HL Deb 27 March 1995 vol 562 cc1409-22

3.13 p.m.

Report received.

Clause 9 [Purpose of Part III]:

Lord Brightman moved Amendment No. 1:

Page 4, line 16, leave out subsections (1) and (2) and insert:

("(1) The rules in this Part apply for choosing the law (in this Part referred to as "the applicable law") to be used for determining issues relating to tort or (for the purposes of the law of Scotland) delict. (1A) The characterisation for the purposes of private international law of issues arising in a claim as issues relating to tort or delict is a matter for the courts of the forum. (2) The rules in this Part do not apply in relation to issues arising in any claim excluded from the operation of this Part by section 13 below.").

The noble and learned Lord said: My Lords, the purpose of this amendment is to clarify Clause 9(1) of the Bill. Part III of the Bill deals with litigation in one of the three jurisdictions of the United Kingdom concerning a wrong occurring outside that jurisdiction, the wrong being non-contractual—what English law calls a tort and Scots law calls a delict. In other words, the scenario with which the Bill is concerned is an action in England, Wales, Scotland or Northern Ireland about a wrong occurring outside that jurisdiction which, if occurring within, would be classified as a tort or delict.

There are clearly two steps involved in the litigation. The first step is to decide whether the issue relates to what we call a tort or delict. The expression commonly used is "characterised" as a tort or delict. The second question is to decide what law is to be applied to that issue once it has been so characterised.

Clause 9(1) of the Bill, in its present form, addresses only the second step. The first step is assumed but not addressed. To clarify the position, my amendment splits subsection (1) into two parts. The new subsection (1) defines step two: the selection of the law to be applied to the trial of the issue. Although that is step two, it is placed first because that is what Part III of the Bill is all about. Subsection (1A) addresses step one—the preliminary question which has to be answered—as to whether the issue is to be characterised as an issue relating to tort or delict. That is to be a matter for decision by what is called the court of the forum, which by definition in Clause 9(6) means the court sitting in England or Wales, Scotland, or Northern Ireland.

The Public Bill Committee agreed that some such clarification of Clause 9(1) was desirable but the amendment then proposed was not moved. I am indebted to my noble and learned friend the Lord Chancellor for the services of his draftsman in getting the necessary amendment into a proper form. I beg to move.

The Lord Chancellor (Lord Mackay of Clashfern)

My Lords, as will be apparent from the introduction by my noble and learned friend, I am very happy with the clarification of Clause 9 of the Bill. I am very grateful to my noble and learned friend for moving the amendment, for the work he did as chairman of the Committee, and to the Members of the Committee who devoted much time to study of the problem. Therefore, I hope that your Lordships will accept the amendment.

On Question, amendment agreed to.

Clause 13 [Exclusion of defamation claims from Part III]:

Lord Lester of Herne Hill moved Amendment No. 2:

Leave out Clause 13 and insert the following new clause:

("Exclusion of Defamation and related claims from Part III

.—(1) Nothing in this Part applies to affect the determination of issues arising in any claim to which subsection (2) applies.

(2) This section applies to any claim which is characterised by the courts of the forum for the purposes of private international law as relating to tort or delict and which is—

  1. (a) a claim under the law of any part of the United Kingdom for libel, slander, slander of title, slander of goods or other malicious falsehood and any claim under the law of Scotland for verbal injury: or
  2. (b) a claim under the law of any other country corresponding to or otherwise in the nature of a claim mentioned in paragraph (a) above; or
  3. (c) a claim which is otherwise based upon a law for the protection of reputation, self-esteem, privacy or confidentiality, whether of an individual or group of individuals, or of a juristic person or of an organ of government.").

The noble Lord said: My Lords, I am glad that at Committee stage the noble and learned Lord the Lord Chancellor in effect accepted the Law Commission's observation in paragraph 3.31 of its report that, given the public interest in free speech and in the proper functioning of public institutions, it is not desirable that those who make statements in this country should have their freedom of expression circumscribed by the application of foreign law".

The noble and learned Lord the Lord Chancellor accepted that observation in relation to defamation law, and Clause 13 has been inserted into the Bill in its present form in Committee so that defamation claims based on foreign laws can be brought in our courts only if they would be actionable under our own laws as well.

