§ 3.17 p.m.
§ The Lord Chancellor (Lord Hailsham of Saint Marylebone)My Lords, I rise to move that this Bill be now read a second time. I rather feel that it should be accompanied by a Government health warning. There is nothing whatever that I can do to make my speech short, and those who expect to find it of throbbing human interest will, I fear, be wholly disappointed. The road lies uphill all the way. It is a technical Bill. Its principal object is to give effect to the Brussels Convention of 1968 on jurisdiction and the enforcement of judgments in civil disputes (together with the 1971 protocol on its interpretation by the European Court), as amended by the convention of the 9th October 1978 on the accession to the Community of Denmark, Ireland and the United Kingdom. This is a treaty obligation which we undertook as a condition of our membership of the Community.
Why then do we simply not treat it like other ratification Bills, and pass it, as it were, on the nod, without amendment and almost without discussion?—principally because it involves a detailed alteration of our internal law and parallel alterations in the law affecting relations between ourselves and other countries with whom we are in contractual relationship, and because our own law is in need of improvement, and this Bill is an appropriate, indeed a necessary, vehicle for the changes proposed. I hope to persuade the House that this is not merely a necessary but a desirable measure, and an important step forward in the reform of our civil code.
I begin with some purely negative propositions. The Bill does not deal, in any way, with criminal law, nor does it deal with divorce or custody, bankruptcy or the winding up of insolvent companies, except that it contains provisions relating to maintenance orders and their enforcement. Its ambit is confined to civil litigation. I hope to make it as plain as it possibly can be made, and I believe that it has no party political flavour whatever.
The Bill will determine who may be sued in our civil courts and, particularly, in what circumstances a person who does not reside in the area of the court may, nevertheless, be sued in it. With the exceptions I have mentioned, it will apply to almost all proceedings brought in the High Court or the county courts in England, Wales or Northern Ireland, and the Court of Session or the sheriff courts in Scotland. At present, these courts, particularly those in England, Wales and Northern Ireland—the position in Scotland is somewhat different—will normally assume jurisdiction over anyone on whom their writ or summons may lawfully be served. The difference, if the Bill passes, will be that the jurisdiction of our courts will depend on whether the defendant or the issue involved falls within a class of persons or subject matters laid down in it. In others words, jursidiction will no longer follow automatically from lawful service of process, but will be determined by a series of statutory rules.
1127 The general principles are reasonably straightforward, but I shall have to explain some very technical provisions of practice and procedure. In preparing the contents of the Bill, the Government have benefited from the advice of a working party under the chairmanship of Lord Justice Kerr on many of the questions which are dealt with, and I should like to thank him and his colleagues for their help. In addition, my noble and learned friend the Lord Advocate has also received a comprehensive report on the position in Scotland by a committee under the chairmanship of Lord Maxwell. This was published last year under the title Report of the Scottish Committee on Jurisdiction and Enforcement. I should like to add my own thanks to those of my noble and learned friend to Lord Maxwell and his colleagues.
Our main object is to enable the United Kingdom to give effect to the convention on jurisdiction and the enforcement of judgments concluded in 1968 between the original six members of the Community. In addition to a previous protocol, in 1978 this was amended by a further convention providing for the accession of the new members I have mentioned. The accession convention, as I shall call it, was signed on behalf of this country by the noble and learned Lord, Lord Elwyn-Jones, then, of course, the Lord Chancellor. Part I of the Bill, which adopts the amended convention, contains the main provision under this head.
The object of the conventions, taken as a whole, is to make judgments given anywhere within the Community fully effective for their enforcement. This will represent a very valuable step forward. Respect for law in a society depends to no small extent on the existence of effective means of enforcement. While this is particularly so in the sphere of criminal law, it does also apply to civil law. If parties can evade their obligations as contained in the judgments of the courts, the usefulness of the whole process is greatly diminished. So the purpose of the 1968 convention, and of this Bill, is to eliminate one major area of evasion; namely, the removal of a judgment debtor's assets to a country where the judgment does not run with effect.
