador from his coach or arresting a crowned head. This is a most important matter and I should be grateful if the noble and learned Lord were to reconsider it. I beg leave to withdraw the Amendment at this stage, on that understanding.
Amendment to the Amendment, by leave, withdrawn.
On Question, Amendment agreed to.
5.43 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 26:
Page 7, line 20, leave out from ("that") to ("purposes") in line 21 and insert ("any property is not in use or intended for use by or on behalf of the State for commercial").
The noble and learned Lord said: This Amendment is consequential upon the provision in the new subsection (5) that execution is to be permitted against the property of a State used, or intended for use, for commercial purposes. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 27:
Page 7, line 24, leave out subsection (7) and insert—
("( ) In the application of this section to Scotland—

(a) the reference to "injunction" shall be construed as a reference to "interdict";

(b) for paragraph (b) of subsection (3) above there shall be substituted the following paragraph—
"(b) the property of a State shall not be subject to any diligence for enforcing a judgment or order of a court or a decree arbitral or, in an action in rem, to arrestment or sale."; and

(c) any reference to "process" shall be construed as a reference to "diligence" and any reference to "the issue of any process" as a reference to "the doing of diligence".").

The noble and learned Lord said: The purpose of this Amendment is to adapt certain expressions used in Clause 14 into terms appropriate for Scotland. It replaces the existing provision in Clause 14(7) which has been rendered inappropriate in view of the other Amendments made to Clause 14. I will not at this late hour venture into the mysteries of multiplepoinding or other such terms. I beg to move.
On Question, Amendment agreed to.
Clause 14, as amended, agreed to.
Clause 15 [States entitled to immunities and privileges]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 28:
Page 7, line 39, leave out ("under the law of that State").
The noble and learned Lord said: It may be convenient to consider with this Amendment, Amendment No 29; and I am delighted to find that I am in harness with the noble Baroness in proposing these two Amendments. Obviously, I am in robust company. Clause 15(1) provides inter alia that references to a State are not to include references to any entity
"which under the law of that State is distinct from the State and capable of suing or being sued".
Consequently, the immunity which States will continue to enjoy as a result of Clause 1 will not be enjoyed by such entities (which are called "separate entities").
The definition is important because many trading, industrial or financial activities carried out on behalf of States are done by entities of this kind, so that the wider the definition, the less scope remains for States invoking immunity. The present wording has been rightly criticised as leaving too much scope for State agencies being identified with the State and not treated as separate entities. The Amendments do, and are intended to, widen the definition. I beg to move.
Lord DENNING: I should like to say how much I welcome this Amendment. We have had in many cases the lawyers of a foreign State or the ambassador or someone else saying: "This is not a separate organ of the State; it is part of the State itself", and so forth. There is more than one case in which the lawyers or the ambassadors or others have endeavoured to get immunity on that ground. I very much welcome this Amendment; it is a great improvement to the law.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 29:
Page 7, line 39, after ("from") insert ("the executive organs of the government of").
On Question, Amendment agreed to.
Clause 15, as amended, agreed to.
Clause 16 [Restriction and extension of immunities and privileges]:
Baroness ELLES Baroness ELLES moved Amendment No. 30:
Page 8, line 26, after ("appropriate") insert—
("(2) No recommendation shall be made to Her Majesty in Council to make an order under this section unless a draft thereof has been laid before Parliament and approved by resolutions of each House of Parliament.").
The noble Baroness said: The purpose of this Amendment is clear. It is intended that any change in the law with regard to the scope of a restriction or extension of immunity should be by affirmative Resolution of both Houses of Parliament. It is clear that the lengthy discussions in this House now and those that undoubtedly will take place in another place, and the decisions in the courts as to the immunity from suit, would be overridden by the Executive if this Amendment were not accepted—and without any check or control or even debate.
It has been suggested already by the noble Lord, Lord O'Brien, that any changes in the law should not be retrospective so as to affect existing agreements and arrangements. If there is any change in the law by an Order in Council, this House and another place should have the possibility of debating such changes, thereby ensuring that if that is the will of Parliament these changes should not be made retrospective. I beg to move.
The LORD CHANCELLOR: The Amendment proposes that an Affirmiative Resolution should be required if it was sought to restrict or extend immunities and privileges. The difficulty really is that Parliamentary procedures, especially Affirmative Resolution procedures, do impose delays; and there could be circumstances of urgency and speed could be important; for example, where, under Clause 16(a), it is intended to withdraw immunity in retaliation for a denial of immunity to the United Kingdom by the State in question, and proceedings against that State in a United Kingdom court are imminent.
The Affirmative Resolution procedure is one which takes a great deal of time. Perhaps, if noble Lords think that the Order in Council procedure would not suffice, we might compromise by providing for Negative Resolution or annulment procedure which reduces the pressure on Parliamentary time and might provide that saving consideration of any matter of importance by Parliament itself.
Baroness ELLES: I thank the noble and learned Lord for his remarks. I should be happy to accept the Negative Resolution so long as there is some form of Resolution which comes before Parliament. In the light of what has been said, and the considerations of time which may indeed be of the essence, I should be happy to accept the Negative Resolution procedure.
The LORD CHANCELLOR: May I give further consideration to that, if the noble Baroness will withdraw it at this stage?
Baroness ELLES: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
1532
Clause 16 agreed to.
Clause 17 [Excluded matters]:
5.52 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 31:
Page 8, line 38, leave out from ("mission") to end of line 39.
The noble and learned Lord said: This Amendment is purely consequential upon the deletion of subsection (3) of Clause 21 which is proposed by Amendment No. 40. I will in due course come to that. I have to speak to it at some time and it might be appropriate to deal with it in connection with the present Amendment.
The deletion of subsection (3) removes an unnecessary express provision on the treatment to be accorded to the principal residence in the United Kingdom of a Head of State and to certain other real property he may own here. The present subsection (3) is intended to accord to a foreign Head of State the same protection in respect of his principal residence in the United Kingdom as is enjoyed by an ambassador. It does so by adapting relevant provisions of the Schedule to the Diplomatic Privileges Act 1964 and applying them to a residence of a foreign Head of State in the United Kingdom and other real property owned by him in the United Kingdom as if they were premises of diplomatic missions or used for official State purposes.
On further reflection, it appears unnecessary to make such specific provision. The general provision in the amended Clause 21(1) applying to Heads of State immunities and privileges enjoyed by ambassadors seems adequate for the purpose. The "principal residence" of a head of State will only ever be temporarily in the United Kingdom and always in such cases he will be here officially. In these cases the Head of State will have the immunities and privileges conferred by Part I of the Act by virtue of subsection (1)(a) of Clause 15.
Any other residence in which he is actually living when visiting the United Kingdom privately will be entitled to inviolability under Article 30 of the Vienna Convention. As regards immunity from suit, he will be immune in regard to embassy premises, should these be held

