HL Deb 15 February 1990 vol 515 cc1473-91

3.44 p.m.

The Lord Chancellor (Lord Mackay of Clashfern)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee. —(The Lord Chancellor.)

On Question, Motion agreed to.

House in Committee accordingly.


Clause I agreed to.

Clause 2 [Conventions to have force of law]:

Lord Lloyd of Kilgerran had given notice of his intention to move Amendment No. 1: Page 1, line 22, after ("Articles") insert ("1(1) in so far as it applies to contractual obligations relating to intellectual property rights,").

Lord Tordoff

Unfortunately my noble friend Lord Lloyd of Kilgerran had a fall last night. Although he was not seriously injured he is incapacitated for a few days and he sends his apologies to the Committee. I am sure that your Lordships will understand that, although he gives his tacit support to this and later amendments to which he has put his name, since he knows more about the subject than anybody else in this Committee, indeed perhaps in Europe, there is no one on our Benches capable of substituting for him. Therefore the amendment is not moved.

[Amendment No. I not moved.]

Lord Wilberforce moved Amendment No. 2:

Page 1, line 26, at end insert —

("( ) This Act shall apply as between any pasties 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: This amendment arises out of a question which I asked on the Second Reading of the Bill. It concerned the scope or intended scope of the Bill and the convention. The question was broadly, as I put it, whether the Bill was intended to apply to all contracts, whoever made them, all over the world, or whether it was intended to relate to European contracts; EC contracts, as it is broadly phrased.

The noble and learned Lord charged with responsibility for the Bill at that time, the Lord Advocate, was not able to answer the question then but he said that he would write to me. He kindly did so a few days later and said that the intention was that the Bill and the convention should have universal effect, universal scope; that is, it was not intended to apply to what one might call European contracts but to all contracts, with the exceptions mentioned in the convention, Article 1(2); that is any convention which comes before the courts of England, Scotland or Northern Ireland. In that case the court would be obliged to apply the rules of the convention. In view of that I thought that I ought to put down an amendment so that the Committee could consider the scope of the Bill which may have quite serious consequences if it goes one way.

My purpose in moving Amendment No. 2 is to make it clear in the event of ambiguity on the face of the Bill and the convention that the Bill is intended only to apply to EC contracts. That is an expression which I shall explain with greater precision later. Because the matter was not discussed at Second Reading it will be necessary for me to expand upon it a little. I cannot promise the Committee the delight of another extended legal argument between lawyers. For that Members must await the pleasure of the Report stage of the Courts and Legal Services Bill next week. I am merely trying to raise an important point of principle which I suggest is fit to be considered by the Committee.

Where do we start? We are dealing with the Rome Convention of 1980 on the law applicable to contractual obligations. It is important to be clear about the exact scope and purpose of that convention. The Committee can see that very well in the first instance from the preamble. For the convenience of Members I have had printed as my Amendment No. 5 the preamble to the convention which, for some reason that I do not understand —perhaps economy —has been omitted from the schedule to the Bill. The preamble states: The High Contracting Parties to the Treaty establishing the European Economic Community" — that is, the original Rome convention— 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", and so on. The Committee will note the reference to the,

field of jurisdiction and enforcement of judgments".

That is a reference to the convention of 1968, again another EC convention which was made part of our law by an Act of 1982. It was clearly, explicitly and definitely restricted to judgments given within a Community state. The preamble to the amendment shows this to be an EC convention. The text of it shows that it is permeated throughout with EC matters. It is not open to accession by any other state. It is a closed convention.

The Committee will see both in the Bill and in the conventions themselves references to the European Court at Luxembourg as being the court which will have jurisdiction as regards interpretation. I suggest that it is absolutely clear that we are dealing here with a closed family contract between the 12 member states which aims at harmonisation of the law relating to contracts as between those member states. In that respect it is like other European conventions which are gradually building up a body of European law. I mentioned the judgments convention of 1968. In that respect I am not concerned to attack or criticise the Bill or the convention in any way, although the Committee may recall that the convention has been strongly attacked by a number of learned writers who say that it is misconceived and unnecessary. However, I am not concerned with that here.

I am perfectly willing to accept the wisdom of bringing the convention as a European document into our law. I wish to pay a tribute to our representatives who negotiated it, particularly to Dr. North of Oxford University who is one of our leading experts in private international law and who has performed a splendid job in obtaining agreement with the representatives of the other EC states.

The Committee will note the expression with which Clause 2 of the Bill is introduced into our law. I pause to note that the Bill refers to conventions in the plural but I do not think the Committee need trouble itself with that. There are three conventions but it is convenient to speak of the convention in the singular. Clause 2(1) states that the conventions shall, have the force of law in the United Kingdom".

That is the formula that is commonly used to bring conventions into our law. The suggestion I make to the Committee is that it was never intended by that formula or by the convention itself that either the Bill or the convention should apply to contracts that have no EC connection at all and where no party has anything to do with the EC or any member state and where none of the contracts involved have any reference to the EC or to any member state. The purpose of my amendment is to make that clear.