The problem is not a new one. As long ago as 1801, the Crown Debts Act set up the first scheme for reciprocal enforcement inside the United Kingdom, which is composed of three totally separate jurisdictions, and the system inaugurated by that Act was enlarged and improved throughout the course of the 19th century. In this century, provisions for the same purpose were introduced in Part II of the Administration of Justice Act 1920, concerning the enforcement of judgments in the different parts of His then Majesty's dominions, and in 1933 the Foreign Judgments (Reciprocal Enforcement) Act 1933 introduced provisions of the same kind for enforcement arrangements with foreign countries. Under the 1933 Act, arrangements have been made with all the six original Community members, except Luxembourg.
What is new about the 1968 convention is that the enforcement of a judgment delivered in another country is made, as nearly as possible, automatic. Hitherto, a condition has always been placed on the party desiring to enforce a judgment to demonstrate 1128 that the court which gave the judgment had assumed jurisdiction on a proper basis. The courts of the country where enforcement is requested have had a duty to refuse enforcement, unless the original court assumed jurisdiction on one of a number of recognised grounds. In the 1933 Act, which is, perhaps, the most important, the main grounds were either submission by the defendant to the jurisdiction in question in the original proceedings, or the residence of the defendant in the country where they were brought.
These grounds represent a lowest common denominator. With minor variations, they are applied virtually to all countries. But in most, including the United Kingdom, the courts also assume jurisdiction on additional grounds. In England, these additional grounds are set out in Order 11 of the Rules of the Supreme Court. They include, for example, cases where a defendant is sued for breach of a contract allegedly broken in England and Wales, or for a tort allegedly committed in England and Wales. In such cases, a judgment obtained here would probably not be enforceable elsewhere. In these cases, such judgments are known in the jargon of the trade as "limping" judgments. To some extent, the problem could be met by enlarging the grounds of jurisdiction which qualify for recognition. But whichever way these are defined, they still entail proof of the basis on which the original court assumed jurisdiction and provide plenty of room for endless dispute.
The novelty of the 1968 convention is that it regulates directly the grounds on which the courts of adherent countries may assume jurisdiction and then goes on to provide that all such judgments are enforceable. The grounds are spelt out in Title II of the convention—I think at page 36 and following of the the Bill—and in cases to which that title applies the court before which proceedings are brought may assume jurisdiction on those grounds, and on those grounds alone. Since the courts are required to entertain only proper cases, generally speaking, there is thus no need for re-examination at the stage of enforcement and, subject only to a few exceptions, this is accordingly dispensed with.
This approach has a second and most important additional advantage. It reduces the scope for what is called "forum shopping". In other words, a would-be plaintiff is less likely to be able to shop around for the court whose law and procedure is most favourable to his own particular case. Consequently, defendants will be less open to proceedings in other Community countries with which neither they nor the dispute have any real connection.
The grounds of jurisdiction listed in Title II are very much wider than the grounds which are recognised in our previous reciprocal arrangements, and they go far beyond the lowest common denominator which I have described. They reformulate the most important basis of jurisdiction to be applied in member states. The main ground is that the defendant should be domiciled—and I use the word—in the member state where the proceedings are brought. But the word "domicile" has in this Bill and in the convention a meaning which differs from its ordinary significance to English lawyers. Broadly speaking, it means continuously residing. I will return to this point later. But there are also a number of other grounds given, 1129 including one upon which I have just touched; namely submission by the parties to the jurisdiction of a particular national court.
Settling the list has, of course, involved some give and take on all sides, but it has been found possible to retain most of the jurisdictions exercised in each country. Although we have largely had to accept what the six had settled before we joined the Community, our existing jurisdictions are mostly preserved without major change. To avoid differences of interpretation, in 1971 a protocol was signed—it is at page 61 of the Bill—under which national courts of appeal may seek preliminary rulings from Luxembourg on any point of interpretation.
