HL Deb 05 April 1990 vol 517 cc1537-48

12.26 p.m.

Report received.

Clause 2 [Conventions to have force of law]:

Lord Wilberforce moved Amendment No. 1: Page 1, line 26, at end insert: (" () This Act shall apply as between any parties to a contract who at the time of conclusion of the contract have their habitual residence, or in the case of bodies corporate or unincorporate, their central administration in a Contracting State.").

The noble and learned Lord said: My Lords, the amendment is the same as that which I moved in a speech of inordinate length in Committee. Your Lordships will be glad to know that on this occasion I shall not indulge in a similar oration.

Noble Lords may remember that in Committee there was confusion about whether the United Kingdom had already ratified the Rome Convention of 1980, there being in existence a Command Paper which on its face stated that the United Kingdom had ratified but there being doubts about whether it had done so. There is no longer any confusion because it is now clear that we have not ratified the convention to date and that our hands are free to do so or not.

In Committee I took the position that to apply the convention outside the sphere of EC contracts would be damaging to our law because it would deter many potential litigants from coming to our commercial court. That argument was supported by other noble Lords on these Benches. It was not disputed that that might be the case but the best that could be said was that the convention could do no harm and that it would be useful to us in the European context. Secondly, I took the position that we are not bound to apply the convention outside the sphere of EC contracts to contracts generally and that we are free to limit it. The purpose of my amendment was to limit the convention.

The noble and learned Lord the Lord Chancellor took a different view but kindly said he would take further advice on the matter. He has now done so and I am grateful for the trouble that he has taken to obtain advice and communicate it to me at great length. However, I am in the unfortunate position of not being able to agree with that advice. I had hoped that the view that was expressed from these Benches, even though the Government took a different view, may have justified the conclusion that the convention is ambiguous. Therefore, we should be able to take the course least damaging to our own interests.

That is not the Government's position; they wish to apply the contract universally. Therefore, I am not in a position to press my amendment. I remain of the opinion, which may arise later, that if that is correct, and under the convention we should be obliged to extend it to all contracts irrespective or whether thay have any EC connection, we should not ratify the convention. That would certainly be my position when that stage is reached. However, at this point I beg formally to move the amendment, though I indicate to your Lordships that I shall not be pressing it to a Division.

12.30 p.m.

The Lord Chancellor

My Lords, I am grateful to my noble and learned friend Lord Wilberforce for raising the matter again. Because the question of the extent of the convention is an important one, and because some questions have been raised about it by some of my noble and learned friends, I hope that it may be right and acceptable for me to give a fairly full explanation of the matter as I see it.

Article 1 (1) of the convention provides in the English text that: The rules of this Convention shall apply to contractual obligations in any situation involving a choice between the laws of different countries". The other five language versions are in similarly general terms. The texts are identical in referring to "contractual obligations" at large and not, for example, to contractual obligations entered into by persons domiciled within the contracting states.

The remaining paragraphs of Article 1 limit the scope of the convention, but they do so purely by reference to the subject matter of the contract and not to the parties' country of residence or administration. I should, however, draw attention to Article 1 (3), which states that: The rules of this Convention do not apply to contracts of insurance which cover risks situated in the territories of the Member States of the European Economic Community". This express exclusion to my mind clearly suggests that the words in Article 1 (1) are to be given a universal meaning.

As I have said before, had it been intended that the convention should apply only to European Community contracts, one would have expected to find such a limitation stated expressly. One obvious place for it would be the preamble. The preamble states that the contracting parties are, anxious to continue in the field of private international law the work of unification of law which has already been done", and that they wish, to establish uniform rules concerning the law applicable to contractual obligations". I believe that these words make it clear that the primary concern of the convention is with the conflict of law rules of the member states, and not with contracts entered into by parties within the member states. The European Community states have agreed between themselves to apply certain uniform rules in a universal way; it does not follow from the limitation of the convention to such states that the subject matter to which the rules will be applied must be similarly limited.

The ordinary meaning of Article 1 (1) points to the application of the convention to all contracts, and there is nothing in the other provisions of the convention to suggest otherwise. The negotiating history of the convention bears this out entirely.

