Crime and Courts Bill [Lords]

Debate between Baroness Harman and John Redwood

Monday 18th March 2013 Commons Chamber

[Ms Harman]

I am well aware that many arbitration cases are incredibly complex—for example, those in the construction industry. However, one thing that the recogniser established under the royal charter is charged to do is to see that the regulator, which is coming forward to seek recognition, has an inexpensive arbitration system. Obviously, it is not automatic that an arbitration system will be inexpensive—it could be very expensive—but the regulator, seeking recognition, has an opportunity to put forward a brand new system that starts off by trying to be as inexpensive as possible; it is free of cost for the complainant but there are the costs of running it. I apologise for my slightly waspish response to the hon. and learned Gentleman’s intervention; I must have been trying to get my defence in first.

That deals with the point about arbitration and costs, and I now wish to deal with the issue of exemplary damages. Obviously, the bar for those is set very high and they are rarely awarded. As hon. Members will know, they occur where the court wants not only to quantify the compensation for the claimant’s suffering and loss—mental, physical and financial—but to teach the defendant a lesson. Sometimes called punitive damages, exemplary damages are awarded to make an example; they are like a public policy intervention that gives a good bonus to the claimant, because the court wants to teach the defendant a lesson and so imposes extra damages.

New clause 21A sets the bar for exemplary damages very high, as it provides that the “defendant’s conduct” must have

“shown a deliberate or reckless disregard of an outrageous nature for the claimant’s rights”.

In addition, the conduct must have been

“such that the court should punish the defendant for it”.

We know what we are dealing with here—very extreme conduct.

[Mr John Redwood (Wokingham) (Con)]

We are being asked to legislate for exemplary damages here in this House, so does that mean that this really is a statutory system and that the right hon. and learned Lady won?

[Ms Harman]

No, because there is no statute that says, “We are setting up a system and we are passing a law to make all the newspapers be in it.” The newspapers have a choice as to whether or not they enter the system. However, the point is that we are incentivising them to enter it and disincentivising them from staying outside. They could make a judgment that they want to stay outside. They could decide that they do not want to go to arbitration and that they will take their chances with the court. They might decide that they will be so careful that they will never commit a media tort, and even if they did, that they would never get anywhere near the “outrageous” behaviour that would justify exemplary damages and so would not need to worry about that. I hope that they will not take the view. I hope they will think that, even if they are not behaving outrageously, they would want to shelter themselves from the prospect of exemplary damages. I hope that they will go into the system willingly. Exemplary damages will still be available to the courts to award against people who are in the regulator, but it is more or less a presumption that those people will not be in it. That is a major disincentive.