I hope that this brief introduction has been sufficient to explain why the original six member states regarded the 1968 convention as being of such importance that in Article 63, to be found on page 58 of the Bill, they agreed that any state joining the Community will be required to accept the convention as a basis for negotiations on this subject, and why in the treaty providing for the accession of the new members, each state undertook, including ourselves, subject to necessary adjustment, to accede to the 1968 convention and to the protocol on interpretion. It will also explain why the adjustments which have been necessary to take account of the interests of the three new members have taken a good deal of time to negotiate. Negotiations had started as early as 1972 and continued until 1978. In 1977, a draft convention containing the adjustments—called in the Bill the accession convention—was laid before Parliament. The Select Committee of this House on European Legislation made a valuable report upon it, including certain recommendations for further changes. These were subsequently given effect. The revised convention was signed on 9th October 1978 by representatives of all nine contracting states, including the United Kingdom.
Before the accession convention can come into force for any new member it must be ratified by all the original six and by the new member concerned. Italy, Luxembourg and the Netherlands have already deposited their instruments of ratification and I understand that progress in other states is well advanced. This Bill will give the provisions of the conventions the force of law in this country, so that we too shall be in a position to ratify.
The convention itself does not deal with every question of jurisdiction and enforcement. For the most part it is concerned with allocating jurisdiction between courts of different contracting states and with the enforcement of judgments between them. It does not, for instance, apply to proceedings as between the different parts of the United Kingdom. Where a defendant is domiciled in the United Kingdom, it will be for the law of the United Kingdom, as amended, to determine whether he should be sued in England and Wales, Scotland or Northern Ireland. It would of course be possible in such proceedings to leave in force the existing rules of each part of the United Kingdom which govern these matters at present. But this would complicate matters unnecessarily. It would mean for example that proceedings could be brought in England against a Scottish defendant by service of process under Order 11 of the Rules of the Supreme Court, whereas against a French defendant they would have to be 1130 brought under the convention. To maintain different sets of rules in these circumstances would thus unnecessarily complicate procedures. Part II of the Bill therefore unifies the rules allocating jurisdiction between the courts of the three jurisdictions of the United Kingdom. The new rules are based on those in the convention, but there are some modifications which take account of the difference in the conditions of litigation within the various parts of our country. After all, it would be easier to ask the English plaintiff in the example I have just given to bring his action in the Scottish rather than in the French courts. So the new rules introduced by Part II are in some ways more flexible than those of the convention. They are set out in Schedule 4.
Part II does not affect the functions attributed to particular courts in each part of the United Kingdom. Laws which determine which proceedings are to be brought in the High Court and which in the county court, or in which particular county court, are not affected by the Bill. Furthermore, neither Part I which concerns the Community nor Part II which, as I have said, covers proceedings within the United Kingdom, affect proceedings against a defendant domiciled outside the Community. In accordance with the advice we have received from our English consultations, to which I have referred earlier, we do not propose to make any major changes in England for such proceedings. The Scots, however, view this aspect differently. My noble and learned friend the Lord Advocate will probably wish to give a little more detail about the Scottish approach to these matters later, but in a nutshell the present rules governing jurisdiction in Scotland are already sufficiently close to the convention to make it possible with some modifications to give the convention rules general effect. Part III is confined to Scotland and therefore introduces a new code of jurisdiction for the Scottish courts governing most civil proceedings. This is set out in Section 19 and Schedule 7 on page 80. In England and Northern Ireland the same approach has not been adopted. Although in substance the effect of the convention rules will not be very different from the present ones, they are presented in a different form and the balance of advantage lies in retaining the system to which practitioners are used and which has been worked out by our courts in some detail. So in England and Northern Ireland the present rules will in general be retained, both for cases arising wholly within the jurisdiction and also for cases where a non-Community defendant is concerned. In these cases, Order 11 of the Rules of the Supreme Court will still apply.
So far I have been talking mainly about jurisdiction. Now I come to enforcement. Broadly speaking, any civil judgment given by a court in proceedings to which the convention applies is to be recognised and enforced in all the other contracting states. It does not matter who is the defendant. A judgment obtained here against a defendant who happens to be domiciled outside the Community to which the jurisdictional rules do not apply is none the less to be enforced within the Community. But the convention only provides for reciprocal enforcement in another contracting state. It does not govern enforcement of judgments obtained within the same contracting state 1131 and does not regulate the enforcement of judgments obtained in countries outside the Community. In respect of judgments internal to the United Kingdom we have again a choice between having different systems for Community judgments and for others or assimilating the totality.