1533
by him privately (which seems very unlikely), and his private holdings would be governed by the provisions of Article 31(1), which seems to produce a satisfactory result. He will not enjoy any immunity from jurisdiction in real actions relating to private premises.
We may come back to these matters on Amendment No. 40, but I thought it right, in dealing with the consequential provision, to explain that part of Amendment No. 40 at this stage. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 32:
Line 41, leave out ("the armed forces of a State") and insert ("anything done by or in relation to the armed forces of a State while present in the United Kingdom").
The noble and learned Lord said: Clause 17(2) provides that the Bill is not to apply to proceedings relating to the armed forces of a State. It is intended to relate to the activities of forces stationed in the United Kingdom and their supplies, but it could be read to cover also any purchases made here for a foreign State's forces elsewhere. That is not what is intended or is required by the relevant Article of the European Convention (Article 31).
The Amendments will remove only things done by or in relation to Armed Forces in the United Kingdom from the operation of the Bill, so that purchases made by a State for the use of its armed forces elsewhere (whether of supplies or military equipment) will fall under Part I and enjoy no immunity. For instance, subsection 3(a) of the new clause inserted after Clause 2 will apply to such transactions. I beg to move.
On Question, Amendment agreed to.
Clause 17, as amended, agreed to.
Clause 18 [Interpretation of Part I]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 33:
Page 9, line 10, at end insert—
(""commercial purposes" means purposes of such transactions or activities as are mentioned in section (Commercial transactions and contracts to be performed in the United Kingdom)(3) above;").
The noble and learned Lord said: This is a new provision which is in part consequential on the adoption of the new clause after Clause 2 and links the term "commercial purposes" with the definition of "commercial transaction" in the new clause. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 34:
Page 9, line 11, at end insert—
("( ) In sections 2(2) and 14(4) above references to an agreement include references to an international agreement to which the State concerned is a party.").
The noble and learned Lord said: This Amendment was dealt with in part in relation with Amendment No. 24. I then explained why the words "or by an international agreement" were omitted from Clause 2, page 2, line 3, and the desirability of having a separate clause providing that references to an agreement include references to an international agreement.
Under the proposed new Clause 14(4), relief by way of injunction or order for specific performance or for the recovery of land or other property and the issue of process for the enforcement of a judgment or arbitration award may be given with the written consent of the State concerned and any such consent (which may be contained in a prior agreement) may be expressed so as to apply to a limited extent or generally. It is thought that such a prior agreement should include an international agreement which a State has entered into with another State or international organisation. This explains the reference to Clause 14(4) in the proposed new clause.
I am advised that, if a definition of an international agreement is sought, an international agreement is an agreement between two or more subjects of public international law which is governed by public international law and which creates rights and obligations under public international law. As a matter of general acceptance in international relations, an international agreement is one made between parties which are the subjects of public international law. I have no doubt that the noble and learned Lord could devise a more satisfactory definition