On page 8 of the Official Report of the Convention the authors, when considering the work of the working group which prepared the convention, say that, From the very beginning of its work the Group has professed itself to be in favour of uniform rules which would apply not only to the nationals of Member States and to persons domiciled or resident within the Community but also to the nationals of third States and to persons domiciled or resident therein. The provisions of Article 2 specify the universal application of the convention". On page 13, when considering Article 2, the authors say that, This Article underlines the universal character of the uniform rules laid down in this convention. The Convention does not apply only in situations involving some form of connection with one or other of the Contracting States. It is of universal application in the sense that the choice of law which it lays down may result in the law of a State not party to the convention being applied. By way of example, under Article 3, parties to a contract may opt for the law of a third State, and in the absence of any choice, that same law may be applied to the. contract under Articles 4 and 5 if it is with that State that the contract has the closest links. In other words, the Convention is a uniform measure of private international law which will replace the rules of private international law in force in each of the Contracting States, with regard to the subject matter which it covers and subject to any other convention to which the Contracting States are party (see Article 21) ". The leading English text-book writers have no doubt as to the universal nature of the Convention. In Dicey and Morris, The Conflict of Laws, on page 1251, it is said that, The Convention requires the application of its rules even as regards contracts with a non-EEC element, and its rules will therefore apply to all contracts with a foreign element coming before the English courts". Cheshire and North's Private International Law states on page 505 that, The Convention is world-wide in effect. In other words, it does not just provide choice of law rules for contracts with an EEC connection. It provides rules harmonising contract choice of law rules in all Member States. If implemented here, it would apply, in principle, to all international contracts coming before the courts in this country". Finally Morris's The Conflict of Laws states on page 298 that, The Convention is world-wide in effect: it will apply to all contract cases having a foreign element, whether or not they have any connection with the EEC". Lest it be thought unwise to rely solely on the interpretation of the convention as seen from this country, your Lordships may be interested to know that when the German Government introduced legislation to give effect to the convention its eplanatory memorandum to the Bundestag made it entirely plain that the convention would apply universally. I am not aware that any member state has sought to limit the convention to EC contracts, nor that any academic writer has taken the view that it is so limited.

The question arises whether we are entitled, if we so wish, to limit our application of the convention to EC contracts. I do not believe we are; if we ratify, we are bound to comply with the obligation under Article 1 (1), which means legislating to cover all contracts. Furthermore, the effect of legislation only partially giving effect to Article 1 (1) would require a reservation to that article. Article 22 indicates two reservations which may be made to the convention and it follows that no other reservations may be made.

Finally I must say that to introduce a limitation to EC contracts would go completely against the objective of the convention, which is to unify the choice of law rules of member states. A limitation would lead to considerable complication and introduce a distinction which does not exist at present in our conflicts rules for contracts nor, so far as I am aware, in those of any other member states.

I hope that this explanation has been clear and that there is now no doubt that it is neither possible nor right for this Bill to limit the scope of the Rome Convention as applied in the United Kingdom. I understand from what my noble and learned friend Lord Wilberforce has said that he still has an opposite or different point of view. However, I have tried to canvass opinion as fully as I can, and I am now putting on record the results of that.

I should perhaps deal with one last matter. As my noble and learned friend said, at Committee stage he showed me the print of the text of the convention published by Her Majesty's Stationery Office in 1982. That I thought at the time contained a misprint. I understand that a correction slip was issued shortly after publication to say that the convention has not been ratified by the United Kingdom. That remains the position.

To conclude the matter, I should add that we had conducted consultations at the time that this convention was being negotiated. My noble and learned friend Lord Wilberforce, with his great knowledge of this area of the law, was very naturally one of those who was consulted on the almost final text in June 1979, and then on the final text in August 1980, in order that the Government might take a view about the appropriate way forward. I understand from what I have been told that my noble and learned friend did not have any adverse observations to offer and did not respond on either of those occasions.

In the light of all these circumstances, I believe that the right way forward is for the convention to be ratified, and this legislation is put before the House in order to enable us to ratify it properly with the full approval of Parliament. My noble and learned friend said that having heard the explanation he did not intend to press the amendment.

Therefore, I hope that he may feel able to withdraw it.

Lord Wilberforce

My Lords, I am sure that the House will be grateful to the noble and learned Lord for the explanation that he has given of the advice that he has received. I do not propose to weary the House by answering it. However, there is an answer and there is a different view.