There is nothing unusual in having one section of the law applying within the Community and general law applying outside. That is common form and it occurs in the case of judgments. There are any number of international conventions which apply in one area but which leave the rest of the law to be governed by the common law or perhaps by other conventions. The contrary view —that is, the universal view —would mean applying the rules in Title II of the convention to contracts between persons or between companies from non-member states; for example, to contracts between a United States company and a Swedish company or between a Japanese company and a Norwegian company. The consequences of that are, in my view, extremely serious and not at all academic.

One has to bear in mind the situation of the jurisdiction of our Commercial Court. That court is a remarkable institution. It is difficult to guess statistics but it is absolutely safe to say that the majority of cases which are brought before that court concern foreign entities. My noble and learned friend Lord Goff of Chieveley, who I hope will be with us shortly, will confirm that a figure of between 30 and 40 per cent. of the cases in the Commercial Court concern two parties, neither of whom have anything to do with this country. They are foreigners who bring their cases here. They do that because the Commercial Court is an attractive body and has a high international reputation. It is staffed by judges with great experience and learning who are permanently present and who are thought to provide a good service.

The same is true of arbitration. Arbitrations between foreign parties are brought to this country because the London Court of International Arbitration and the arbitrators it appoints have a high international reputation. It is not an exaggeration to say that the United Kingdom is, I believe, the international centre for commercial dispute. In that respect it is a thoroughly good thing for our law, our lawyers and our balance of payments.

If faced with a choice of law, our Commercial Court or UK arbitrators apply the UK rules of conflicts of law. That is an excellent body of law built up by judges over the years. It is not criticised in any way. As far as I know there is no demand for reform of it. I hope no one will mention the name of Mr. Vogelaar of Brussels. I can confidently say that there is no demand for reform of that body of law. It has been formulated in an accessible and convenient form in our textbooks, which are known all over the world. My noble and learned friends will be familiar with Dicey's The Conflict of Laws. That book contains a comprehensive code which deals with all the subjects which come under the heading of conflicts of laws.

The book contains a whole section on laws applicable to contracts. Rule 180 states: The term 'proper law of a contract' means the system of law by which the parties intended the contract to be governed, or, where their intention is neither expressed nor to be inferred from the circumstances, the system of law with which the transaction has its closest and most real connection".

That rule is followed by a whole series of other rules and sub-rules which carry the matter further across the whole area that is also covered by the rules in this convention. It is safe to say that as the matter stands at present we have the best of both worlds. We have the convenience and certainty of formulation in a code but we also have the great advantage of flexibility. The rules can be changed at any time as new judicial decisions emerge. They are changed from time to time and a new edition is produced, whereas if a statutory code is established, as is now threatened by the Bill, one would have to pass another Bill in order to change it. As regards the convention, that cannot be changed by another Act of Parliament. It is safe to say that the mini code in Dicey's Conflict of Laws is known and respected, certainly throughout the English-speaking world.

I have with me an effusion by an American professor who concludes it by stating in relation to Dicey's Conflict of Laws: The elegance style and analytic powers of the British legal community have survived the decline of the British Empire intact".

That is the kind of reputation that Dicey's Conflict of Laws has.

The wider interpretation of this Bill means that all that would go. The common law would be superseded by the rules stated in Title II of the convention. Any case brought before an English, Scottish, Northern Irish or Welsh court would have to be judged not by the common law and not by Dicey's rules but by the new rules set out in Title II. The Committee will note from a cursory examination of Title II that the rules are framed in new and unfamiliar language. They are not framed in the precision language used by parliamentary draftsmen but in language which has been called the disorganised composition which one normally finds in international instruments which have to be used in order to obtain agreement between professors. Therefore Title II contains totally different language.

There is no precedent of interpretation, whereas Dicey cites all the cases which have preceded in our courts, the American courts, the Australian courts and the Canadian courts. That has never been interpreted up until now. It is liable to be interpreted in the light of the report of the professors —Professor Giuliano of Italy and Professor Paul Lagarde of Paris (referred to in Clause 3(3) of the Bill). It is also liable to be referred ultimately to the European Court of Justice. That is a formidable proposition which faces English law.

One can give hypothetical examples, which sometimes convince and sometimes do not. Perhaps I may give an actual example, which may be a little more convincing, of a case with which I was recently concerned. It was a case between an Indian company and an American company centered in New York. It concerned a large contract involving many millions of dollars. The contract did not include any choice of law clause. Therefore the Indian party and the American party chose to have the case decided in England by English arbitrators. The English arbitrators heard the case on the basis of Dicey's rules. It was argued on both sides on the basis of Dicey's rules and it was decided in one day. The parties went away having obtained a solution quickly and cheaply.