In my view there are still two respects in which Clause 13 remains unsatisfactory. In the first place, the definition of "defamation claims" in Clause 13(2), purely by reference to a list of English torts such as libel and slander, and the Scots law of verbal injury, leaves a large degree of unnecessary vagueness and uncertainty. That is one main reason for my seeking to add paragraph (c) to Clause 13(2); in order to create greater certainty by making clear that where a claim is based on a law which does not correspond to the list of English and Scottish torts and delicts, but which is in substance a claim, based upon a law for the protection of reputation, self esteem … whether of an individual or group of individuals, or of a juristic person or of an organ of government", it will be excluded from Part III.

Perhaps I may give an example to explain what I mean. Let us suppose that under the law of Ruritania it is a civil wrong to bring the president or government into disrepute by undermining public confidence in their capacity to govern. A law of that kind is not unknown in some parts of Asia, Africa or the Caribbean. A claim based on such a law would not necessarily be in the nature of a claim of the kind mentioned in Clause 13(2) (a). But it would certainly come within the wider words of my proposed paragraph (c).

As I understand the position, the noble and learned Lord the Lord Chancellor accepts that foreign torts of this kind should be within Clause 13. The first object of my amendment is to put the matter beyond doubt for the sake of achieving legal certainty. Knowing the controversial nature of the decision of Pepper v. Hart, I do not think it satisfactory for the matter to be dealt with only by a statement in the House which can then be placed before the courts. With respect, in my view it should be on the face of the Bill.

The second main aim of my amendment is to cover foreign laws of privacy of a kind unrecognised by common law or statute law in this country. I am glad to be able to report, speaking from this Bench, that, because of the dangers which such a law would create for free speech and a free press, my party recently decided at its Scarborough conference that it was not in favour of enacting a statute creating a new tort of media intrusion on privacy of the kind previously suggested by the Government. The Liberal Democrats preferred to press for the incorporation of the European Convention on Human Rights into UK law and to leave it to the courts to develop appropriate remedies for invasions of personal privacy on a case-by-case basis. According to press reports last Friday, it seems that the Government too have, happily, now decided not to create a general tort of privacy in this country.

The Law Commission in its report drew particular attention to invasion of privacy as a prime example of a foreign tort not recognised in this country. It emphasised that it was not desirable that British broadcasters and newspapers should be held liable for such a foreign tort of privacy. I submit that the Law Commission was perfectly right. Surely it is even more objectionable to allow plaintiffs to sue in our courts on the basis of a foreign law of privacy, without a public interest defence, than to allow them to sue on the basis of a foreign libel law less liberal than our own law. A foreign privacy law which forbids the publication of truthful statements and lacks any public interest defence surely poses a greater threat to free expression than does a foreign libel law, especially where prior restraint on free expression may be obtained through interlocutory privacy injunctions.

Perhaps I may give the example of French law. For the purpose of this debate I consulted M. Roger Errera, a member of the French Conseil d'Etat, who chaired the committee of inquiry on the press and the judiciary appointed by the French Minister of Justice, in 1984, and who gave evidence on privacy to Sir David Calcutt's committee. I can briefly summarise the position as follows. French defamation law is civil and criminal in nature. French defamation law is less intrusive on free speech and freedom of the press than is English defamation law. That is because the newspaper has the defence of publication in good faith and also because damages awards are modest compared with English jury awards. However, the limited nature of French defamation law is complemented by French privacy law, even though the two are legally distinct.

French privacy law has developed to protect not only honour and reputation but also the individual's personality. Unlike defamation law, any interference with privacy gives rise to a right to a remedy. Good faith is no defence, nor is the truth of what is published and there is no developed public interest defence in France. The civil courts there have very broad powers not only to award damages for invasions of privacy, but also to order preventive measures, including interlocutory injunctions to restrain invasions. The French civil code was recently amended, in 1993, so that damages may be awarded and injunctions granted against newspapers for breaching the civil right to respect for the presumption of innocence, pending the determination of a pending criminal case. The French courts may also order the press to publish corrective statements drafted by the courts.

Let us then suppose that a British broadcaster or newspaper publishes news and comment which is heard or read in France as well as in this country, and which breaches the French civil law of privacy or of the presumption of innocence or both. Suppose that the news and comment are accurate. They are published in good faith, their publication is in what we would regard as the public interest. As I have explained, these defences are not available in French law. The alleged victim could not invoke French penal law or other public law in our courts under the Bill. But under Clause 13 as it now stands, he or she could sue the broadcaster or the newspaper not only in the French courts for what is wrongful civil and criminal misconduct under French law, but the plaintiff could also sue in our courts for damages and injunctions on the basis of French civil law, even though that conduct is not wrongful under English or Scots civil law.