I was rather embarrassed by the reference to a consultation which the noble and learned Lord said took place in 1979. I have no recollection of that. I was not reminded of it in the course of the exchanges which have taken place with the noble and learned Lord. I can only say that at that time I must have taken the view which I now take, that the convention was not intended to have universal effect, and on that view thought that it was quite harmless.

In my case, the Brussels Protocol, which introduces very objectionable references to the European Court, did not exist. Having said that, I reiterate that I do not propose to renew the arguments. However, I wish to state as respectfully as I can that I maintain the view that I put to the Committee at length. I beg to move the amendment.

The Lord Chancellor

My Lords, I think my noble and learned friend wishes to withdraw the amendment.

Lord Wilberforce

My Lords, no. I beg to move it.

On Question, amendment negatived.

Clause 3 [Interpretation of Conventions]:

The Lord Chancellor moved Amendment No. 2: Page 2, line 10, leave out subsection (3) and insert: ("O.J. 1980 No. C282/1. (3) Without prejudice to any practice of the courts as to the matters which may be considered apart from this subsection—

  1. (a) the report on the Rome Convention by Professor Mario Giuliano and Professor Paul Lagarde which is reproduced in the Official Journal of the Communities of 31st October 1980 may be considered in ascertaining the meaning or effect of any provision of that Convention, and
  2. (b) any report on the Brussels Protocol which is reproduced in the Official Journal of the Communities may be considered in ascertaining the meaning or effect of any provision of that Protocol.").

The noble and learned Lord said: My Lords, this amendment replaces the previous Clause 3 (3) which was in the Bill as drafted. It differs from the previous subsection in two ways. At Committee stage my noble and learned friend Lord Simon expressed concern that the effect of the subsection was that the courts would not be able to consider the works of English text book writers but only the report which is referred to in the subsection. I do not share his concern. To my mind there is an important difference between a report on a convention which has been specially prepared and which can be said to have some official status and the work of textbook writers.

I believe that it is helpful for the Bill to refer specifically to the official report but I do not agree that such a specific reference has the effect of preventing the courts from following their usual practice of looking at academic writings when it is desirable to do so. However, in order to put the matter beyond doubt, I offer this amendment which makes it clear that the courts' discretion to consider the official report is to be without prejudice to their practice in considering other matters.

The new subsection also provides that the courts may consider any report on the Brussels Protocol which is reproduced in the European Communities' Official Journal when interpreting that protocol. A report on that protocol is at present being drawn up, although I have to say that progress so far makes it unlikely that it will be published before the Bill completes its passage.

Your Lordships will recall, as my noble and learned friend Lord Wilberforce has just mentioned, that the Brussels Protocol relates to the powers of the European Court of Justice to interpret the Rome Convention, about which misgivings have been expressed. I hope that the report on the convention will help to allay those misgivings. It will therefore be desirable for our courts to be able to consider the report. For that reason, and because the Civil Jurisdiction and Judgements Act 1982 contains a similar provision, I commend this amendment to your Lordships. I beg to move.

12.45 p.m.

Lord Simon of Glaisdale

My Lords, I am most grateful to my noble and learned friend and particularly for his allowing me to enter into correspondence on this matter which has its technical aspects and is more suitable to be resolved through correspondence than discussion.

Unfortunately, we did not see eye to eye on the law. I tried to ingratiate myself with my noble and learned friend by referring to the maxim in question as a brocard. Whether that softened him or whether it was the consideration of the possible legal implications of the clause as it stood unamended, my noble and learned friend kindly came up with this amendment with which I am entirely content.

I am also grateful that his department let me see the amendment in draft in a form in which I could let the co-signatories of the Committee amendment and the noble Lord, Lord Mishcon, who spoke in support of it also see in advance. I believe that they are content with it. I do not doubt that the noble Lord, Lord Lloyd of Kilgerran, probably thinks that it does not go far enough and would like a reference enjoining the court to consider specifically the leading textbook on intellectual property, preferably one written by himself. For myself, I am content with this and I reiterate my thanks to my noble and learned friend.

Lord Mishcon

My Lords, the noble and learned Lord, Lord Simon, was trying to guess before your Lordships what argument it was that led the noble and learned Lord to bring forward this amendment. I add a further guess and I think I am much nearer the mark. It was the weight of the opinion of the noble and learned Lord, Lord Simon of Glaisdale, which he put forward with such clarity. That will always weigh not only with this House but also with the noble and learned Lord. I am sure that that is what has led to this amendment.