Can one believe that those companies would have been willing to have their contract judged by the rules in Title II and that strange language by reference to the professors' report? The professors' report —if one can find it at all because not everyone has the Official Journal of the European Communities on their shelves —runs to 47 pages of two columns each. Can one really expect such people to refer to that report? Can one expect them to have a case judged by reference to the jurisprudence of the Court of Luxembourg, on which neither of those countries has a judge? There is no Indian and no American judge.

Putting the question provides the answer. Such a conclusion is bound to involve a massive transfer of litigation to non-convention states instead of their being brought here. They will either be taken to Ireland or the Netherlands, if those countries are sensible enough not to ratify the convention, or to Switzerland or some other forum. They will not come here. All that business will be lost for no compensating gain. I suggest to the Committee with some confidence that the practical objections to applying the convention universally outside the EC area are overwhelming.

The matter does not rest there. There is what I suggest is a serious constitutional objection so to applying the convention. I do not use the word "constitutional" lightly. It is a word of which I usually have some suspicion as being used by people who do not have a better argument. However, I believe that the matter is of constitutional importance. It may be perfectly acceptable to bring an international convention into English law by the method of stating that it is to have the force of law. There are objections to that, but it is done. It is probably acceptable so long as it is not carried too far. It involves a transfer of language from the convention into an Act of Parliament, which involves difficulties.

In this case one is going very much further. If universal application is intended it involves a substitution of an entire general code or mini-code in the area of conflict of laws for the common law of England and Scotland. If that is to be done surely it should be done in the form of a code, properly drafted by parliamentary counsel in language of precision rather than in convention language, submitted to Parliament for discussion and, if necessary amendment. It should not be introduced by the back door, brought in holus-bolus by schedule which is not capable of discussion and not capable of amendment.

There is therefore a serious practical objection and a not negligible constitutional objection to giving the convention universal force. Then one asks the crunch question. Are we obliged to give it that force because we ratified the convention? I know that there is a body of opinion which believes that we are. That is an argument that has to be met. Having given the best thought that I can to the wording of the convention, I suggest that there is nothing either in law or in bona fides which obliges us to apply the convention rules outside the ambit of the European Economic Community.

The supposed universal effect is said to be derived from Article 1(1) and the beginning of Article 2 of the convention. I suggest that they do not have that effect. Article 1(1), it is true, has general words but they are not universal words. Nor are they limiting words. It could have said that it applied to "all contracts concerning the EC" or it could have said "all contracts". It says neither. It reads: The rules of this Convention apply to contractual obligations".

Those are general words.

One has to interpret a convention in the same way as one does an Act of Parliament. The Vienna Convention on the Interpretation of Treaties says so. One interprets it in ordinary meaning having regard to the object and purpose of the enactment. Having regard to the object and purpose of the enactment, it is perfectly legitimate and compulsory that one should read those words as being limited to the context in which they are used. The convention deals with European matters and European Contracts and the words should be interpreted accordingly.

Then one comes to Article 2, which states that: Any law specified by this Convention shall be applied whether or not it is the law of a Contracting State".

That says only, for example, that a contract between a French company and a German company for the erection of a plant in Nigeria or the Cameroons may be governed, either by choice or implication, by the law of Nigeria or the Cameroons. It does not say any more than that. It certainly does not extend the nature of the contracts to which it applies.

That limitation of the convention to EC contracts is not my thought only. It is confirmed, I believe, by the Notes on Clauses which the noble and learned Lord's department kindly gave me. It agrees with a statement by Dr. North that the object is to facilitate the flow of goods and services within the European Communities. In particular, and I suggest that this is decisive, it is confirmed by the report of the professors which is referred to in the Bill—the report of Professor Giuliano and Professor Lagarde.

Referring to the universal application of the uniform rules the report reads: The provisions of Article 2 specify the universal application of the convention".

The commentary on Article 2 reads: 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".

I return to the case of the French and German companies contracting for the erection of a plant in Nigeria. They therefore confirm my submission that, if the contract is universal, it is universal in a special and limited sense in that it enables the law of other countries to be brought in, not that it requires the convention to be applied to all contracts, whoever they are made by and however little they have to do with the EC.

I strongly suggest to the Committee, and I hope that the noble and learned Lord will agree, that we are free to make it clear that the convention is not to apply generally outside the European Community. One may ask, what interest could there conceivably be in our European partners requiring us to give it a wider interpretation? If one asked any French or German lawyer, surely he would say, "Oh no, of course it is only to apply within the EC to European contracts".

I am glad that my noble and learned friend Lord Goff of Chieveley is now here because I believe that he will confirm that point. I should have great doubts whether the foreign professors who negotiated the convention had any idea of the universal, international jurisidiction of our Commercial Court. One may be fairly certain that if they were told about it they would say, "Oh, we didn't realise that. We don't wish to interfere with the jurisdiction of the Commercial Court. It must apply whatever rules it sees fit. The convention is not meant to constrain it". They have no interest in interfering. What Community interest is there in laying down the law which our Commercial Court or arbitrators are to apply to a contract between an Indian company and a New York company?