As regards the claim based on interference with the presumption of innocence, I recognise that our courts might perhaps refuse to apply the French law on the ground that, although civil in nature under French law, in substance it should be regarded as penal in nature in this country. But it is not clear that that would be so and in any event what is clear is that our courts could not do that in relation to a privacy claim, which is plainly civil in nature.

Under the Bill as it stands, the only safeguard for free speech and a free press based in this country would be the power to disapply French privacy law preserved by Clause 14(3) on the ground that it would conflict with British principles of public policy—a power which our courts would understandably be reluctant to exercise.

Because the definition of defamation-related claims excluded from Part III, in Clause 13(2), is so narrowly and technically worded, it would not cover a claim based on these foreign torts, even though—as I have sought to explain—they would unnecessarily interfere with the right to free expression. An alleged victim could therefore use our courts to obtain a remedy for conduct not regarded as unlawful under our own legal system and in circumstances which would severely chill free expression.

That was the very mischief which the noble and learned Lord the Lord Chancellor wisely—if I may say so respectfully—recognised in Committee as needing to be dealt with in relation to defamation claims. It is the very same mischief because a foreign privacy law is at least as capable as a foreign libel law of unnecessarily chilling free speech and a free press. Indeed, I would say that it is much more capable of chilling free speech in the absence of a public interest defence and given the power to obtain prior restraint on publication in the form of interlocutory privacy injunctions.

It may be said that, in the context of the European Economic Area, plaintiffs may, under the Brussels and Lugano Conventions, readily enforce foreign judgments based on foreign torts in this country. That is true. But it seems to me to be one thing to facilitate the enforcement of foreign judgments and quite another to allow our own courts to be used to adjudicate and grant remedies in circumstances which I have described. Moreover, many examples of foreign torts menacing press freedom come from countries beyond the European Economic Area, and therefore beyond the Brussels and Lugano Conventions.

For example, I happened to be in New Delhi in January in court to hear an application by the so-called "Bandit Queen", Phoolan Devi, for an injunction to prevent Channel 4 from exhibiting a film about her life, not only in India but also in the UK and, indeed, world-wide. Her claim was founded partly upon a privacy tort recently developed out of the Indian constitution by the Supreme Court of India. Happily, the case was settled amicably. But if this Bill is enacted in its present form, then it would become possible for another "Bandit Queen" to sue here on an Indian tort of privacy unknown to our law, to prevent a film from being shown here.

In one respect, I recognise that my amendment may be too wide. That is in referring to confidentiality. There are well-developed remedies under our law for breaches of confidence in commercial and other areas of life. It would therefore seem unnecessary and undesirable to refer to confidentiality and I would readily accept that that should be omitted from my amendment. However, that apart, I very much hope that the amendment will commend itself to the House. I beg to move.

3.30 p.m.

Lord Irvine of Lairg

My Lords, the principle of Part III of the Bill is that the double actionability rule should be abolished and that foreign law should be applied to foreign torts. The Special Public Bill Committee heard a broad range of evidence and decided to exclude defamation from the general rule. That had been the view of the Law Commission, and the Committee responded positively to representations it received from the press.

I do not accept that a similar case can be made—certainly, it was not made to the Committee—for excluding foreign breach of confidence or privacy claims. If the noble Lord will forgive me for saying so, it is unduly insular to suppose that foreign laws protecting rights of privacy are beyond the pale. Out of caution I should perhaps declare an interest in these matters as a member of the appointments commission which appoints members to the Press Complaints Commission. The Press Complaints Commission represents a system of self-regulation of the press with a majority of lay over press members.

My position is that I remain a supporter of self-regulation of the press, provided that it remains effective and the public can have confidence in it. At present I am unconvinced that we require a statutory law of privacy in this country. On the other hand, I certainly do not regard a foreign law of privacy as untoward and therefore one that we should not enforce in appropriate cases in this country. Therefore I oppose the amendment.

I have confidence that the courts will have no difficulty in developing the public policy exception in Clause 14(3); I do not agree with the noble Lord that they would show any reluctance to do so. I, too, am confident that the courts would take into account freedom of expression as a value to be protected as a matter of public policy in any privacy based claim from abroad which seemed to imperil freedom of expression in this country.