I add only that it obviously gives clarity to a matter which worried us. One is grateful to the noble and learned Lord for the amendment with which I personally am satisfied. The pertinacity, quite apart from the wisdom of the noble and learned Lord, Lord Simon of Glaisdale, has won a victory.

Lord Lloyd of Kilgerran

My Lords, I am also satisfied with this amendment. I should like to congratulate the noble and learned Lord, Lord Simon of Glaisdale, on the way in which he has presented his case. I have always been brought up strictly that one should not consider any book a matter of law or precedent unless the author is dead. If the author is dead, then it can be an authority. Therefore, I am very grateful for the reference which the noble and learned Lord made to at least one of the books on intellectual property which I had the privilege to edit. I have edited only two: one on trade marks and the other is the third edition of Halsbury's Law on Trademarks and Design. However, I am grateful to the noble and learned Lord on the Woolsack for his amendment.

The Lord Chancellor

My Lords, I am grateful to all noble Lords who have spoken. Indeed, the noble Lord, Lord Mishcon, is right that it is the fact that my noble and learned friend felt that the Bill would be improved by an amendment along these lines, along with the support of the noble Lord and others, that made me think that it was wise to table such an amendment.

In reference to what the noble Lord, Lord Lloyd of Kilgerran, said, I believe that the courts are now more ready than they were to look at the writings of textbook writers who have not yet been made authoritative by their demise. I have no doubt that that would be particularly so of the textbooks to which the noble Lord, Lord Lloyd of Kilgerran, has referred.

I believe that the courts are able to look at those writings for whatever value they may have and that we are now more prepared to look at them for the value of the argument rather than the status of the author. Of course it is always possible for counsel to incorporate those views into their argument by reference in any case so that the value of the distinctions which may have been made hitherto is perhaps not particularly great. I believe— and I believe that many of my noble and learned friends who are here would share my view— that the decisions of the court are often greatly improved if the members of the court are given an opportunity closely to study academic writings relating to the subject matter where the authors are happily still with us and able to improve the texts with the passage of time.

On Question, amendment agreed to.

Schedule 1 [The Rome Convention]:

The Lord Chancellor moved Amendment No. 3: Page 4, line 3, at end insert: ("The High Contracting Parties to the Treaty establishing the European Economic Community, Anxious to continue in the field of private international law the work of unification of law which has already been done within the Community, in particular in the field of jurisdiction and enforcement of judgments, Wishing to establish uniform rules concerning the law applicable to contractual obligations, Have agreed as follows:").

The noble and learned Lord said: My Lords, Amendment No. 3 is designed simply to incorporate the preamble into the context, as suggested at Committee stage. I agree that it is an improvement and that is what I have done.

Lord Lloyd of Kilgerran moved, as an amendment to Amendment No. 3, Amendment No. 4: Line 8, after ("obligations, ") insert ("but not including contractual obligations or situations relating to intellectual property").

The noble Lord said: My Lords, it is with some trepidation that I rise to move an amendment to the amendment of the Lord Chancellor. The purpose of my moving the amendment is to ascertain whether the Bill and its schedules, on their proper construction, establish that the rules set out in Schedule 1, Title I, entitled "Scope of the Convention", exclude matters and situations relating to intellectual property in the UK in addition to the eight subparagraphs (a) to (h).

My prime reason for raising the matter is that questions of intellectual property are well known to be complex. They have been referred to as labyrinthine. It is well known that they have very important industrial applications; therefore, Bills relating to intellectual property, as I have often said, should be simple in their exposition of the law. I submit that on the face of the Bill, with its schedules relating to the convention, it is clear that there has been an omission or error. For some reason matters relating to intellectual property have not been referred to.

If one looks at the list on page 4 of the matters to which the Rome Convention shall not apply, under UK law, it includes the status or legal capacity of natural persons, contractual obligations relating to wills and succession, rights in property arising out of a matrimonial relationship and rights and duties arising out of a family relationship, obligations arising under bills of exchange, cheques and promissory notes, and arbitration agreements and agreements on the choice of court.