1535
than that, but I hope that that may explain what we have in mind. I beg to move.
Lord WILBERFORCE: I am grateful to the noble and learned Lord who has honoured his promise give on the earlier clause to give an explanation of this rather mysterious expression "international agreement". I understood the words to mean an agreement between two subjects of international law, which means either States or some body having its existence under international law. Therefore it would not, as I understand it, include agreements between a State and, say, a British company or individual. If that is so, I begin to have some doubts about it, particularly as it applies in either Clause 2(2) or in Clause 14, I think that this probably requires some thinking out. I shall have to reserve my position on this. It may be too narrow in its scope if it is confined to agreements between subjects of international law, which in effect means States.
The LORD CHANCELLOR: As I am advised, as a result of more recent developments of international law, international organisations set up by States could also have the capacity to enter into international treaties and could therefore be included in the conception of being parties to an international agreement. I do not know whether that helps matters; but, if the noble and learned Lord is not happy about this, I am willing to revert to it again at Report stage.
Lord WILBERFORCE: I am very grateful to the noble and learned Lord.
Baroness ELLES: I wonder whether the noble and learned Lord will allow me to complicate matters a little further. May I ask whether these international agreements are only those which are registrable under Article 102 of the UN Charter? Would it in fact cover other international agreements? As this would also be relevant, will the noble and learned Lord, when he is giving a further explanation on this, include consideration of that in his answer?
The LORD CHANCELLOR: In the circumstances, I beg leave to withdraw this Amendment so that we can return to the point at a later stage.
Amendment by leave, withdrawn.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 35:
Line 12, leave out ("3") and insert ("(Commercial transactions and contracts to be performed in the United Kingdom)").
The noble and learned Lord said: This is consequential upon the introduction of the new clause after Clause 2 and the deletion of Clause 3. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 36:
Line 16, leave out ("4(1), 5(1) and 6") and insert ("(Commercial transactions and contracts to be performed in the United Kingdom)(1), 5(1), 6 and 17(2)").
The noble and learned Lord said: This again is consequential on the insertion of the new clause after Clause 2. I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 37:
Line 19, at end insert—
("(4) In relation to Scotland in this Part of this Act "action in rem" means such an action only in relation to Admiralty proceedings.").
The noble and learned Lord said: This is a drafting Amendment to clarify the meaning of the words "action in rem" as regards Scotland. In Scotland, the term is used to designate Admiralty actions, but it is also used to designate certain actions related to ownership of other property, and in particular the action of multiplepoinding—which I hope the Hansard reporter can spell—to determine between competing claims to movable property. In the context of Part 1 of this Bill, the term "action in rem" always means an Admiralty action in rem, and the Amendment makes this meaning clear so far as Scotland is concerned. I beg to move.
On Question, Amendment agreed to.
Clause 18, as amended, agreed to.
Clauses 19 and 20 agreed to.
Clause 21 [Visiting heads of State].
6.4 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 38:
Page 11, line 16, leave out from ("State") to end of line 18.
The noble and learned Lord said: I should like to speak to Amendments Nos. 38 and 39 together. Clause 21 is intended to lay down in statutory form the immunities and privileges enjoyed by foreign heads of State in their private capacities, their families and their households. The position of such heads is governed by customary international law which is not yet embodied in any international convention. The law lacks the precision which is now given to the law concerning practically all other persons who enjoy international immunities and privileges, namely diplomats, consular officers and persons on diplomatic missions, by international Conventions and United Kingdom legislation giving effect to them.
This clause takes the immunities and privileges of heads of State on the analogy of the immunities and privileges of heads of diplomatic missions, which are already covered by legislation in the Diplomatic Privileges Act 1964, and so can readily be attracted. Problems about the position of heads of State rarely arise except when they visit the United Kingdom, and the analogy of the head of a diplomatic mission in the United Kingdom fits naturally for a visiting head of State. The clause has therefore been drafted for such visitors only. However, this method of legislating leaves an unsatisfactory doubt about the position of heads of State who are not in the United Kingdom, which cannot be left unresolved. It could be argued that, with visitors covered, others have no immunity at all. In any event, the uncertainties of the customary international law would remain in respect of property owned here by foreign heads of State or services supplied to them or their families while the head of State is not in the United Kingdom.
These Amendments therefore will ensure that heads of State and members of their families forming part of their households will, irrespective of presence in or absence from the United Kingdom, be treated as regards immunities and privileges like the heads of diplomatic missions and members of their families. I. beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 39:
Line 20, leave out from beginning to (" and")
The noble and learned Lord said: I beg to move.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 40:
Page 11, line 29, leave out subsection (3) and insert—
(" ( ) Subject to any direction to the contrary by the Secretary of State, a person on whom immunities and privileges are conferred by virtue of subsection (1) above shall be entitled to the exemption conferred by section 8(3) of the Immigration Act 1971.
( ) Except as respects value added tax and duties of customs or excise, this section does not affect any question whether a person is exempt from, or immune as respects proceedings relating to, taxation.")
The noble and learned Lord said: Your Lordships will recall that I spoke to the reasons lying behind this Amendment just a moment ago. I therefore beg to move this Amendment formally.
On Question, Amendment agreed to.
Clause 21, as amended, agreed to.
Clause 22 [Evidence by certificate]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 41:
Page 12, line 16, after ("Immunity") insert (", whether it has made a declaration under Article 24 of that Convention").
The noble and learned Lord said: This is a new provision consequential on the introduction of new clause 14(5), providing for the exclusion of property in use or intended for use for commercial purposes, belonging to a State which is a party to the European Convention only if that State has made a declaration under Article 24 of the Convention. The Secretary of State will be able to give a certificate, which will provide conclusive evidence that such a declaration has been made by a specified foreign State. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 42:
Line 20, after (" 13 ") insert (" (1) or (5) ").
The noble and learned Lord said: Amendment No. 42 is consequential on the

1539
Amendment to Clause 13, page 6, line 32. The Secretary of State can issue conclusive certificates to determine whether and, if so, when a document has been served or received where it has been transmitted through the Foreign and Commonwealth Office to the foreign Ministry of Foreign Affairs. He cannot issue such a certificate in respect of service effected under the agreed method of service which has now been added as an alternative method by the new subsection of Clause 13. I beg to move.
On Question, Amendment agreed to.
Clause 22, as amended, agreed to.
Clause 23 agreed to.
Clause 24 [Short title, repeals, commencement and extent]:
Baroness ELLES Baroness ELLES moved Amendment No. 43:
Page 13, line 10, leave out (" 16th May 1972 ") and insert (" the coming into force of this Act; ").
The noble Baroness said: As has already been stated by the noble Lord, Lord O'Brien, there is considerable anxiety in the City, and particularly among financial and commercial institutions dealing with foreign States and the State trading companies of foreign States. The relationship is based very largely on trust and in the belief that in the United Kingdom we have a fair legal system. A change in the law of the United Kingdom, such as will obviously be the outcome of this Bill, may modify or even extinguish existing contractual obligations. It will certainly affect them in a major way and it would seem quite unprincipled that the United Kingdom should be seen to be acting in such a way as to bring in retrospective legislation which would alter the terms and conditions of existing agreements.
In the Convention itself, in Article 35(3), the date of 16th May 1972 is the earliest date at which the Bill could take effect, but there is nothing in the Convention that I can find which makes that an obligatory date. Therefore, I should like to suggest that the noble and learned Lord should consider my Amendment so that the Bill would not apply not only to proceedings instituted before the coming into force of the Convention but also to
1540
proceedings in respect of matters that occurred before the coming into force of this Act. I beg to move.
The LORD CHANCELLOR: In view of the anxiety expressed by the noble Lord, Lord O'Brien—and the matter has now been underlined by the noble Baroness—I am certainly very willing to give further consideration to this matter if the noble Baroness will withdraw the Amendment.
Baroness ELLES: On the undertaking from the noble and learned Lord, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn. Clause 24 agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 44:
In the Title, line 7, leave out (" visiting ").
The noble and learned Lord said: This Amendment is consequential on Government Amendments to Clause 21. That Clause, as amended, now makes provision for immunity of heads of State irrespective of whether or not they are visiting the United Kingdom. Therefore, the adjective "visiting" has to be deleted before "heads of State". I beg to move.
On Question, Amendment agreed to.
House resumed: Bill reported with the Amendments.