I do not ask anything radical in my amendment. It seeks to resolve what is obviously an ambiguity in the convention and the Bill and to specify that the convention and the Bill are concerned with EC contracts. If the noble and learned Lord is unable to accept my argument as to our obligations under the treaty, I most earnestly request him to take further advice, to consult the Law Officers or the Treaty Department at the Foreign Office to see what the extent of our obligation is. Only if we are compelled to do this by our international obligations should we override what I suggest are substantial practical and constitutional objections to the wider application.

Perhaps I may say a few words about the terms of my amendment. They must be refined. I put them down so as to raise the point and I did not wish to trouble the Committee at this stage with details as to the formulation. I have spoken generally about European contracts. The amendment refers to "habitual residence" and to, central administration in a Contracting State".

Those words are taken from Article 4(2) of the convention. I do not vouch for them in any way. They may be capable of improvement or expansion, particularly to deal with a case in which there is more than one place of business. That is the kind of principle involved and there is no difficulty, with good will, in making them more precise. There will probably have to be a definition of the words "Contracting State" and it may be that the Long Title to the Bill will have to be amended in due course. I am perfectly content to leave all that to the noble and learned Lord's department, offering my co-operation if it is desired.

I apologise for having taken rather a long time, but I hope that on those grounds the Committee will give my amendment favourable consideration. I beg to move.

4.15 p.m.

Lord Goff of Chieveley

Perhaps I may add a few words to support what my noble and learned friend Lord Wilberforce has said. I understand from Professor Peter North, whom I consulted about the issue, that he understands the scope of the convention to be very wide; in other words, that we should have to apply it in the courts of this country in disputes as between parties both of which had their domicile or habitual residence in countries outside the European Community.

That proposal would raise considerable difficulties in this country. We have in London the Commercial Court which is truly international in character and to which litigants from overseas frequently have resort. I had the honour to preside over that court between 1979 and 1981. In one of those two years, in every case that was heard by the court, either one or both parties came from overseas. That is a most remarkable fact, but the same must be substantially, if not exactly, true of every year in the Commercial Court, certainly in the past 15 years or so.

In a sense, we should not be surprised by that. It is a symptom of the enormous importance of the City of London in world commerce. All the commodity trades are centred in London, world shipping is dominated by London and the Baltic Exchange, the P & I Clubs, Lloyd's Underwriters, Lloyd's Register of Shipping and many other organisations are based here. Most insurance throughout the world ends up in London. More commercial arbitrations are held in London every year than in the rest of Europe put together. Likewise, and for much the same reasons, the Commercial Court has an international clientele quite unlike any other court in Europe.

It therefore follows that, if the convention is given the broad scope for which Professor North has contended, it will have a far greater impact in this country than in any other European country. From what I have been able to gather, it may well be that our European friends and lawyer colleagues do not fully appreciate the impact which it would have on commercial litigation in this country. Perhaps I may add that, if it will have a significant impact on the courts, its impact will be far greater on advisory work which solicitors and barristers in London have to undertake on behalf of their foreign clients. I refer particularly to the large commercial firms in the City which advise clients from all over the world on the governing law applicable to their contracts. The matter may therefore affect the jurisdiction of the court in some cases because there are cases in which the court's jurisdiction depends upon the relevant contract being governed by English law.

It is right to say that the convention has basically adopted the common law test for ascertaining the system of law which governs a contract, but the simple fact is that in certain significant respects it is not the same as our law. It therefore follows that any competent lawyer approaching any particular case must if the convention applies turn away from our law to the new law under the convention and in due course will have to have regard to the decisions of the European Court of Justice as and when they occur.

I have little doubt that our customers in the Commercial Court from the world outside Europe, especially those in the United States of America and the developed Commonwealth countries, will be startled if that is the scope of the convention. They will ask why England of all countries should apply a European test to contracts between parties, both of whom come from outside Europe.

I must confess that I was startled when I discovered that that was said to be the scope of the convention. As far as I am aware, there has been no real criticism of that part of the common law which lays down a test for the choice of the governing law of a contract. So far as I know, it is accepted throughout the whole common law world under which between a quarter and a third of the world's population live. All that is set out in the work of Dicey and Morris, The Conflict of Laws, which is the prince of legal textbooks and is used throughout the common law world.

Had it been left to me, I could never have proposed or recommended that change if it had been placed before me as a matter for consideration. As I understand the position, I imagine that the trouble is that this country has ratified the convention. It may well be that that has been done for good policy reasons, but it may be that we are now imprisoned within the terms of the convention. I do not know; that is something beyond my ken. However, I respectfully support and agree with all that my noble and learned friend Lord Wilberforce has said. I support his amendment and if it is possible to clarify the convention in the way that he recommends, I support that proposal.

The Lord Chancellor

I am grateful to my noble and learned friends Lord Wilberforce and Lord Goff of Chieveley for having taken part in the debate on this amendment. I do so in the knowledge that they speak with great expertise on this subject. The first time that I had the honour to appear as a Scottish counsel in an English appeal was in the field of international private law and my noble and learned friend Lord Wilberforce was sitting. I therefore learned something about this subject at his feet and a very important subject it is.

