AS AN AMENDMENT IN LIEU OF COMMONS AMENDMENT No. 115 (Hansard, 2 November 1988)

§ Lord Young of Graffham

My Lords, I beg to move that this House do disagree with the Commons in their Amendment No. 115, but propose Amendment No. 115A in lieu thereof. In speaking to this, I shall speak also to Amendments Nos. 126, 126A and 126C.

Commons Amendment No. 115 was tabled at a very late stage in the proceedings on the Bill in another place. The Government had no prior warning of the concerns underlying the amendment, but felt that they merited further consideration. We therefore supported the adoption of Amendment No. 115 in order to allow time for that consideration. My honourable friend the then Parliamentary Under-Secretary of State for Industry explained that we did not consider Amendment No. 115 to be acceptable as it stood, but that we would come back to the matter in your Lordships' House.

The underlying issue behind Amendment No. 115 is whether the Copyright Tribunal should have power to backdate any variation in charges on which it may decide when a scheme or licence is referred to it. The amendment had its background in a dispute between the Performing Right Society Ltd. and the Committee of Registered Clubs Association (which includes the political clubs) over the level of royalties payable by clubs to the PRS for the performance of musical works in the PRS repertoire. The main point brought into prominence by the dispute is that if a licensing body withdraws a licensing scheme and substitutes another containing higher royalty rates, neither the Copyright Act 1956 nor the Bill allows an aggrieved licensee to continue to pay at the old rates until the dispute is determined.

Having now looked into the matter, we agree that, in a case where a tariff increase is either wholly or partly rejected by the tribunal, it is unfair that licensees should be obliged to pay the higher royalty rates for the period between the reference being made and the decision being reached, with no possibility of recovering any over-payment. Proceedings before the tribunal take time and even if an increase is eventually reduced the licensees may have to pay at the higher rate for a considerable period. We therefore believe that there is a case for some form of provision for backdating tribunal decisions.

It would not, however, be a workable proposition to require all new licensing schemes to be referred automatically to the tribunal, as Amendment No. 115 would require. This would be bureaucratic and indeed unnecessary since disputed schemes will be referred anyway, and schemes acceptable to both sides by definition do not need to be.

Since Report we have consulted all those copyright interests, both users and copyright owners, which might be affected by a backdating provision. Almost all are agreed that such a provision is desirable, and most are in favour of applying the principle of backdating more widely than the particular circumstances of the dispute I have mentioned.

293 Opinion is divided on whether backdating should be mandatory or applied at the discretion of the tribunal, but the Council on Tribunals strongly favours the power being discretionary and we believe that this is right. Amendments Nos. 115A and 126C would therefore give the Copyright Tribunal a discretionary power to backdate any variation in charges to the date on which that reference was made; or, if later, the date of coming into force of the relevant scheme or licence or the expiry of the contractual term in the case of an existing licence, or some intermediate date. Over- or underpayments would then be made good by the relevant party following the decision.

References to the tribunal would continue to be voluntary as under present law. There would be no compulsion on either users or copyright owners to refer licensing schemes or licences to the tribunal, whether new or varied.

Except for the new subsection introduced by Amendment No. 126C, which I have just explained, the new clause introduced by Amendment No. 126 is consequential on Amendments Nos. 123 to 125. Amendment No. 126A makes a small drafting correction to it. The most important result of Amendments Nos. 123, 124 and 125, which we shall debate in a moment, is that once the tribunal has made an order under Clause 119 or Clause 120, it is that order, and not the licence to which it relates, that determines the rights of the parties. Subsection (1) of the new clause therefore restates what is already in Clause 122 but in more suitable words. Subsection (2) provides for the assignability of tribunal orders under Clauses 119 and 120: licences are assignable as a matter of general law, but if the parties rely on an order rather than the licence to which it relates, the benefit of the order must be equally assignable.

I turn now to Amendment No. 126B, in the name of the noble Lord, Lloyd of Kilgerran. I understand that this amendment may reflect certain concerns of the BBC. If we have interpreted the matter correctly this concern is that the changes which the Government are proposing in Amendments Nos. 115A and 126C do not go far enough. The main intention seems to be that the tribunal should have power to backdate its decisions, not merely (as we propose) to the date of a reference or application to it, but beyond that to some earlier date, such as the date on which the licence or licensing scheme referred to first came into effect or would have come into effect. If that is correct, then it raises a major new policy issue and this is, if I may say so, an extremely late stage of the Bill at which to do so for the first time.

Our proposals were recently the subject of a major consultation exercise with all the copyright interests which might be affected, including the BBC. None of the responses to that exercise suggested that the power to backdate a tribunal decision should extend back beyond the date of the reference or application, and in our view that is right. If a licensee or would-be licensee believes he is being charged too much for the use of copyright material then it is up to him to instititute proceedings before the tribunal without delay. Copyright owners should not be subjected to 294 the uncertainty of possibly having their charges reduced retrospectively in respect of a period when a licensee could have instituted a reference but chose not to do so.

If my surmise as to the intention of Amendment No. 126B is correct, then I have to say that I do not think that amending the clause inserted by Amendment No. 126 is the right way to do it. In fact I am not certain that the change in wording contained in Amendment No. 126B has any very great effect, and it seems to us less clear than what is in the Bill already. I hope that in the light of what I have said the noble Lord will not press his amendment, because I fear I shall have to resist it.