The Bill proceeds on the assumption that the machinery for enforcing judgments as between different parts of the United Kingdom should certainly not be less effective and, where possible, should be more effective than the machinery for the enforcement of judgments given in another contracting state. As I mentioned earlier, there are a number of statutory provisions developed during the course of the last century which already contain procedures for this, and in some respects these are still superior even to the convention rules. Within a single state, of course, this is not really very surprising. But other aspects of the present procedures have become rather outdated and Part II replaces them with the new machinery. One of the changes made is that while formerly the provisions only applied to judgments for the payment of a sum of money, it will not be possible to obtain the enforcement of judgments providing other forms of relief. The new procedures for money judgments are set out in Schedule 5—page 74 of the Bill—and those for non-money judgments are set out in Schedule 6, page 77 of the Bill, both stemming from Section 17. The Bill is not concerned, however, with methods of enforcement within the same part of the United Kingdom. As I said a moment ago, the convention does not affect judgments given in countries outside the Community. We do not propose to make any comprehensive changes in the law governing this but a few badly needed improvements are being introduced, including some amendments to the Foreign Judgments (Reciprocal Enforcement) Act 1933.
May I now summarise some of the most important provisions which I have been describing. Part I makes provision to bring the conventions into effect. The main provision is Clause 2, by which the conventions are given the force of law throughout the United Kingdom. Following this there are a number of ancillary provisions. Clause 3 concerns the interpretation of the conventions. Noble Lords will see a rather remarkable reference to reports by Monsieur Jenard and Professor Schlosser. This is a most unusual provision in English law. But reports of this nature are now a common feature of international treaties. The only analogy which I can think of offhand in English law is the Highway Code and codes of that nature. The negotiating committee for international treaties often appoints one of its number or an outside expert, who is called a rapporteur, to write an explanatory commentary. The report is not formally agreed by the participating states but can be taken to be authoritative for most purposes. So here, M. Jenard wrote the reports on the 1968 convention and the interpretation protocol, while Professor Schlosser wrote the one on the accession convention. Clause 3(3) makes these admissible in legal proceedings in this country, though not binding. Clauses 4 to 8 contain provisions detailing the effect to he given in this country to judgments from other contracting states. In large measure they follow the 1933 Act and, so far as 1132 maintenance is concerned, the Maintenance Orders (Reciprocal Enforcement) Act 1972.
Clauses 9 to 15 contain various other ancillary provisions. Clause 9 concerns the relationship between the 1968 convention and other conventions containing provisions for jurisdiction or the recognition and enforcement of judgments—and there are a growing number of these. The main ones are listed at the very end of Professor Schlosser's report. Some are exclusively concerned with jurisdiction or the enforcement of judgments. For example, the 1952 Brussels Convention on the Arrest of Sea-Going Ships lays down detailed rules governing the cases in which jurisdiction may be assumed by an action in rem against a ship. Others create a more comprehensive régime governing substantive liability as well. For example, the 1960 Paris convention on third party liability in the field of nuclear energy creates a special régime in that field. By Article 57 of the 1968 convention which can be found on page 56 of the Bill, the provisions of these conventions on jurisdiction and enforcement override its own provisions. The United Kingdom is a party to a number of them, including the two which I have mentioned. The legislation by which they are implemented in this country usually contains a number of ancillary provisions. Clause 9(1) preserves their effect.