Further, Clause 13(2) does not call for the amendment that the noble Lord proposes. I am well content for the courts to be allowed to develop, by decision, the existing words in Clause 13(2) (b), any claim under the law of any other country corresponding to or otherwise in the nature of a claim", defined in Clause 13(2) (a).

In my view also, foreign torts protecting reputation and self-esteem would be caught by the language of Clause 13(2) (b), and there could be a danger in attempting an exhaustive list lest it be argued subsequently that any claim not expressly included must have been intended to be excluded. For my part, the broad language of the existing Clause 13(2) is preferable. For these reasons I oppose the amendment.

Lord Hailsham of Saint Marylebone

My Lords, I intervene in this interesting discussion to make two points. First, we are signatories to the European Convention on Human Rights, and that convention includes a right of privacy. Secondly, the European Convention on Human Rights, on the matter of privacy, does include a public interest exception. I draw the conclusion which I believe follows from those two observations.

Lord Mishcon

My Lords, that brief intervention was extremely valuable. I follow the line that my noble friend Lord Irvine of Lairg took for a very different reason. Before I develop that reason, perhaps I may raise one very small point; it may be completely incorrect. I had no opportunity of putting down an amendment on this possibly trivial matter, but I owe it to the noble and learned Lord at least to draw the matter to his attention. Clause 13(2) (a) of the Bill contains the words, slander, slander of title, slander of goods or other malicious falsehood". Slander does not of itself amount to malicious falsehood. Libel does not of itself amount to malicious falsehood. It is an entirely separate tort which is meant to cover the situation where someone deliberately tells a falsehood and does so maliciously so as to cause harm. Therefore, it being a separate tort, I do not understand the word "other".

Having made that minor technical point, I turn to the root of the amendment, I oppose the amendment because I should like us in this country to have experience of actions which protect the privacy of the individual. I say that because I hope it will encourage any government, whatever their complexion, to bring in a law of privacy.

Many of us realise that men in public life have some sort of reputation which has to be kept. All of us who are in public life realise that. This country suffers—as do many other countries, including the United States—from the fact that you will never get men and women of calibre, who are capable of serving their country well, when their rights of privacy are from day to day absolutely despoiled in the press.

Noble Lords

Hear, hear.

Lord Mishcon

We have experienced enough for me not to give examples. There are people who are capable of public service in this country who have been not only embarrassed by publicity but hounded out of office as a result of it. I therefore hope that if we have experience of foreign laws that protect individuals—matters of public policy and public interest excepted—we shall then say (we may not follow fully the example of France which was given by the noble Lord, Lord Lester) that in our own way we shall carve out a proper law of privacy to enable people of ability and repute to know that their families will not be portrayed on the front pages of a newspaper, nor the fact that one of their children happens to take drugs.

The Lord Chancellor

My Lords, I, too, seek to oppose the amendment proposed by the noble Lord, Lord Lester of Herne Hill. So far as the first part of the amendment is concerned, I consider that the amendment adopted by the Committee is sufficiently wide to cover with sufficient precision the area of defamation, and claims like defamation, which it was thought right to exclude from the general provisions of this part of the Bill. The general principle of this part of the Bill has been to depart from the rule of double actionability which hitherto prevailed in such claims and to use the appropriate applicable law, that law to be determined in the light of the circumstances set out in Clauses 11 and 12 of the Bill.

The Committee that deliberated on this Bill decided that it was wise to give quite a considerable amount of flexibility to the court of the forum by allowing not only the whole case to be the subject of consideration in relation to an applicable law but also separate consideration of whether any particular issue arising in the case should be dealt with by a different applicable law from that which might apply to another issue in the case. So a very flexible system has been set up under this Bill in accordance with the views of the special Committee that dealt with it in detail.

Against that background it seems to me that clear principle is required if one is to make an exception. Having considered this matter carefully, the Committee concluded that it was wise to make an exception in respect of defamation—it received quite cogent evidence on that point—in that statements made in this country might well infringe defamation laws in other countries; and that it was accordingly wise, in the light of the circumstances with which the industry is faced, to make such an exception. In fact, that exception, as approved by the Committee, goes beyond what was inserted by the Law Commission. It is a wider exception than the Law Commission proposed. That having been done, I submit that that is where it should stop.