SHIPBUILDING (REDUNDANCY PAYMENTS) BILL
6.11 p.m.
Report received.
Clause 1 [Payments to redundant workers in the shipbuilding industry]:
Lord McCLUSKEY Lord McCLUSKEY had given notice of his intention to move Amendment No. 1:
Page 1, line 22, leave out from (" Shipbuilders ") to second (" and ") on page 2, line 11.
The noble and learned Lord said: My Lords, the Amendments in my name on the Order Paper fall into two groups.

1541
Nos. 1, 2, 4, 6, 7, 9, 10 and 11 all raise matters which the House discussed at the Committee Stage. There have been discussions about these Amendments in the course of the day through the usual channels, and I understand that it is agreed, certainly, with the noble Lord, Lord Campbell of Croy, that it would be for the convenience of the House if we did not discuss this group today. Accordingly, I shall not be moving them. The other group of Amendments—Nos. 3, 5, and 8—deal with a quite separate issue of a relatively technical character and I understand that there is no difficulty about our discussing this group today. Accordingly, with that explanation, Amendment No. 1 is not moved.
[Amendment No. 2 not moved.]
Clause 2 [Supplementary provisions relating to schemes]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 3:
Page 3, line 9, leave out subsection (2).
The noble and learned Lord said: My Lords, with Amendment No. 3 I should like to consider Amendments Nos. 5 and 8. These Amendments are of a minor and technical character and are for the purpose of clearing up doubt about the powers of the Secretary of State to make a provision in the scheme which he has already announced his intention to make. Noble Lords will recall that the Government published an outline of the scheme which it intends to make under the Bill. It was published in a Written Answer in another place on 7th February. As I think your Lordships will know, you will find it in the Commons Hansard of that date, in columns 475 to 478. That outline included a provision (paragraph 11) reading—
"Re-employment of a beneficiary under the scheme by a relevant company would be conditional upon the refund by the employee of a proportion of any lump sum payment calculated in proportion to the length of time for which the employee has been redundant".
The method of calculating the amount to be repaid is a little complex, but the purpose the Government have in mind is quite clear. As the House knows, the Bill is intended to alleviate hardship for those who lose their jobs because of the crisis in demand for large ocean-going ships. Given the nature of the crisis, it
1542
is to be expected that once a shipbuilding worker has become redundant there will be no opportunity for him to return to the industry in the foreseeable future. Nevertheless, it is not inconceivable that the occasional individual may return to another job in his trade with another company coming within the terms of the Bill, and that within a short time. If this were, exceptionally, to happen it would obviously be absurd for him to retain the whole of the sum of public money—in some cases quite a large sum—which was paid in recognition of the permanent loss of his job.
We do not expect this to happen except in the rarest of cases but I am sure that noble Lords will agree that it is right for the Government to provide against this contingency by requiring that an appropriate portion of the redundancy payment be repaid in such circumstances. That is the object of the provision to which I have referred.
As already indicated, it is the Government's intention to include an appropriate article in the order making the scheme under the Bill. However, I am advised that there is serious doubt whether this could effectively be done in the order without some specific enabling power in the Bill itself. The proposed Amendment, which would add a new subsection (7)(a) to Clause 2 of the Bill, is intended to clear up that doubt. That is the Amendment No. 5.
The other two related Amendments are consequential upon the main Amendment. Their purpose is to define the word "prescribed"—that is prescribed in the order making the scheme wherever it occurs in Clause 2, amended as proposed. At this stage I beg to move Amendment No. 3.
Lord CAMPBELL of CROY: My Lords, I shall start by expressing gratitude to the noble and learned Lord, Lord McCluskey, and also to other noble Lords on the Government Front Bench, for having agreed not to move today the group of Amendments to which the noble and learned Lord referred. I shall say no more than that, no doubt because of printing difficulties, we heard about these only yesterday afternoon and many of my noble friends did not know about them until late today.