There are two questions to be asked. First, what is the meaning of the convention? Secondly, if the convention has the general meaning applying to all international private law questions which may arise in this country, ought we to give effect to it? The position is that the convention was signed a considerable time ago but it has not yet been ratified. The purpose of the Bill is to enable us to ratify it.

Lord Wilberforce

I hope that the noble and learned Lord will forgive me for interrupting him. I know that that statement was made on the previous occasion. In front of me I have the Command Paper which brings the convention before us. On the face of it, it states that the convention has been ratified by Her Majesty's Government. That is a Command Paper dated 1982. I do not know whether there is some confusion but that Command Paper says that the convention has been ratified.

The Lord Chancellor

I did not have responsibility in relation to this matter in 1982, but my understanding is that if it was ratified in 1982 we have left it for a very long time before bringing it into effect. I understand that the convention was signed but has not yet been ratified. The purpose of the Bill is to enable that ratification to take place. The Command Paper says that: The convention has now been ratified by the United Kingdom". If it has been ratified by the United Kingdom, in a sense the position is more difficult. My understanding was that this Bill was brought forward to enable us to ratify the convention and bring it into law in the United Kingdom.

Lord Mishcon

I hesitate to intervene but I wonder whether it is possible sensibly to continue this debate on the amendment until we know whether or not it has been ratified.

The Lord Chancellor

My information is that the printing to which my noble and learned friend Lord Wilberforce has drawn attention is a misprint. It should have said that it: has not been ratified by the United Kingdom". So that is the 1982 situation. I think I must be right about that. As I understand it, it is quite impossible in good faith to ratify a convention and give it the force of law in the United Kingdom unless one is in a position to make it the law. My noble and learned friend pointed out with a good deal of clarity that this is not in accordance with the present law of the United Kingdom and therefore it would not be possible for the United Kingdom properly to ratify the convention.

Lord Wilberforce

I did not want to interrupt the noble and learned Lord. I wanted but to be succinct.

The Lord Chancellor

The purpose of the Bill is to enable us properly to bring the law of the United Kingdom into line with the convention —to give the convention the force of law in the United Kingdom.

As I said, the first question is to ask whether the convention has the meaning that my noble and learned friend Lord Wilberforce attaches to it. As my noble and learned friend Lord Goff of Chieveley said, the chief negotiator on the convention for the United Kingdom was Dr. Peter North. His understanding is that this convention is intended to provide a rule of law in the field of international private law which will apply whether or not the contract in question has connection with the European Community in any sense.

I shall deal with this matter briefly. My first point is that Article 1(1), which concerns the scope of the convention, states: The rules of this Convention shall apply to contractual obligations in any situation involving a choice between the laws of different countries". On the face of it that clause gives the rules of the convention a universal application where a choice is required between the laws of different countries. As my noble and learned friend Lord Wilberforce pointed out Article 2 states: Any law specified by this Convention shall be applied whether or not it is the law of a contracting state". The comment of the Official Report is that it is universal in the sense that it refers to all law. As regards scope, Article 1 makes clear that, subject to disapplications (to which I need not refer), the rules of the convention apply to contractual obligations in any situation involving a choice between the laws of different countries.

Perhaps the most significant point is that in the convention there is no clause on the lines of what my noble and learned friend proposes in Amendment No. 2, which would be necessary if the convention were to have a limited scope because the scope of the proposals would require to be defined.

The Official Report states on page 7: 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 national or 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". Perhaps I may refer to the textbook writers. The standard textbook of Dicey and Morris states on page 1251 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". My understanding is that the member states of the Community which drew up their own convention —I take that as the leading one—intended it to be a convention setting out the rules of international private law in this context of contractual obligations which would apply generally. If that is right, the only question is whether or not we should put this convention into force in our law. The option to do what my noble and learned friend suggests is in fact not open.

So far as concerns foreign litigants coming to the commercial court and so on, the situation is dealt with as follows. As both my noble and learned friends said, and particularly my noble and learned friend Lord Goff of Chieveley remarked on it, what the negotiators were able to do —and for this we are extremely grateful to Dr. Peter North and those associated with him —was to bring colleagues in Europe to accept the principles of our international private law rules.

My noble and learned friend Lord Wilberforce read out Rule 180 from Dicey. I think I am right in saying that the two parts of that rule are given effect in the freedom of choice clauses of Article 3 and Part 1 of Article 4, dealing with the applicable law in the absence of choice. I accept that to some extent in the convention there has been a detailed working out of these principles which would not be entirely in accordance with some decisions in this country. On the other hand, the fact that the principles of the law applied in this very difficult area have been our principles is a matter of considerable importance. I therefore believe that if the convention is accepted —as I believe that in the interest of comity in Europe it ought to be —the result in the end will be very like the result that we have at present.