So far as concerns the amendment of the noble Lord, Lord Lester, your Lordships will see that it does not depend on anything to do with statements. The latter part of his amendment concerns infringements in relation to privacy and confidentiality. In my submission, it would be quite wrong, having regard to the general principle to which I referred, to give effect in this Bill to that amendment.

I have recently looked at the Morris v. Beardmore decision in this House in connection with attempts by the police to go into a private residence. It is a case that has recently been referred to by Anthony Whittaker in The Times as having possibly been lost sight of in the debates about privacy in this country. But the noble and learned Lord, Lord Scarman, said in that case (recorded at page 464 in 1981 Appeal Cases)—which is related, as I said, to the question of police officers entering a private house— In formulating my reasons for allowing the appeal and restoring the decision of the magistrates, who acted with excellent judgment in dismissing the charges, I have deliberately used an adjective which has an unfamiliar ring in the ears of common lawyers. I have described the right of privacy as 'fundamental'. I do so for two reasons. First, it is apt to describe the importance attached by the common law to the privacy of the home. It is still true, as was said by Lord Camden, CJ … in … 1765". The noble and learned Lord then quotes those words and goes on to refer to the European Convention on Human Rights. So, the common law of England has long recognised a right to the privacy of one's home. I submit that it would be quite wrong to exclude privacy in the way proposed by this amendment. The way in which the Bill has been dealt with by the Committee amply protects any right of that kind.

The noble Lord, Lord Lester of Heme Hill, once more used a phrase which attracted a certain amount of attention when he used it last. He spoke of "chilling" the press of this country. I believe I am right in saying that in his concluding example he suggested that under this Bill the Indian lady could have required the courts of this country to prevent a film with the kind of subject matter of the case in Delhi from being shown here. So far as that goes, this Bill is concerned with events that happen outside this country. It is in different law districts of this country or outside the country that the matter would arise. I believe that the Bill has been left in an appropriate state by the Committee. This amendment goes too far in trying to restrict the principle of the Bill.

I am grateful to the noble Lord, Lord Mishcon, for drawing my attention to the use of the word "other". I should like to consider that point carefully. We may possibly return to it at Third Reading. It is the kind of issue that might be appropriate for that occasion. In the meantime, I urge your Lordships not to accept this amendment should the noble Lord decide to press it to a Division.

In the course of his remarks, the noble Lord, Lord Lester, made reference to certain decisions of the Government. Obviously, he knows more about those than I do. The question of what should be the law in this country is a matter of concern but different from the particular matter with which we are concerned today.

I hope that, if the noble Lord presses his amendment, your Lordships will not accept it.

3.45 p.m.

Lord Ackner

My Lords, before my noble and learned friend sits down, perhaps I may say on the matter raised by the noble Lord, Lord Mishcon—I invite consideration of this point—that the word "other" was used in relation to slander of goods. I have a very dim, distant and therefore probably wholly unreliable recollection that in regard to that tort malice is required.

The Lord Chancellor

My Lords, I am grateful to my noble and learned friend. That is probably in accordance with the authorities as they still stand, notwithstanding the length of time to which my noble and learned friend referred. There may still be a question of whether, in the context, the word "other" is the most appropriate one. I should certainly like to consider that point and I am grateful to my noble and learned friend.

Lord Lester of Herne Hill

My Lords, I feel that I owe some kind of apology to those noble Lords who are not legally qualified and may find this discussion somewhat difficult to follow. Certainly, for myself, this has been an important and interesting debate.

Let me say first that I agree with the noble Lord, Lord Irvine of Lairg, that the way forward in protecting the right to privacy in this country is through effective voluntary machinery—the Press Complaints Commission—and the development of common law. The case of Morris v. Beardmore referred to by the noble and learned Lord the Lord Chancellor, and, I believe, the speech of the noble and learned Lord, Lord Keith of Kinkel, in the Spycatcher case, indicate that there is potential for growth in the common law in further protecting privacy, including media intrusions of privacy. So it is common ground that there is scope for development of the common law and the use of the Press Complaints Commission. So the real issue is about what our courts and laws should do where a foreign privacy law goes much further than would the developing English common law.