Under subparagraph (e) there are a large number of exceptions to which the rules of the convention do not apply, including, questions governed by the law of companies and other bodies corporate or unincorporated

A number of illustrations appear. A very wide branch of corporate law is excluded from application under the convention. Subparagraph (g) excludes the application of, the constitution of trusts and the relationship between settlors, trustees and beneficiaries".

I understand that exception because the law of trusts is not known as clearly under UK law as in foreign countries. I therefore understand that the position of UK law relating to trusts should be excluded. The eighth exclusion is, evidence and procedure, without prejudice to Article 14".

The noble and learned Lord the Lord Chancellor referred to paragraph 3 which says that the convention does not apply to contracts of insurance and certain other risks which I need not read out. Clause 2 (2) of the Bill refers to two articles of the Rome Convention— I need not read them— which will not have the force of law in the United Kingdom. I and many of my noble friends find it very difficult to understand why intellectual property rights and situations were not included in the list of exceptions from the Rome Convention under UK law.

That raises the question of how one is to correct what I referred to as an error or omission on the face of the document? What do common sense or natural justice require should be done? In that regard I am in some difficulty. I have therefore sought to add words to the preamble. My reason for so doing is to illustrate to your Lordships the importance of an exception in relation to intellectual property rights.

In the construction of a patent specification the words must have their grammatical meanings. But we at the patent Bar always have great fun with judges of the Chancery Division when explaining to them that the patent specification is directed, in the jargon of the patent Bar, to those "skilled in the art". The numerous authorities say that a specification can be made its own dictionary to interpret what is the sta:e of technology at the date of the publication of the specification.

It has been the experience of many of us— I remember my own experience as a junior— to try to persuade a Chancery judge that he must put himself in the position of a person "skilled in the art" (a person who is aware of the scientific and technological situation at the date of publication) before he can construe that specification and deal with questions of infringement.

I heard one noble and learned Lord— who shall be nameless— recently say that in his experience Chancery judges of first instance in his time were almost carnivorous. I also found that difficulty. I am sorry the noble and learned Lord looks somewhat disturbed and horrified by that quotation from one of his learned brethren; nevertheless it was always difficult to make a Chancery judge understand how to construe a patent specification because it did not conform simply to the matters of construction which apply, say, to trusts or contracts.

There is then the question of the onus on a party. That differs in certain patent matters. It is quite different from the general law of onus in relation to other contracts. I cannot understand— it is entirely my fault— why no consideration was given to the position of patent rights. Why were patent rights not added to the list in Schedule 1, which outlines the scope of the convention, as one of the matters to which the convention shall not apply?

As your Lordships know, intellectual property rights cover not only patent matters but trademarks and passing off. I should have thought that the law of passing off should have been included in these series of exceptions to the Convention because that law is based on the common law rights of this country. So far as foreign countries are concerned, the common law rights are not accepted in the same way as they are in this country.

I am encouraged to suggest that UK copyright ought to have been excluded having regard to an extract of the report in The Times of the 17th February 1990. I apologise to the noble and learned Lord the Lord Chancellor that I have not given notice of this case but it is the case of Tyburn Productions Limited v . Conan Doyle. The defendant in this case was Dame Jane Conan Doyle, the surviving child of the late Sir Arthur Conan Doyle. It came before Mr. Justice Vinelott, and the report says this: English courts would not entertain claims relating to disputes involving foreign patent, copyrights, or trademark laws. Such disputes concerning intellectual property rights were properly to be considered as actions of a local nature".

I shall not go on to read the judgement, but that in my view, would support my contention that the law of copyright ought to have been one of the matters excluded from Schedule 1 to the Rome Convention. It is an interpretation about which I registered my protest and therefore it is difficult to see how properly one can get this across. I am slightly encouraged to know that since the Second Reading and Committee stages of this Bill the Foreign Ofice has been closely consulted. Therefore I wonder whether the amendment that I am suggesting to the amendment put forward by the noble and learned Lord the Lord Chancellor might have some further consideration. I beg to move.

Lord Wilberforce

My Lords, I should like to say just two words, if I may. I am very grateful to the noble and learned Lord for proposing Amendment No. 3 in response to a comment which I made at Committee stage. I have no doubt that it is an improvement to the Bill.