My noble and learned friend did not deal particularly with the later conventions on the protocol. I therefore shall not trouble the Committee with that.

On the constitutional point, if the convention regulates this area of the law, the right way to give effect to it must be to give the convention the force of law in the United Kingdom. If we were doing something over and above what the convention required, it would be open to us to use our own language to do that. But it would cause tremendous confusion to legislate the convention, insofar as it was to apply here, in language that was different from the convention itself if we wished the convention to have the force of law in this country.

The second point arises only if I am wrong in the proper construction of the convention, with which I have dealt. It is obviously a very important question. However, hitherto I had the impression that the general result of consultation either favoured the convention or saw no objections to it. The convention was sent out for consultation in 1979. The result of the consultation was summarised in 1981 in this way: that with the exception of Dr. Francis Mann —and that is a quite considerable exception in my judgment because Dr. Francis Mann is a very experienced and distingushed lawyer in this area —all those that have been consulted now either favour the convention or at any rate see no objections. It was in consequence of that that the convention was signed in December 1981.

Since then I have not heard any suggestions that the Commercial Court opposed the ratification of the convention. It was concerned about the possibility of delays in cases as a result of reference to the European Court of Justice. We have sought to deal with that in the protocol. But we certainly did not understand that the committee was opposed to the convention being applied.

I entirely accept that the situation is one of importance. I am certainly willing to consider the matter further, and in particular to invite further advice fron the Foreign Office, as my noble and learned friend has suggested. However, the Bill has been put forward on the basis that it would be appropriate now to ratify the convention and to bring the law in the convention into force in the United Kingdom.

4.30 p.m.

Lord Wilberforce

Perhaps I may briefly reply to the noble and learned Lord, with thanks for the way in which he dealt with the matter. I shall not comment on most of the points except to say this. I have read a great many papers and files, although not so many as the noble and learned Lord has in his department. Although there has certainly been consultation, it has not focused on the question of whether the convention has what I call the universal effect or the limited effect; it has focused on the question of reference to the European Court. Finally, the protocol was evolved in the way that it was—with objections not entirely met, and the British point of view not entirely satisfied —that being the main purpose of the consultation.

I agree, and my noble and learned friend made it clear, that it is the opinion of Dr. Peter North that the convention should have universal effect. One would expect that. He has done a great deal of work. He is an enthusiast. He wants the convention to have the widest possible effect. With respect, I take a different view. I suggest that there is nothing in the convention —having given it the best consideration that I can —which compels us to give it universal effect. That is the whole point.

We are now faced with the difficulty that we do not know whether or not it has been ratified. My argument was put on the basis that we had ratified, and having ratified, we come under a good faith obligation to pass legislation to bring the convention into our law. But we are still not obliged to go further than the convention does. Therefore, if I am right in my construction of the convention, there is nothing that obliges us to give it universal effect, and we should not do so.

However, since there seems to be some doubt on that point, and on the question of whether or not it has been ratified, I very much welcome the noble and learned Lord's offer to take advice on the question of what we are bound to, what is the extent of our international obligation, in the hope that we would not go further than our international obligations compel us to do without very careful thought and perhaps further reference to this Chamber. On that basis, I am willing not to proceed with the amendment at this stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Clause 3 [Interpretation of Conventions]:

Lord Simon of Glaisdale moved Amendment No. 3: Page 2, line 10, at beginning insert— ["Any relevant published comment on the provisions of the Conventions which appears to be by an expert may be considered in ascertaining the meaning or effect of any provision of the Conventions; and, without prejudice to the generality of the foregoing").

The noble and learned Lord said: My Lords, Clause 3(3) has already been referred to by my noble and learned friend Lord Wilberforce and by my noble and learned friend the Lord Chancellor. It provides that in ascertaining the meaning and effect of the convention the court may have regard to a report made by the two named professors, one Italian and one French. At Second Reading, I used that somewhat as a peg to argue and urge that our courts should have regard to comments by the Law Commission on Law Commission Bills that it prepared. The amendment is directed to a slightly different point.

The report of the two professors was referred to by the noble and learned Lord the Lord Advocate at Second Reading as if it were what is known in the international law as preparatory work. I am not sure that that is altogether an accurate description in this case. The professors' report was certainly amended and discussed by the signatories of the convention.

I desire to say only this. Insofar as English courts decline, generally speaking, to look at preparatory work—that which lies behind an Act of Parliament —they do so in the interests of economy of material.

I venture to agree with what was said recently by my noble and learned friend the Lord Chancellor, that it is unacceptable and undesirable that English courts in particular should look at Hansard. In theory and principle it is unjustified, and the American experience suggests that it is an extremely wasteful and inconclusive exercise.

The amendment does something slightly different. The clause provides that the court may look at the professors' report; but there is a principle of English law of interpretation, and, I believe of Scottish law, which is generally expressed in Latin. I imagine that in Scotland it is invariably expressed in Latin. It means that if one expressly includes one thing one will be taken as excluding everything else. If that principle is applicable, it means that the courts may look only at the professors' report and may not look at other comments, for example, by Dicey and Morris, however valuable they might be.