It is probably my own lack in grasping what has been said, but I continue not to understand at all the difference in principle between disallowing foreign libel laws where they do not match English libel law on the ground that foreign libel laws menace free speech unnecessarily and yet allowing foreign privacy laws which are not matched by English privacy laws, even though they too might, in a particular case, menace free speech law unnecessarily. It seems to me that both kinds of interference with free speech are simply different forms of interference arising from foreign laws. I fail to understand the principle which indicates why one should be excluded and the other admitted even though there is a mis-match between the foreign system and the English system.

The noble and learned Lord, Lord Hailsham of Saint Marylebone, drew attention to the European Convention on Human Rights which guarantees both the right to privacy and the right to free speech. But that by itself does not provide adequate guidance to English judges, even if it were part of our law, as to how to deal with the problem that the amendment raises. I should make clear—it is a defect in the amendment—that the amendment is intended to cover only statements made by the media in this country of exactly the kind that troubled the noble and learned Lord the Lord Chancellor in relation to the law of defamation.

I should like to reflect on all that has been said in the course of this short but interesting debate and consider whether there is any need to return to the matter at a later stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 [Transitional provision and savings]:

Lord Howie of Troon moved Amendment No. 3:

Page 5, line 41, at end insert ("including acts or omissions where the knowledge required to bring an action for damages in respect of any claim for loss or damage they occasion is not available until after the commencement of this Part").

The noble Lord said: My Lords, in moving Amendment No. 3, it may be for the convenience of the House if I speak also to Amendments Nos. 4 and 5. They are all related, as I shall attempt to show.

As your Lordships will know, I am not a lawyer and would not normally intervene in legal matters of this complexity. However, your Lordships may recall that I have a long-standing connection with the construction industry. I was asked by a construction company to raise these matters for clarification due to certain fears it had arising out of the Bill. The company is called Cape. It is a fire engineering company and supplies fireproof materials to the construction industry.

Although I shall refer to the company specifically, its position is quite general in relation to other companies. Cape used to own a company in South Africa which supplied asbestos to customers in the United States of America. That company was sold in 1982 to a South African interest. Cape has been named as the defendant in numerous personal injuries claims in the United States on the basis of United States law in respect of the damage caused by the asbestos supplied by the South African subsidiary. It resisted those claims on the grounds that it has no presence or assets in the United States and is not prepared to submit to the jurisdiction of the US courts. A case was brought against Cape in the High Court in England in 1988—Cape v. Adams —and the judgments in the High Court and the Court of Appeal confirmed that Cape was not liable for the default judgments made against it in the United States. It was confirmed by those judgments that litigants in the United States could not penetrate what is called the "corporate veil" which exists between a parent company and its subsidiaries under English law.

Cape and its lawyers, who drafted these amendments for me, fear that a claim could be brought against the company. When a cause of action arises in the case of industrial disease where there has been exposure to asbestos, the cause for action may not arise until many years after the exposure when the effects of the exposure manifest themselves. In some cases that can take as long as 25 to 30 years. It is feared that the Bill as it stands may leave a company which supplied asbestos to the United States many years ago, prior to the passing of the Bill, exposed to claims arising after the Bill is passed.

As many noble Lords will be aware, a person may be exposed to asbestos as a result of stripping out material from an old building. That may occur at any time because many buildings throughout the world still contain asbestos. In this country the exposure could take place after the passing of the Bill, even though the supplier ceased to have any control over the material many years prior to the exposure. In the United States and Italy, for instance, a parent company is fully liable for the debts of its subsidiaries. In effect there is no corporate veil. The Bill will place English companies in a situation where they will cease to be protected by the laws of England in respect of acts carried out by subsidiaries abroad. Also, the Bill makes no reference to damages, which is extremely important when a company is exposed to the laws of the United States where damages may be severe.

Leaving the general background, I rum specifically to Amendment No. 3. In the Second Reading debate the noble and learned Lord the Lord Chancellor said that the Bill was not retrospective. The amendment seeks to make that clear on the face of the Bill rather than in the columns of the Official Report. However, this afternoon I received a letter from the noble and learned Lord—I thank him for his courtesy in sending it to me—which relieves my anxieties in part on this matter. However, at the same time I should like his observations on retrospection to be recorded in the Official Report.