Part II deals with jurisdiction and enforcement within the United Kingdom. Clause 16 introduces Schedule 4, which provides the uniform rules allocating civil jurisdiction inside the United Kingdom. That schedule is a modified version of Title II of the convention, and the modifications are clearly indicated in print. The most significant modification is the omission of Section 3, dealing with jurisdiction in insurance matters. Section 3 contains a number of special rules for the protection of insurance policyholders. In the convention context, no doubt these are of value but, within the United Kingdom, the degree of protection achieved is not sufficient to warrant their retention. Section 8, which deals with conflicts of jurisdiction, is also omitted. This is based on the principle that, where proceedings concerning the same matter are brought in the courts of two or more contracting states under the convention those brought first have precedence and other proceedings should automatically be stayed. As a rule of thumb, this mechanism appears satisfactory, but within the United Kingdom our courts have adopted a more sophisticated approach, which consists of assuming or yielding jurisdiction according to the court which is considered the most suitable for disposing of the particular case. This rule, sometimes referred to as forum non conveniens, will be preserved by the Bill in Clause 45.
Clause 17 introduces the provisions governing the enforcement of judgments within the United Kingdom. It introduces Schedule 5, which concerns money judgments, and Schedule 6 concerning non-money judgments. Apart from covering non-money judgments, the only change from the existing law worth mentioning is that, whereas previously judgments of the inferior courts of one part of the United Kingdom were generally enforceable in another only through registration in another inferior court, from now on all judgments will be registered in the superior courts. 1133 This accords with the new convention, and follows the practice already adopted for Commonwealth and foreign judgments. It will ensure a greater concentration of expertise.
As I have said, Part III introduces the new code for Scotland. This is contained in Schedule 7 and is generally modelled on Title II of the 1968 convention, but it preserves a number of existing grounds of jurisdiction in Scotland where these depart significantly from the convention rules.
Part IV is entitled Miscellaneous Provisions. They concern mainly those areas of jurisdiction and the enforcement of judgments which extend beyond the scope of the convention and Parts II and III. I will not mention all of them, but I will mention one or two. For example, Clauses 23 to 25 create new powers for the superior courts in the United Kingdom to grant interim relief in any case where the proceedings are being conducted in another country. This reverses the decision in the case called The Siskina, to which I was a party in exercising the appellate jurisdiction of this House. In The Siskina, this House held that at that time the English courts had no jurisdiction to do what I have described, owing to the inapplicability to that situation of Order 11. However, in Article 24, the 1968 convention expressly contemplates that the courts may do so, and these provisions contain the necessary powers. They will for example enable the High Court or the Court of Session in Scotland to restrain the disposal of assets in this country belonging to a defendant to proceedings in a court of another part of the Community where those assets might be made the subject matter of the proceedings or might be available to satisfy the judgment of that court. This corresponds to a well-known continental doctrine with the auspicious name of saisie conservatoire. The same power is given in relation to proceedings in another part of the United Kingdom and it may also be extended by Order in Council to proceedings in a country outside the European Community or to arbitration proceedings.
Further down, Clause 32 reverses the law of England and Wales and Northern Ireland as stated by the Court of Appeal in a case called Henry v. Geoprosco, decided in 1976, on which my predecessor received representations from the two branches of the legal profession. As I mentioned earlier, one of the grounds on which the jurisdiction of a foreign court will be recognised for the purposes of enforcement here is that the parties submitted to the jurisdiction. But of course the question then arises as to what is submission to the jurisdiction and, as stated in Henry v. Geoprosco, the law stretches the idea of implied submission too far. In that case it was held that a defendant who appeared in a foreign court to argue that that court should not entertain the case should, if the contention were rejected, be treated as having submitted to the jurisdiction. Clause 32 will now prevent this.
I should also mention Clause 33 and Schedule 9. This makes amendments to the 1933 Act, which, as the House will recall, enables arrangements on enforcement of judgments to be made with individual foreign countries. The main effect will be to allow those arrangements to cover judgments of any courts or tribunals in the foreign country, whereas at present the Act only applies to superior courts. The increase 1134 in the monetary limits of our own county courts and the increasing need for the enforcement abroad of these make it important that we should be able to make arrangements covering those judgments.