With my noble and learned friend Lord Wilberforce, I tabled an amendment to make it clear that other comments may be looked at if they seem to be by experts whose comments would be of value. It is only permissive. I am by no means wedded to the drafting, and if my noble and learned friend would like the draftsmen to have a go at improving it, I should be only too willing. In the meantime, I beg to move.

Lord Mishcon

Perhaps I may briefly speak on the amendment, which I support. On Second Reading I asked, in all innocence, whether it was by way of a precedent that we were inserting into an Act of Parliament a report which might be considered on interpretation with its named authors, to whom one wished length of days but who indeed might disappear from the human scene, even though their report, upon which one was unable to question them, remained in the archives. I was suitably taught that when legislation ratifies conventions it is common for such a provision to be inserted. I learnt from that lesson and I shall not repeat the point on the amendment.

Where I respectfully agree with the noble and learned Lord, Lord Simon, is in regard to the wording of Clause 3 which is so specific as to the matters of interpretation which can be and should be taken into account. Clause 3(1) deals strictly with the point that, Any question as to the meaning or effect of any provision of the Conventions shall, if not referred to the European Court in accordance with the Brussels Protocol, be determined" — there it is set out, excluding, one would think, the interpretation rule to which the noble and learned Lord gave expression— in accordance with the principles laid down by, and any relevant decision of, the European Court". In other words, any other court ruling on interpretation is presumably excluded by Clause 3(1).

Clause 3(2) provides: Judicial notice shall be taken" — and it is mandatory— of any decision of, or expression of opinion by, the European Court on any such question". Again, it seems to exclude other matters, jurisdictions and courts.

When we look at Clause 3(3) the report to which we have previously referred may be considered"— this is permissive— in ascertaining the meaning or effect of any provision of that Convention". If one therefore takes Clause 3 on the setting down of the rules of interpretation of the conventions, and to whom one should look for judgments on that interpretation, it seems at first sight to be exclusive; and therefore something similar to the amendment moved by the noble and learned Lord, so that one can introduce other expert opinions as matters which might be considered, would seem to be a right amendment.

Lord Wilberforce

I support the amendment, for the reasons that have been given. As the noble Lord, Lord Mishcon, has pointed out, Clause 3(1) is in extremely strong terms, and appears to preclude reference to decisions of this place. One can refer only to relevant decisions of the European Court. That is a strong argument in favour of my main submission on the effect of the convention. I support the principle of the amendment basically for the reason which it is probably improper to voice, but which I voice nevertheless, that in any case most courts would refer to any relevant material, and so it is much better to legitimise it in the form of a clause in the Bill.

4.45 p.m.

The Lord Chancellor

I entirely support the last observation of my noble and learned friend Lord Wilberforce about the desirability of courts being prepared, within reason, to look at any relevant material. I welcome the opportunity to look at the academic writers' views on topics with which we are concerned when sitting judicially. However, I doubt whether it is wise to seek, as it were, to legitimise that practice in the Bill because to do so would suggest that it was in relation only to the subject matter of the Bill that that was proper.

I must disagree with the construction that has been put on Clause 3. The clause directs attention to matters which might not ordinarily be taken into account by a court. It is not the intention and, with great respect, I do not believe that it is a consequence that requires to be drawn from Clause 3, that the Court of Appeal would not have regard to a decision of this place relevant to the matter. This place deciding the matter would, if it had to do so under the Bill, require to take account of the principles laid down by, and any relevant decision of, the European Court. The idea of course is to maintain coherence between the different legal systems. It is no good bringing legal systems together and then allowing them to part because the courts are then apart on the central principles.

The doctrine contained in Clause 3 is special to that convention and is designed not to restrict but to enlarge the matters that must be taken into account, with particular effect of course with regard to the decisions of the European Court on the question. Subsection (2) enables that to be done without any proof of the European Court's decision. Subsection (3) is designed to enable account to be taken of that report and, as has been said, that is in accordance with the usual provision which is exemplified in Section 3(3) of the Civil Jurisdiction and Judgements Act 1982 where the Official Journal referable to the Brussels Convention, is taken into account.

Lord Mishcon

Perhaps the noble and learned Lord will bear with me. As I said, I was taught on Second Reading and I am more than happy to be taught in Committee. However, he referred to Clause 3(1) as not excluding a judgment of the Court of Appeal or the House of Lords but said that when the Court of Appeal or the House of Lords adjudicates upon a matter, that court should have and, indeed, must have the relevant decisions of the European Court and the principles laid down by it as its guide.

I was trying to ask —and possibly asking it badly —whether that means (and this really goes back to the first amendment of the noble and learned Lord, Lord Wilberforce) that the court could not and should not take into account any of the decisions to be found in Dicey or of the House of Lords or the Court of Appeal with the comments of Dicey upon them. Does it not mean that the courts would have to exclude all those from their deliberations and merely look at the decisions of the European Court and the principles laid down by that court?