1543
The three Amendments Nos. 3, 5 and 8 to which the noble and learned Lord has addressed his remarks are straightforward and not controversial and I can tell my noble friends that I think they are necessary and will be a good addition to the Bill. I therefore commend them to your Lordships' House.
Viscount SIMON: My Lords, I thank the noble and learned Lord and his colleagues for the action they have taken. My noble friends would also be very happy with the three Amendments which he is proposing to press upon us.
On Question, Amendment agreed to.
[Amendment No. 4 not moved.]
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 5:
Line 34, at end insert—
(" (7A) A scheme under this Act may provide that where any person—

(a) is made redundant by a relevant company;

(b) receives payments under the scheme; and

(c) is subsequently re-employed by a relevant company within such period, begitnning with the date of his redundancy, as may be prescribed,

that person shall be required to make such repayment of the sums paid to him under the scheme as may be prescribed and to such person as may be prescribed.")
On Question, Amendment agreed to.
[Amendments Nos. 6 and 7 not moved.]
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 8:
Page 4, line 19, at end insert—
("(11) In this section "prescribed", in relation to a scheme under this Act, means prescribed by the scheme in question.")
The noble and learned Lord said: My Lords, I have already spoken to this with previous Amendments. I beg to move.
On Question, Amendment agreed to.
Clause 3 [Financial Provisions]:
[Amendments Nos. 9 to 11 not moved].

IMPORT OF LIVE FISH (SCOTLAND) BILL [H.L.]
6.20 p.m.
Viscount THURSO: My Lords, I beg to move that this Bill be now read a second time. This Bill is exactly the same Bill as that which came before your Lordships, was amended by your Lordships, and was subsequently passed by your Lordships last year, in the last Session of Parliament. It found favour with your Lordships, but unfortunately failed in another place. But I think that the principle which it sought to establish, and the powers which it sought to give to the Secretary of State for Scotland, found favour with the Secretary of State and his Department.
I therefore waited a while to see whether the Government would, in fact, bring forward similar legislation, which I have no doubt the noble Lord, Lord Kirkhill, will tell us was at one time their intention. Unfortunately, however, it does not seem that this legislation is coming forward and, in the circumstances, if the powers are to be given in time to the Secretary of State for Scotland, it seemed to me necessary to move again a Bill similar to the one which your Lordships considered before. That is the one which your Lordships now have before you, and which I ask your Lordships to read a second time.
It is only fair to mention that, when this Bill comes to the Committee stage, I may well seek to make Amendments to it. Obviously, one of the reasons why a Private Member's Bill of this kind can fail, is that it imposes the necessity upon the Government to provide money to carry it out, and I am advised that, if this Bill has a compensation clause still in it, it will be necessary to provide money for compensation and expenses, if claimed. On the other hand, my advice is also that, if the compensation clause and the expenses clause are taken out of the Bill, it will then not require money and it might be possible for this Bill to go to another place and to succeed. I put it no higher than that. In the meantime, however, I urge upon your Lordships all the arguments which I adduced last time towards this Bill—the necessity of it in order to protect our stocks of native fish, and in order to give powers to the

1545
Secretary of State to make orders to protect our stocks of native fish. I commend the Bill to your Lordships. My Lords, I beg to move.
Moved, That the Bill be now read 2a—(Viscount Thurso.)
6.23 p.m.
Lord CAMPBELL of CROY: My Lords, I congratulate the noble Viscount, Lord Thurso, on introducing his Bill again in this Session. We discussed it through various stages in your Lordships' House in the last Session, and considerable amendment was made to the first version. I am glad that one or two of the suggestions that I made on Second Reading were, in fact, incorporated in Amendments. But one of the strange things that happened was that the Bill expanded from less than a page to about four pages during the course of being amended. I understand that most of the additional material was provided on the suggestion of the Government, because they thought that more provisions were necessary to produce a scheme which would be comprehensive.
The noble Viscount has explained, both on those occasions and again, briefly, today, that the Bill will provide safeguards against any ill consequences to indigenous fish from the imports of strange fish—sometimes known as exotic fish—from abroad, which are not natives of the British Isles. In particular, the Coho salmon has been imported, and many were worried that it might have an ill effect up on our own native salmon, which would have very serious consequences for Scotland. As I pointed out in the debates in the last Session, the salmon rivers in Scotland provide, through the rating system, a great deal towards local finance. Therefore, if visitors from abroad come and pay a great deal for fishing on prolific salmon rivers in Scotland, they are paying money which goes almost directly into the coffers of local government.
I must declare an interest, as I have in the past, that I own some fishing on the river that flows past my own house. I may say that it is not a pecuniary interest, from an income point of view, because I have a system of fishing permits for local people and bona fide visiting fishermen, and the fishing is free. Indeed, I have to pay rates to the local council, which are
1546
based upon the average catch of salmon during the previous five years, so that it is far from being a pecuniary interest. But I have an interest in the preservation of salmon.
I shall not repeat what was said about this Bill in the last Session by other noble Lords, and what I said. I would just put one question, which is really for the Government and not for the noble Viscount who has introduced the Bill, because he has given the necessary explanations in the past. This Bill cannot succeed in this Session of Parliament, unless it gets a successful passage through another place. But it is unlikely to get any time in another place, because it is very difficult even for Members of another place to get time for a Private Member's Bill, unless they are successful in the annual ballot and are in the first eight. Therefore, I must ask the Government whether they support this Bill sufficiently to be able to provide some time in another place.
Secondly, if the other place allowed the Bill to go through on the "nod", as it were—that is, without debate at all, which could be possible if nobody objected to its going through without debate at, for example, four o'clock on a Friday—does the Government's support of it extend to the financial part? I ask that question, because the Bill calls for some impositions on the public purse, and, therefore, only the Government can provide the necessary support in the form of a Money Resolution, if it is to pass through another place.
6.28 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): My Lords, I should like to congratulate the noble Viscount on the presentation of his views in moving the Second Reading of his Bill on this subject for a second time. When the noble Viscount introduced his Bill last year, the Government pledged support for the aim of the Bill—to provide powers to control the introduction of species of fish which could harm stock already established in this country, either native or well-established immigrants. That Bill fell in the other place, as we know.
There is no need to repeat all that was said in your Lordships' House last year, during the passage of the Bill. I should