Finally, Part V contains supplementary and general provisions. The most important are contained in Clauses 38 and 39 concerning the domicile of individuals and corporations. Domicile is really the key concept of the 1968 convention, because it determines first whether or not the convention applies to any proceedings at all on the ground that the defendant is domiciled in the Community, and secondly whether the defendant can be sued in a particular contracting state because he is domiciled there. It also determines whether Part II applies and therefore in which part of the United Kingdom a defendant may he sued. Under Part III, it determines whether the defendant can be sued in a particular court in Scotland.
So I conclude with some brief exposition of the specialised meaning to be attached to this expression "domicile" for the purposes of the Bill. It is a direct borrowing from the French expression "domicile". In French it has a weaker meaning than it has hitherto been thought to have here. In English law, domicile has hitherto meant residence in a country combined with an intention to continue to reside there permanently, or at least indefinitely. In continental countries it means something more like what we should regard as ordinary residence; that is, residence which is not purely temporary or fleeting. The convention does not itself define the concept, but leaves it to national law, subject to some rules as to which national law is to be applied. But this was done on the basis that in all the original six the expression meant more or less the same thing.
Therefore, for us the continental meaning is adopted expressly for the purpose of the Bill. It would in fact be contrary to our interests as well as our obligations to adopt any other course, because it would mean that many defendants ordinarily resident here could not be sued here. For many people ordinarily resident in the United Kingdom do not have a British domicile of origin or the requisite intention to make the United Kingdom their permanent home so as to give them a United Kingdom domicile of choice. This also applies to companies. Our meaning of the domicile of corporations is restricted to the country where the company is incorporated. This is too narrow. All this is achieved by the new definition for the purposes of the convention contained in Clauses 38 and 39. Under these clauses an individual will be domiciled in the United Kingdom if he is resident in the United Kingdom and his residence is of such a kind as to show that he has a substantial connection with this country, and a corporation will be domiciled in the United Kingdom if it is incorporated in this country or if its central management and control are exercised here.
I am happy to say it is time to stop. although there are some other clauses on which I have not commented. But I hope that they will now fit readily into place. I will simply conclude by offering some remarks on the European dimension of this Bill. As a practical matter it is obviously inspired by the increased commercial and social mobility which has followed the creation of the Common Market and the special 1135 problems of law enforcement following that. This phenomenon is not likely to recede, whether as between the member states or in any other context. Already in 1968 the Scottish Law Commission issued a consultative memorandum in which they examined the operation of the present machinery for the enforcement of judgments within the United Kingdom. More recently, the Commonwealth Law Ministers have considered possible revisions of the Administration of Justice Act 1920 to which I referred at the beginning of my remarks. In the mid-1960s The Hague Conference on Private International Law considered the question on a wider basis. So it is not a problem unique to the European Community but its practical importance in that context is undoubtedly greater. Secondly, the Convention represents a measure of law reform in this particular field which will undoubtedly influence others. In particular there are two further conventions pending between member states, one concerning the proper law of contracts and another concerning bankruptcy. Conventions of this kind present obvious problems in reconciling different approaches, legal concepts and differing technical expressions. The 1968 convention created some special difficulties for us because we were not in on the ground floor when the Community came first into being. But I do not think that we have suffered as a result.
In the negotiations for accession, our Community partners were very understanding and we have obtained very significant changes. In other respects our position on the 1968 convention has been considerably easier than it might be in other fields. This is because, as I have explained, the question of enforcing judgments across frontiers has already a considerable history. In particular there was the 1933 Act drafted against a background not unlike that underlying this Bill. There was then no multilateral convention but there were bilateral conventions with Belgium, France and Germany which the Act enabled us to ratify. For this reason most of the concepts in the 1968 convention will be recognisable to any one in this country familiar with this branch of law, despite, or even perhaps because of, the technical nature of some of its provisions.
So I believe that the 1968 convention has come at a very opportune moment for us. It is a far-sighted measure. I hope that this Bill maximises its potential, both by giving it effect in this country, and by using it as a vehicle for rationalisation of other aspects of this branch of the law.
My Lords, after my due warning, I beg to move that this Bill be now read a second time.
§ Moved, That the Bill be now read 2a.—(The Lord Chancellor.)