The Lord Chancellor

The precise guidance which could be taken out of pre-Act decisions would be a matter of close consideration. For example, when the Sale of Goods Act codified the law on the sale of goods, it did not completely nullify the effect of previous decisions as decisions of utility in ascertaining how the words of the Sale of Goods Act should be applied, because generally speaking that Act proceeded on the basis of the principles laid down in those authorities.

The point about this convention is that due to the negotiating skills of Dr. Peter North and those associated with him, the principles of the English conflict rules in relation to contract have been adopted. Therefore, illumination of those principles in previous decisions might well be useful in the application of those principles, following the convention, to a particular case. In my submission, there is nothing in the provisions of Clause 3 which would in any way prevent a court in this country from using properly any material which it had available to it. The only purpose of Clause 3 is to make sure that the material which the European Court would use is before the court in this country and also that where the European Court has given a judgment upon the clause, the principles which it has enunciated should be followed.

As I said, I entirely agree with the proposition that the court should be prepared, within reason, to look at helpful opinions from those expert in the field, and I think particularly in this context at the views of academic writers in the field. However, I believe that to be the general law in this country and I do not believe that Clause 3 in any way detracts from that. Therefore, even without the amendment of my noble and learned friend Lord Simon of Glaisdale, I believe that the result will be the same and that there is damage to be done by putting this provision into this very special Bill. The Bill has a fairly narrow subject matter, although it is important as my noble friends have said. These are general matters and are best left in generality. I hope that in the light of my explanation my noble and learned friend Lord Simon of Glaisdale will feel able to withdraw the amendment.

Lord Simon of Glaisdale

My noble and learned friend really only advanced one argument against this amendment; namely, that if we put this provision into the Bill it may cast doubt on its absence from other Bills. So far as I know, there is only one other Bill which invokes a report in this way and that was the one referred to by my noble and learned friend just now.

There is no question of casting doubt on another Act of Parliament. It is a general provision of English and Scottish interpretation that if you identify one matter, you will be taken as excluding others. I believe that is reinforced by what my noble and learned friend has just said because there is nothing, as he says, to prevent the English courts looking beyond what is laid down by the Luxembourg court. A court will be particularly likely to do that on a matter of interpretation because matters of interpretation in private international law fall to be decided by the law of the forum. That will reinforce the inclination to apply the universal rule applied to every Act of Parliament that if we identify one thing, we will be taken as excluding the other.

Of course, it would be ridiculous to press this to a Division. All I can do is to ask my noble and learned friend if he will reconsider the matter and weigh, for what they are worth, the arguments put forward by other Members of the Committee. Perhaps we can return to the matter on Report. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Clause 4 [Revision of Conventions etc.]:

[Amendment No. 4 not moved.]

Clause 4 agreed to.

Clauses 5 to 9 agreed to.

Schedule 1 [The Rome Convention]:

Lord Wilberforce moved Amendment No. 5: Page 4, line 5, at beginning 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: I do not propose to press this amendment. I only tabled it as a convenient means of bringing the text to the attention of the Committee. I am quite willing to leave it to the noble and learned Lord as to whether he wishes to refer in full to the convention and also to the other conventions or whether he is willing to economise by leaving it out. I am willing to leave that to the good sense of the noble and learned Lord.

The Lord Chancellor

When this Bill was drafted the advice which I received was that the matters which were to become a force of law should be printed and not the preamble. However, having considered the matter in the light of my noble and learned friend's amendment, I believe that there is something to be said for putting in the preamble. If we do that for the Rome Convention, we should want to do it for the others. Therefore, if my noble and learned friend will leave the matter with me, I shall consider bringing forward an amendment upon Report to put in the preambles in respect of all the documents.

I have now had a chance to study the paper of 1982. I believe that on studying that paper it is fairly plain that there is no suggestion within it that the convention has been ratified. It is all about signatories. I believe that that justifies my initial suggestion that the word on the outside was a misprint and should have been "not" rather than "now". I understand that is the position.

Lord Wilberforce

I am much obliged to the noble and learned Lord. He may care to note also that in 1982 the precedent was observed of putting in the preamble. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Schedule 2 agreed to.

Schedule 3 [The Brussels Protocol]:

On Question, Whether Schedule 3 shall be the third schedule to the Bill?

Lord Wilberforce

I have a small point on Schedule 3 which I think is non-controversial. On page 13, at line 47, I believe the Greek to be incorrect. I do not wish to give what I think is the correct Greek because it would embarrass the writers of Hansard, but I believe those words to be incorrect. I am willing to leave it to the classicists in the noble and learned Lord's department to correct them. I say very quickly that it should be ta avwtata Aikaampta.

The Lord Chancellor

I am extremely grateful to my noble and learned friend.

Schedule 3 agreed to.

Remaining schedule agreed to.

House resumed: Bill reported without amendment.