1547
only like to note that, although such powers have existed for mammals since 1932, when the Destructive Imported Animals Act was introduced, no such powers exist for fish, except in relation to disease. The import of a consignment of eggs of Coho salmon in 1976 brought the issue to public notice. We need not go into detail about the pros and cons that were discussed. I only wish to emphasise the need to keep an open mind, when it comes to considering the case for and against the entry of any particular species. As I said at the time, any legislation aimed at controls of this type must be framed in a way which provides for a balanced judgment being taken.
Care must be taken not to create a situation which is prejudicial to sensible and valuable introductions. Powers such as the noble Lord's Bill provides could have been invoked, had they existed, to prevent the introduction, for example, of rainbow trout—a fish which has proved of great value to us both in the table market and for sporting purposes.
The current progress of the import of Coho which was allowed under a conditional licence issued by my Department under the Diseases of Fish Act is that the fish hatched from the imported eggs have since been held in absolute quarantine. The effluent is sterilised in order to ensure that no live fish or diseased organisms can escape to the outside environment. They are regularly monitored by my Department and to date no trace of disease has been found. The fish have made growth and it is possible that some may mature for spawning towards the end of this year. No broodstock will survive after spawning, but if by then they are found to have remained clear of disease there would be no powers in the existing legislation on disease to control the progeny of the stock. That, of course, is the problem.
Our scientific advice is that the possibility of damage to our native salmonid stocks, especially salmon, should Coho be brought into use in this country for fish farming purposes, cannot be regarded as negligible. This should not be interpreted as meaning that damage would definitely occur, but simply that the possibility of its occurring cannot be ruled out. It is not possible to say how great is the risk as it is governed by the scale of
1548
importations and by a number of practical and biological factors, the combined effects of which cannot be quantified from scientific information at present available; neither does this establish an undeniable case for an all-out ban on future importations of Coho.
But whatever the strength or weakness of the case against Coho salmon in 1978, the need for control of entry of—to use the phrase of the noble Lord, Lord Campbell of Croy—exotic species of all kinds is undeniable. The Government acknowledge the need to have control powers, and I reaffirm the Government's support for the principle underlying the noble Lord's Bill. There are, however, pressing Parliamentary commitments in another place and I can give no undertaking about the Bill's passage in that place.
Regarding the query raised by the noble Lord, Lord Campbell of Croy, as to whether or not the Government will undertake to move a Money Resolution in the other place, again I have to emphasise that the Government are not in a position tonight to give an undertaking as to the passage of the Bill. However, I shall report the points which have been raised this evening to my right honourable friend the Secretary of State for Scotland.
Viscount THURSO: My Lords, may I thank the noble Lord, Lord Campbell of Croy, and the noble Lord, Lord Kirkhill, for joining in this debate and for their kind words about the Bill. I realise that there are doubts as to the passage of the Bill, but I do not think that they should deter us from giving it a Second Reading. Accordingly, I beg to move.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

THE UNITED NATIONS UNIVERSITY
6.34 p.m.
Lord BEAUMONT of WHITLEY Lord BEAUMONT of WHITLEY rose to ask Her Majesty's Government what support, financial and otherwise, they propose giving to the United Nations University. The noble Lord said: My Lords, the idea of a United Nations University was first mooted by Dr. U Thant

1549
in 1969, and in 1973 it received its Charter. This makes it a very young infant in the United Nations field. Since then the University has progressed quite fast, and thanks to very generous help indeed from the Japanese Government a headquarters has been set up in Tokyo. I say "a headquarters" because it is not the kind of university which has a campus. The whole of the globe is its campus.
The University has as its object the harnessing of scholarship to global problems in order to fill a gap which I think it is necessary to fill and in order to link up the work which is being done on global problems in different parts of the world. Its projects are concerned with identifying these problems, and for these projects it has advisers all over the world. It attempts to fill the gaps in the knowledge that we have of the various problems of the world, in particular of the underdeveloped world, and it stimulates research in developing countries. To that extent it may be considered to be a kind of reverse brain-drain that enables academic research to be continued in places from which it might otherwise be attracted away.
The University disseminates its results in two ways. First, it disseminates them through the academic world. It keeps people who are working in the same field, and also those in different and complex fields, in touch with each other so that they know what is going on. Possibly even more usefully, the University exists to pass on in a usable form the information which it obtains from its research to people who can use it for the good of developing countries and for solving problems thoughout the world. Above all, it is an institution which is devoted to solving some of the most difficult and vital problems that the world has to face. Its three particular priorities are world hunger, natural resources—what they consist of and how they can best be used and not wasted—and the development of man and society, with particular reference to the underdeveloped or the developing world.
This University is worthy of support. It faces financial danger at the moment, as a result of which it may not flourish, and may not even continue to exist. One of its virtues is that it is one of the very
1550
few United Nations organisations which is not inter-governmental. It is separate; it has its own Charter and it is not dependent upon Governments for the day-to-day running of its affairs. Nor can the University be influenced by Governments. The University works within the true traditions of the academic world. But the corollary is that Governments are not so interested in helping to support it, and this may be one of the reasons why there are financial problems.
A number of nations have contributed towards the University, some of them extremely generously. I have already mentioned Japan. Obviously what is needed is a major contribution from the United States of America. However, the USA are getting a little tired of the fact that everybody seems to want them always to take the lead in matters of this kind, a lead which other nations will then follow. Congressmen and Senators have been heard to say that it is time other people, particularly in Europe, took the lead.
This country does not have a bad record, although it is not so good as it might be, on these questions of aid and help to the developing world. We are associated with the University. The noble Lord, Lord Briggs, is on its council — and he is very sorry that he is unable to be here today to address your Lordships. At least one of our institutes is taking part in the work of the University; namely, the Tropical Products Institute. I acknowledge the help which that institute has given to the University.
I believe that thin University is infinitely worth while. It is the right kind of project; it is pump-priming; it is seed growing. This is not a question of giving out to developing countries money which might or might not be wasted. It is not the spending of money on a once-and-forall basis. The money is being invested in that most precious of all commodities—knowledge and the spreading of knowledge throughout the world on a number of very vital topics.
It is my earnest hope—and, I think, the hope of a number of noble Lords and Members of another place—that, now that there is somewhat more money available than there was a year or so ago, the field

