Foreign Limitation Periods Bill [H.L.] (Hansard, 27 July 1983)

§ The Lord Chancellor
My Lords, in rising to move that this Bill be now read a second time, I have it on command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Foreign Limitation Periods Bill, has consented to place her prerogative and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
I can hardly pretend that this Bill is throbbing with human interest. Its object is to reform a rule of private international law as applied in England and Wales. With two minor exceptions, to which I shall come, it is in precisely the form annexed by the Law Commission to their Report No. 114. All legal systems contain provisions for the extinction or barring of stale claims after a prescribed period. In common with most, if not all others, our own law, too, prescribes time limits within which civil claims may be brought. These vary for different classes of claim and differ from one legal system to another. They are also of varying effect. Regarded procedurally, the lapse of time may merely bar the remedy, so that while the right remains theoretically intact, it becomes unenforceable by action. That is regarded as procedure. Alternatively, upon the expiry of the time limit the right may itself be extinguished. That is regarded as a rule of substantive law.
This distinction, apparently so technical, between procedure and substance is of particular significance when foreign claims become the subject of litigation. If the foreign limitation period is merely procedural it is ignored by the English courts and so long as that too is procedural, our courts apply the English limitation period instead. This is because the general rule is that all procedural matters are dealt with according to the law of the court of trial. If, on the other hand, the foreign limitation period is part of the substantive foreign law it will be effective to bar the claim. This is because, the limitation being substantive in character, the right is considered to have been destroyed.
The intermediate case when the claim is in time by the foreign law but out of time by English law, or vice versa, is not entirely clear. It is also less clear what the 1547 English courts would do if the English limitation period was classed as substantive and the foreign limitation was classed as procedural. The Law Commission's answer to this conundrum was that as at present: the action would seem to remain perpetually enforceable; though it is to be expected that an English court would strive to avoid this conclusion". With such Delphic words the Law Commission declared itself baffled.
The present law of England is consistent neither with that of many other jurisdictions, notably those civil law jurisdictions within the European Community, nor with the Community Convention on the Law Applicable to Contractual Obligations. It was examined by the Law Commission and found wanting. Further, they found widespread support for its reform. The principal criticisms are that it is based on a distinction which is in some respects at least unreal. I have explained this and its anomalous effects. It may well be thought that a right cannot be said to have an objective existence independently of the remedy which can enforce it. This, of course, is a philosophical point.
Secondly, in certain circumstances the English rule may bar a claim which is still alive in the country in which it arose. This result is contrary to the spirit of our system of private international law which seeks to enforce foreign rights and not to destroy them. Conversely, the English rule can operate to frustrate a foreign limitation law which aims to protect defendants from stale claims. This may give succour to a tardy claimant by enabling him to make his claim in this country. Thirdly, the Law Commission thought it questionable whether the application of the English rule is necessarily simple, since it may involve reference to two quite different legal systems.
The Law Commission's recommendation is that, where under our existing rules of private international law the substantive foreign law alone applies, the rule of the same foreign law which relates to limitation should also be applied, and not the English law of limitation. Subject to one or two qualifications and to certain exceptions recommended in the report, that scheme is that adopted in this Bill.
The principal exception is contained in subsection (1) of Clause 2 of the Bill. That is the public policy exception. Where in a particular case, the court determines that the application of the principal period of limitation prescribed under the foreign law would be contrary to public policy here, the court may refrain from applying it. This follows a general principle. The principle is that our courts have a discretion to refuse to apply foreign law where to do so in a particular case would be contrary to the fundamental policy of English law—in effect, that means to public conscience as it is understood here. Recourse to that principle will be made only in exceptional circumstances. There is a similar provision in Section 8(2) of the Recognition of Divorces and Legal Separations Act 1971, which gives effect to The Hague Convention on that subject.
An example falling within Clause 2(1) might be where the relevant foreign law prescribes different limitation periods for different classes of claimant in such a way as to discriminate against different racial 1548 groups. Though instances are likely to be rare, the principle does afford some safeguard against cases which would otherwise be contrary to conscience. One observation is appropriate. While the notions of public policy to be applied are those of English law, they are not applied merely to suit individual notions of expediency and fairness, for that would be unwarrantably destructive of foreign rights and contrary to the spirit of the system of private international law.
Clause 2(2) contains a second exception to the general principle. The expression "law on limitation" is denned in Clause 4 of the Bill as including provisions extending or interrupting the limitation period. However, in view of the disfavour with which one particular class of such provisions is generally regarded, special treatment is provided in that case. Thus, a court is to disregard any suspensive provision of the foreign law effective on the absence from a specified jurisdiction of a party to the proceedings. Were this not so there might be cases in which a defendant in proceedings in this country would be deprived indefinitely of the benefit of the relevant period of limitation owing to his presence here and not elsewhere. Other suspensive provisions of the foreign law are to be applied by our courts, as indeed is the whole body of a foreign law of limitation, apart from any rules of private international law, but including the exercise of any discretionary power.
Finally, subsection (3) of Clause 2 excepts from the general principle of the Bill a suspensive provision of our own law; namely, that in Section 1 of the Limitation (Enemies and War Prisoners) Act 1945, which provides that time shall not run during any period when a party is an enemy or is detained in enemy territory. If a foreign court has given a judgment in any matter by reference to the law of limitation of its own or of any other country, including that of England and Wales, that judgment too, quite logically, is to be recognised by our courts as a judgment on the merits, and hence will be a conclusive determination of the parties' rights. That is provided for by Clause 3. It is to be noted that by Clause 5 the provisions of the Bill apply also to arbitration proceedings; and that by Clause 6 the whole Bill applies in relation to any action or proceeding by or against the Crown.
I mentioned at the outset that the Bill departs in only two places from the draft annexed to the Law Commission's Report. The first departure is the addition to Clause 1 of subsection (5). This applies to the so-called doctrine of renvoi —why one has to speak French, I do not know. Where an English court is directed to look at the law of one foreign country which then directs the judge to apply the law on limitation of a second country, it is the latter law on limitation alone which is applied in our courts. The law of the first country will act as a guide or pointer, but once it has performed that humble function it will be ignored. The second addition to the Law Commission's draft is Clause 7(3). This precludes retrospectivity and is designed to ensure that claims already barred in English courts under the existing law will not be revived by the changes effected by the Bill. Similarly there will be no effect on pending proceedings.
1549 The Bill, it will be remarked, has effect only in England and Wales; hence my constant use of the word "English" in preference to the word "British". The Scottish Law Commission produced earlier this year its consideration of Prescription and the Limitation of Actions. Its recommendations are consistent with those incorporated in this Bill, but would require a separate Prescription and Limitation (Scotland) Bill as suggested in their report. Again, as to Northern Ireland, separate legislation will be appropriate.
My Lords, I commend this Bill to your Lordships as a useful, if technical, item of law reform, and therefore beg to move that the Bill be now read a second time.

