Contracts (Applicable Law) Bill [H.L.] (Hansard, 24 April 1990)

§ The Lord Chancellor
My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Contracts (Applicable Law) Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read a third time.—(The Lord Chancellor.)

§ Lord Mishcon
My Lords, a word or two ought to be said about the Bill before it is passed by your 438 Lordships' House, as one anticipates it will be. In moving the Second Reading the noble and learned Lord the Lord Advocate described it as being a technical, perhaps even esoteric, Bill but not very exciting. It is a useful Bill which, thanks to the parliamentary draftsmen, has the great merit of establishing what I hope is a precedent for all time. The three conventions to which it refers appear as schedules to the Bill. The result is that anyone wishing to consult the Bill will find all the conventions and need not carry out any more research work. That is a tidy precedent to set and I hope that it will be followed in future.
I have only one question to ask. If I remember correctly, seven countries had to ratify in order for this Bill to take effect, and six had done so at the time of Second Reading. The Netherlands, Ireland and ourselves were in the position that one of us would make the running as the country to make this Bill effective. Have the Government managed this time to expedite their activities and thus become the Government to see that this Bill became effective? In other words, did they beat the Netherlands and Ireland?

§ Lord Wilberforce
My Lords, I should like to offer a very brief observation on this Bill. Before I do that, I should like to correct something which I said at an earlier stage and to offer an apology to the noble and learned Lord. In a speech replying to one of the amendments—and of course that speech was impromptu—I claimed to have suffered some embarrassment by a reference by the noble and learned Lord to a consultation which he said took place in 1979 which I thought had been sprung on me. That was a plain mistake.
The noble and learned Lord who, as always, has acted with complete fairness and appropriateness, had drawn the fact of consultation to my notice. I should have had that in mind and I am glad to offer him my apology and to correct the record regarding what I said on that occasion.
I endorse entirely what has been said by the noble Lord, Lord Mishcon, as to the form of the Bill. That is excellent and very convenient. I am afraid that I do not go along with him altogether as to the substance. For reasons which I developed at earlier stages, I regard this Bill as unfortunate and unnecessary. It brings into English law the effect of a European Convention in an area which in English law is perfectly satisfactory, has been controlled by the judges and is now to be set into the cement of statutory legislation. There are various matters to which objection had been expressed in the course of the passage of the Bill, notably, intellectual property. That point was raised most forcefully by the noble Lord, Lord Lloyd of Kilgerran. So far we have received no satisfactory assurance on that. I shall not expand on those considerations because they have not been answered or seriously controverted in the course of the discussions on the Bill.
It has been said that we are precluded by the terms of this convention, which I believe we have not yet ratified, from giving it a reasonable and limited effect. I offered to the noble and learned Lord what I thought and hoped was a reasonable and respectable 439 way out of that straitjacket; but on advice he felt that he was unable to accept that. I regret that and very much regret that after the passage of the Bill we and the commercial community will be fixed by the terms of it. We shall come to regret that fact. I maintain my objection to the Bill, and I am not able to give it my personal support.

§ Lord Lloyd of Kilgerran
My Lords, in view of the fact that intellectual property was mentioned, I should like to draw to the attention of the House one matter to which the noble and learned Lord did not refer. I have spent a great deal of time pressing the point that on the face of the Rome Convention there is clearly an omission to include an exemption for intellectual property. After hearing me on that matter, the noble and learned Lord on the Woolsack pointed out that my amendments could not be accepted. However, he kindly said that if that was a substantial point, he would consider any matter which I put to him and perhaps the Foreign Office would also consider that. He said that those matters would be under consideration.

§ The Lord Chancellor
My Lords, I should like to thank all those who have taken part during proceedings on the Bill which I believe—and I speak with deference here in the presence of my noble and learned friend Lord Wilberforce—represents a valuable measure of co-operation with our partners in the European Community, albeit in a technical area of the law; namely, the rules of conflict in relation to contract.
The Bill has been improved by the amendments that have been made to it in this House, first by clarifying the powers of the courts when interpreting the conventions, which was proposed by the noble and learned Lord, Lord Simon of Glaisdale; and, secondly, by adding the preambles to the conventions to their substantive texts as set out in the schedules, which was suggested by the noble and learned Lord, Lord Wilberforce, so that, as the noble Lord, Lord Mishcon, said, we now have the complete texts of all three including their preambles appended to the Bill.
One of the purposes of putting forward this Bill is to enable us, with parliamentary approval, to ratify; and ratification will follow assuming this Bill becomes law. There are still only six ratifications. If and when this Bill passes in the other place—as I hope it will—then we shall be quick, as the noble Lord suggested we should, to make use of that opportunity.
Ratification of the Rome Convention will lead to few changes in our law. Its two basic provisions—namely, that the parties may choose which law is to govern their contract, and that in the absence of choice the contract will be governed by the law of the country with which it is most closely connected—correspond to our existing law. I agree that they are expressed in the language of the convention, but they adopt the fundamental principles of our law in this area. The convention was drawn up after very careful negotiations, and the United Kingdom's decision to ratify it was taken 440 only after very extensive consultations. I am grateful to my noble and learned friend for accepting that I had sought to mention that to him in advance of our previous discussions.
Our belief is that those consultations show that there was virtually no opposition to the convention. Similar negotiation and consultation took place on the Brussels Protocol which gives the European Court of Justice limited powers to interpret the Rome Convention. References to the European Court will always be discretionary and they will only be possible where a reference is necessary to enable the court to decide the case before it. Those powers to interpret the Rome Convention are narrower than those which the European Court has under the 1968 Judgments Convention, to which the Rome Convention is closely related. I believe that references to the European Court will be rare and that there is no danger that the Commercial Court will suffer as a result of our ratification of the Rome Convention.
As I have said, this Bill will preserve the principles of our complex rules for contract, and the convention will create a harmonised set of such rules throughout the European Community; in other words, the other member states which ratify the convention will have the benefit of the same principles as those which the courts of this country have worked out, as my noble and learned friend said, over the years.
Regarding the rules relating to intellectual property, I am happy to repeat the assurance which I gave to the noble Lord, Lord Lloyd of Kilgerran. I am not aware that hitherto any difficulty has been expressed in that connection, but if any difficulty arises, that will be a matter for further consideration. I commend this Bill to the House.