1551
of aid, particularly, would be an area where it would be absolutely right if Her Majesty's Government could see their way to giving a significant grant to the endowment fund, or in some other way helping this university which is doing such good work. I hope that the noble Lord who speaks for the Government will be able to give such good news, so that we can help in that way in the very near future.
6.41 p.m.
Baroness ELLES: My Lords, I am sure all noble Lords would wish me to thank the noble Lord, Lord Beaumont of Whitley, for raising the question of the United Nations University, an organisation or institution which does not get very much attention either in your Lordships' House or elsewhere in the world, as indeed the noble Lord pointed out. I am sure the Minister will listen with sympathy to the remarks and requests made by the noble Lord.
I have some personal memories of the United Nations University, because I was the United Kingdom delegate at the United Nations in 1972, when the resolution was passed in the General Assembly, in the Third Committee, to which I was a delegate, relating to the setting up of the University and the future adoption of its charter. So I have taken an interest in its initiation and the continuation of its work. The charter was adopted in 1973, and the United Kingdom voted in favour of the United Nations University, with 117 other Member States.
At that time the Secretary-General agreed that there was a need for an endowment fund so that the University should have stable conditions, and this must be one of the essentials of an institution of this kind. Obviously, it operates, as the noble Lord has described, in a different way from an ordinary university; but it is quite clear that, in order to get the academic excellence which would be demanded of an institution of that kind, funds must be available, and they must be guaranteed for at least a minimum period. No professor or senior academic would be able to leave his position in any university for any length
1552
of time without some guarantee of financial reward; that is clear.
Nevertheless, my own view of the United Nations University, certainly when it was debated in 1972, was that it was not so much to be undertaking research work but to be a meeting place for the youth of the world. It was with that ideal in view that the resolution went forward from the General Assembly which I attended. But I have seen no evidence in the programme or in the activities of the University as it has been conducted so far which in any way attempts to realise those ideals which I thought were quite excellent. This would be one of the only areas in the world where youth from all quarters of the globe, from all groups of society, of every nation, could meet to undertake some form of joint effort in the development of culture and science. There is no evidence at all that the United Nations University, as it now is proceeding in its activities, is in any way making a contribution in this way.
The last amount allocated to the University, so far as I have been able to find, was the sum of 790,000 dollars. Admittedly, it is not very much in world terms; but, when you look at what it is being spent on, you see that 200,000 of those comparatively few dollars are being spent on regional meetings. Before one volunteers that the United Kingdom should be contributing more funds, I think one ought to inquire what kinds of regional meetings are these and who attends them, because very often they just become joy rides for people who are on the inner circuit, as we know very well. Another 190,000 dollars are going for world hunger purposes. Nobody in your Lordships' House would deny that world hunger is one of the major subjects which should be studied, but there is already an expert organisation, the FAO, to say nothing of the new World Food Fund which has been set up, which have financial resources to make these kinds of studies. I wonder, therefore, whether the sums which have been allocated to the United Nations University are being spent wisely or with the purposes in view for which the University was originally set up.
This is in no way to decry the excellent work and the opportunities that the

1553
University may hold for youth in the world today. I would ask the Minister whether any proposals have been made by the Government at the last General Assembly—presumably particularly in the Third Committee—with regard to the future programme of the United Nations University, and as to the way the money that is available to the University has been spent and is going to be spent. I should also like to know whether the Government have, through their delegate at the United Nations, made any proposals as to the kind of programmes on which perhaps the University could be better spending its time—or, at any rate, the persons employed by the University—making a greater contribution to world resources.
Perhaps I may say that I am very sorry the noble Baroness, Lady Gaitskell, is not here tonight; no doubt she had a pressing engagement. Undoubtedly she would have taken an interest in the activities of the University when she was a delegate at the last General Assembly in New York. I would conclude by saying that I am very grateful to the noble Lord, Lord Beaumont of Whitley, for having raised this matter. I think it is a matter not only of principle—as to how far and how much the Government are prepared to co-operate in such United Nations institutions as this University—but it also raises prospects which could hold out a great contribution for peace if the Governments and Member States of the United Nations are prepared to co-operate in this great venture.
6.48 p.m.
Lord ORAM: My Lords, I am sure we all appreciate the fact that the noble Lord, Lord Beaumont of Whitley, asked this Question this evening, and thereby drew attention to an important matter which, I would agree with him and with the noble Baroness, has not received the amount of public attention in this country and perhaps elsewhere that it really deserves. If I may respond immediately to the queries of the noble Baroness, so far as I am aware, we have not directly put forward proposals in the United Nations fora, but, as I shall describe in due course, we have been actively engaged in discussions about the University's programme in various consultative conferences.
1554
Since the creation of the United Nations University was approved, in the United Nations General Assembly resolution which was adopted without opposition in 1972, Her Majesty's Government have been watching its progress with interest and with sympathy. Ministers have indicated on more than one occasion that the United Nations University has the support of Her Majesty's Government, that British academic and intellectual resources are there to be drawn on by the University, and that Her Majesty's Government will do all they can to maximise co-operation with the University.
The resolution which approved the creation of the University provided that it should take the form of an administrative and co-ordinating centre to which existing academic institutions in various countries would be affiliated, and that it would be funded by voluntary contributions. The function of the University was not closely defined, but the general intention was that it should initiate and co-ordinate research into world problems.
A charter for the United Nations University was drafted by a committee of experts and, as the noble Baroness pointed out, adopted by the United Nations General Assembly at the end of 1973. The Secretary-General of the United Nations and the Director General of UNESCO then invited 24 eminent persons to serve on the council of the University. As the noble Lord, Lord Beaumont of Whitley, informed your Lordships, we are glad that the noble Lord, Lord Briggs, of Worcester College, Oxford, was among those. Dr. James Hester of New York University was appointed the first Rector of the United Nations University in November 1974.
I understand that during the first year of the University's activities—that is, 1975 to I 976—its first programmes were planned, its first associations were explored and contributions to its Endowment Fund were solicited. Its headquarters opened fully in September 1975 and are, at the invitation of the Government of Japan, in Tokyo. The programme of work of the University is being defined by a series of consultative meetings of experts in various fields. In October 1976, the then Minister for Overseas Development opened such a meeting held at the Royal