Amendment No. 4 relates to what is known as the corporate veil. For instance, in America liability against a defendant can be established on grounds alien to English law. In broad terms, any parent company obtaining a financial benefit from the activities of a subsidiary can be made liable for the activities of that subsidiary and can be made responsible for any damages awarded against the subsidiary. That is achieved in various states in America by piercing the corporate veil. In England, while that may occur, it is rare and was expressly not allowed in the case of Cape v. Adams where the supply of asbestos was by a South African subsidiary. That should be compared with the practice in the United States, where, on the same facts, American courts entered judgment against Cape for the activities of its subsidiaries even though Cape did not itself supply the product. If the English courts apply American law to the cases in England, it is part and parcel of that law that a parent company can be made liable for the acts of its subsidiaries. English courts will have to apply that law if the Bill is enacted. Amendment No. 3 asks for clarification.

Amendment No. 5 refers to damages. Mr. John Taylor, the Parliamentary Secretary in the Lord Chancellor's Department, wrote to Michael Grylls MP on this matter some weeks ago. Mr. Taylor said that very large damages will not be awarded by English courts, as they are in America. However, the Bill offers no protection in that respect. I take it that the damages will be entirely a matter for the court.

The danger to Cape and other companies lies in the United States where, according to the current issue of the Economist published at the weekend, asbestos victims in the United States are five times as likely to sue as they are in the United Kingdom. Great danger lies there to companies in this position. If Mr. Taylor is saying that, for the purposes of establishing liability between the parties, the applicable law as set out in Clause 11 of the Bill should apply but that such law should not apply to the assessment of damages which would be in accordance with English law, it would be better if the Bill were to say so clearly on its face. I am told that the public policy provisions would not apply under paragraph 13(a) (i) as there is at least one English court decision enforcing Texas levels of damages.

It is not my intention to press the amendments today. My intention is to probe the meaning of the part of the Bill to which I have referred for the comfort of Cape and for the comfort of other British companies which might find themselves in the same position, especially in the United States. I beg to move.

4 p.m.

The Lord Chancellor

My Lords, it may be for the convenience of the House if I take Amendment No. 3 and then deal briefly with the other amendments. Amendment No. 3 suggests inserting at the end of Clause 13 the words: including acts or omissions where the knowledge required to bring an action for damages in respect of any claim for loss or damage they occasion is not available until after the commencement of this Part". The provision in the Bill states: Nothing in this Part applies to acts or omissions giving rise to a claim which occur before the commencement of this Part". I do not think that one can have knowledge of acts or omissions before the acts or omissions occur. Accordingly, the amendment is already more than covered by Clause 14(1). As the noble Lord said, I sought to explain that to him in a letter which I wish he had received even earlier.

With regard to Amendment No. 4, questions of the liability of a holding company for its subsidiary will be an issue which will be separate from the issue of straightforward liability in the area to which the case referred. I would think it highly likely that the correct way to apply this Bill to that would be by determining the relationships between the holding company and the subsidiary on the basis of the law governing that particular relationship in the place where the relationship was constituted.

With regard to damages, issues relating to the quantum or measure of damages are at present and will continue under Part III to be governed by the law of the forum; in other words, by the law of one of the three jurisdictions in the United Kingdom. Issues of this kind are regarded as procedural and, as such, are covered by Clause 14(3) (b).

It follows from this that the kind of awards to which the noble Lord referred of damages made in certain states, in particular in parts of the United States, will not become a feature of our legal system by virtue of Part III. Our courts will continue to apply our own rules on quantum of damages even in the context of a tort case where the court decides that the "applicable law" should be some foreign system of law so far as concerns the merits of the claim.

Some aspects of the law of damages are not regarded as procedural and, in accordance with the views of the Law Commissions in their report on the subject, Part III does not alter this. These aspects concern so-called "heads of damages"—the basic matter which is being compensated for—such as special damage relating to direct financial loss. Whether a particular legal system permits such a head of damage is not regarded as procedural but substantive and therefore not automatically subject to the law of the forum. This seems right given the intimate connection between such a concept and the particular nature of the case in issue. But again, I foresee no significant increase in awards of damages because a particular head of damage permitted by some foreign system of law would continue, so far as the quantum allocated to it in any finding is concerned, to be regulated by our own domestic law of damages.

I hope the noble Lord will feel reassured on the three matters he has raised and will feel able in particular to withdraw Amendment No. 3.

Lord Howie of Troon

My Lords, I am always reassured when the noble and learned Lord the Lord Chancellor says something to me, no matter what it is. Not being a lawyer I shall study Hansard tomorrow to see just how and where I have been put right. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 4 and 5 not moved.]