As regards the amendment to that amendment proposed by the noble Lord, Lord Lloyd of Kilgerran, I have a great deal of sympathy with the substance of his observations. Any effective partial demolition of this convention would have my very sympathetic support. The difficult about it is that I cannot quite see how the noble Lord is in a position to amend the preamble, which is simply a preamble to this convention. If he were able to introduce something substantive into the body of the Bill it might be possible to proceed, but the noble Lord does not take that radical step, and in its absence I feel difficulty in supporting his amendment despite having a great deal of sympathy with everything he said about intellectual property, copyright and so on. I am very glad to welcome the amendment proposed by the noble and learned Lord.

The Lord Chancellor

My Lords, I am very grateful for the observations of my noble and learned friend Lord Wilberforce. I do not know how far he would go along with some of the observations of the noble Lord, Lloyd of Kilgerran, with respect to the characteristics of judges of the Chancery Division, which in the past my noble and learned friend would have been in a particularly strong position to comment upon.

So far as the amendment itself is concerned, as my noble and learned friend has pointed out, what we are doing here is simply narrating, as a result of a suggestion from him at Committee stage, the preamble to the Rome Convention, which is an existing document. No ingenuity of the noble Lord, Lord Lloyd, can alter that.

So far as the substance of the point is concerned, this Bill is intended to implement what has been agreed. During the negotiations so far as I know it was never suggested that the matters to which the noble Lord has referred should be excised from the scope of the convention. The Bill and the convention do not in any way seek to alter our substantive law in these areas. It is only the conflict rules concerning these areas which would be affected in this way.

If the noble Lord wishes to pursue the matter, the only way that seems to me possible is either to negotiate a separate convention altogether or seek to revise this convention in accordance with Article 26. The desire of my noble and learned friend Lord Wilberforce to limit the scope of the convention would of course apply to any way in which its ambit could be restricted. However, as I say, I am not aware of any reservation on this line expressed during the negotiation of the convention. If there is concern now and if the noble Lord, Lord Lloyd of Kilgerran, cares to pursue that with me later, obviously the Foreign Office would be closely involved if we were to seek a modification of the convention. However, as at present advised, I do not see any real ground for seeking that, although I am open to further persuasion if the noble Lord wishes to raise the matter.

I hope that in the light of these explanations the noble Lord, Lord Lloyd of Kilgerran, may feel able to withdraw his amendment to my Amendment No. 3.

Lord Lloyd of Kilgerran

My Lords, I am very grateful to the noble and learned Lord for what he has just said. I do not propose to detain the House any longer and I now beg leave to withdraw the amendment.

Amendment to the amendment, by leave, withdrawn.

Amendment No. 3 agreed to.

Schedule 2 [The Luxembourg Convention]:

The Lord Chancellor moved Amendment No. 5: Page 12, line 23, at end insert: ("The High Contracting Parties to the Treaty establishing the European Economic Community, Considering that the Hellenic Republic, in becoming a Member of the Community, undertook to accede to the Convention on the law applicable to contractual obligations, opened for signature in Rome on 19th June 1980, Have decided to conclude this Convention, and to this end have designated as their plenipotentiaries: (Designation of plenipotentiaries) Who, meeting within the Council, having exchange their full powers found in good and due form,

Have agreed as follows:").

The noble and learned Lord said: My Lords, this amendment inserts the preamble to the Luxembourg Convention before the text of that convention, as set out in Schedule 2. I beg to move.

On Question, amendment agreed to.

Schedule 3 [The Brussels Protocol]:

The Lord Chancellor moved Amendment No. 6: Page 13, line 22, at end insert: ("The High Contracting Parties to the Treaty establishing the European Economic Community, Having regard to the Joint Declaration annexed to the Convention on the law applicable to contractual obligations, opened for signature in Rome on 19th June 1980, Have decided to conclude a Protocol conferring jurisdiction on the Court of Justice of the European Communities to interpret that Convention, and to this end have designated as their Plenipotentiaries: (Designation of plenipotentiaries) Who, meeting within the Council of the European Communities, having exchanged their full powers, found in good and due form, Have agreed as follows:").

The noble and learned Lord said: My Lords, this amendment inserts the preamble to the Brussels Protocol before the text of the protocol, as set out in Schedule 3. This is in accordance with the spirit of a suggestion made at Committee stage. I beg to move.

On Question, amendment agreed to.