1555
Society in London. About 100 academics, scientists and officials, not all from the United Kingdom, attended that meeting. There were similar consultations in Paris, Bonn, Stockholm and Kuala Lumpur in 1977. Altogether some 480 participants drawn from 30 countries have participated in these meetings. Plans have been made for further consultative meetings to be held in various parts of the world during this year.
The concept that has now emerged is centred on the basic premise of the University that global interdependence is a fact. The United Nations University recognises that it is different from other universities in that it has no campus, no degree students of its own and no teaching faculty in the familiar sense. It sees its special role as increasing the understanding and alleviation of major world problems without duplicating or competing with existing institutions. The noble Baroness, Lady Elles, urged us to approach this matter with some interrogation and caution, and I think that another cautionary note that one needs to strike is to watch that there is not unnecessary competition with already existing facilities.
The role that I have described lies in the combination of five closely related functions—in the first instance identifying pressing global problems; co-ordinating international research and advanced training; strengthening research and advanced training resources in developing countries; disseminating research results, and encouraging problem-oriented multidisciplinary research and advanced training.
During this initial phase of the University's development its council has agreed that activities and associations should be focused on three broad programme areas, each of which deals with aspects of the human condition. While the University is seeking to maximise intereactions among these programmes, each has a distinctive emphasis. The World Hunger Programme is directed towards the need to provide adequate nourishment for all human beings; the Human and Social Development Programme towards strengthening such development throughout the world; and the Programme on the Use and Management of Natural Resources is concentrated on the physical conditions
1556
in which we live and the natural resources available to us to improve life.
To finance the operations of the University and to guarantee the University's stability and objectivity an endowment fund has been set up. The University is aiming at a target of 500 million U.S. dollars by 1981 to provide an annual income which, depending of course upon interest rates, could range between 25 million and 40 million U.S. dollars. The income from 1981 would be used for headquarters operations which would be some 12 per cent. and for programme activities in the field which would be some 88 per cent. A second source of financial support is derived from contributions by Governments and non-governmental sources for the support of specific projects and programme activities.
The University has reported that, at the end of 1977, a total of 126 million US dollars had been pledged or contributed by 16 Governments. The Government of Japan had pledged 100 million US dollars of this, over a 5-year period and had paid 60 million US dollars out of some 64 million US dollars which have actually been contributed. So we see the very leading part that Japan has played in instituting this University.
My Lords, Her Majesty's Government are currently considering a request from the University that a contribution to the endowment fund should be made. Other than the moral support to which I referred earlier, the University has so far not received from Her Majesty's Government any support, either financial or in kind, beyond that which was mentioned by the noble Lord, Lord Beaumont of Whitley, which has already been made available through the Tropical Products Institute which is an out-station of the Ministry of Overseas Development. The Tropical Products Institute has agreed to accept a number of United Nations University study fellows for studies concerning food loss and food conservation. The agreements have recently been signed and exchanged.
As part of its desire to co-operate with the University, Her Majesty's Government have arranged a series of detailed discussions between the Ministry of Overseas Development and officers of the University. To date, such discussions

1557
have been held with Dr. Kwapong, the Vice-Rector for Planning and Development and Dr. Manshard, Vice-Rector for the Use and Management of Natural Resources Programme. The results of these meetings have encouraged those concerned to complete the series by arranging discussions with Dr. Mushakoji, Vice-Rector for the Human and Social Development Programme and Dr. Scrimshaw, Senior Adviser to the Rector on the World Hunger Programme. It is hoped that these further meetings will take place within the next few weeks.
During this round of contacts it has been learned that the University's endowment fund has been divided into two parts: the income from one part will be used to finance the general work of the University and the income from the other part will he used to finance only work connected with developing countries, with which, understandably, the initial programmes of the University are overwhelmingly concerned.
It is the belief of Her Majesty's Government that the discussions with University officers and the details of the revised financial structure of the endowment fund will provide the effective and up-to-date information which is needed before any decisions can be taken regarding support for the United Nations University by Her Majesty's Government and what form that support might take.
In conclusion, I again express my appreciation to the noble Lord, Lord Beaumont of Whitley, for having raised this subject and given me an opportunity to put before the House information which I feel will be broadly appreciated.

WEST MIDLANDS COUNTY COUNCIL BILL [H.L.]
Petition against, from Arnold Brown. General of the Salvation Army, withdrawn,
LOCAL GOVERNMENT (SCOTLAND) BILL [H.L.]
Returned from the Commons agreed to with an Amendment (privilege); the said Amendment considered and agreed to.