§ Lord Elwyn-Jones
My Lords, the House will be grateful to the noble and learned Lord the Lord Chancellor for explaining the purport of this fascinating Bill. It is a classic piece of lawyers' law, but nevertheless necessary in the interests of clarifying a difficult branch of the law and is additionally in the interest of international comity. It fell to me, I think in 1979, to refer this matter to the Law Commission, and what followed was a classic piece of Law Commission procedure: the consultation with the interests concerned; the White Paper; and then finally, after further consultation, the production of the Bill which is substantially, subject to the two exceptions referred to by the noble and learned Lord, embodied in the Bill before the House.
The noble and learned Lord has mentioned the principal recommendation of the Law Commission: that where under our rules of private international law foreign law falls to be applied in proceedings in this country, the rule of that foreign law relating to limitation should also be applied, to the exclusion of the law of limitation in force in England and Wales. As the noble and learned Lord has said, that is embodied in Clause 1 of the Bill.
The noble and learned Lord has indicated that there is an exception to this principle which is embodied in the Bill in Clause 2(1), and there are some other exceptions as well. The words used in Clause 2(1) are: In any case in which the application of section 1 above would conflict to any extent with the principles of public policy applied by the courts of England and Wales in determining whether to give effect to the law of any other country, that section shall not apply to the extent that its application so conflicts". The words I used there, "the principles of public policy", are wide words and there has been discussion as to whether there should be an attempt to define public policy. I am not surprised that that attempt was resisted, as it would present a great many difficulties.
There has been a suggestion that at least a body of guidelines should be made available to solicitors upon whom will fall the burden of interpreting this difficult legislation. The Bill itself, by reason of the fact that there is no reference to guidelines, shares the view of the Law Commission. This is undoubtedly an issue to which, in the fullness of time after the passage of a suitable period of refreshment in the Long Vacation, we shall no doubt return. This, as the noble and learned Lord has said, is a useful, if difficult, piece of 1550 legislation. It is no wish of mine to delay its further progress.

§ The Lord Chancellor
My Lords, I am very grateful indeed to the noble and learned Lord for his welcome to this Bill. As he said, he was the referer of the matter to the Law Commission. It has fallen to me to seek to enact the Law Commission's proposals. Our common predecessor, the noble and learned Lord, Lord Haldane, said that it takes three Lord Chancellors to effect a law reform. I think that is about right, but I hope there will be continued progress on amicable law reform which will not be interfered with in any way.
As regards public policy, it is, as some famous lawyer of the past said, a difficult horse to ride. I rode it very quietly in my opening remarks. I do now know whether the noble and learned Lord proposes that the guidelines should be a curb or a snaffle, but I am not sure how far we shall be able to improve on the draft. However, I shall bear in mind what the noble and learned Lord has said.