Trade Bill

Lord Hope of Craighead Excerpts

Committee stage
Tuesday 13th October 2020 Lords Chamber

[Lord Hope of Craighead (CB) [V]]

My Lords, I have great sympathy for the thinking that lies behind these amendments, and I have huge admiration for the unremitting way that my noble friend Lord Alton carries on his campaign to root out genocide and to bring its perpetrators to justice wherever they can be found. It is a hard struggle. The UN Convention on the Prevention and Punishment of the Crime of Genocide now seems, with hindsight, to be a deplorably weak instrument for dealing with the challenges we face today. It was indeed the first such treaty of the modern era, as my noble friend Lady Falkner pointed out, but it is simply not up to the job.

It was conceived in the mid-1940s as a reaction against the Holocaust that the Nazis’ policy of extermination had created in Europe. It was assumed that it would be enough to require the contracting parties to enact the necessary legislation and, having done so, to require them to bring those within their jurisdiction who were charged with genocide to trial. But we can now see, in today’s world, how ineffective and perhaps naive this relatively simple convention is.

The UN convention against torture of 1987, which we became familiar with in the case of Senator Pinochet, is a much more powerful instrument. He had travelled to this country for health reasons and, no doubt to his great surprise and dismay, found himself open to proceedings brought against him under that convention in Spain. This was because he had travelled to this country, which was one of the signatory countries that was bound by the convention to extradite him to be tried there. The Law Lords in this House, of whom I was one, upheld the Spanish prosecutor’s request, although in the end Senator Pinochet was allowed to return to Chile. I mention this just to make the point that the torture convention is a much more far-reaching instrument, although even it would probably still fall short of what is needed to deal with the crime of genocide in the countries where it is now prevalent, which have been referred to this evening, simply because those countries would almost certainly refuse to release the perpetrators to a country where they could be brought to trial.

We have to make the best of what we have. We cannot go down the direct route of bringing the perpetrators to trial here, so some other route must be found. We cannot just turn our backs on this appalling crime, and we must be grateful to the noble Lord for doing his very best to see that we do not. The greatest barrier that the noble Lord, Lord Alton, has faced has been in trying to devise a mechanism for bringing the issue before our courts. We have to do this here, because there is no standing international tribunal that has universal jurisdiction in this matter.

Our courts can deal only with those over whom it has jurisdiction according to our rules, and as a general rule it can deal only with crimes committed here in this country. Parliament may give our courts extraterritorial jurisdiction over offences committed abroad, but it must do so expressly, and the accused person must be in this country when and if he is to be tried here. We have had extraterritorial jurisdiction in the case of the murder of British nationals committed abroad, since 1861; and, more recently, in the case of the taking of hostages, since 1982; torture, since 1988; and terrorism, since 2000. But even if genocide had been on the list, without a strong UN convention that would enable us to get the people who really matter here to be tried it is almost impossible. So what else can be done?

The procedure which the noble Lord has chosen has my full support. Let me bring the bare bones that we see before us to life. There are two very important advantages, which I think are worth mentioning. First, you need to have someone with a relevant interest to bring a proceeding before the court; the person or group of persons referred to in these amendments will almost certainly satisfy that requirement. This in itself is a big step forward.

Secondly, what it provides will allow for due process in a hearing in full accordance with the rule of law. By this I mean that notice of the proceedings will be served on the Secretary of State and on a representative of the other signatory to the agreement, as they must both be given a right of reply. This is to enable the Secretary of State to appear and present such arguments as he or she thinks fit, and the other signatory, if it wishes, will have that opportunity, too. This is important, because the court will wish to test the argument in support of the application that is brought before it. There will be two questions before it: first, can the court be satisfied that the crime of genocide has been committed; and, secondly, should it grant the remedy to which the amendment refers?

I wish to stress that the procedure the noble Lord proposes is a very serious matter, not a mere formality. It will result, if it proceeds, in a fully reasoned judgment by one of our judges. That is its strength, as a finding by a judge in proceedings of this kind in the applicant’s favour will carry real weight, quite apart from the effect it will have on the relevant agreement. I think that it will achieve its object, but if a refinement in its wording is needed to be sure that it will do so, that refinement should certainly be made. I, too, very much hope that the Minister will support this amendment.

[Lord Sheikh (Con) [V]]

My Lords, it is imperative that we support Amendment 68, proposed by the noble Lord, Lord Alton of Liverpool. I commend him on his excellent speech; he did indeed speak from the heart.

At the outset, I would like to say that in 1972 my family and thousands of Asians were expelled from Uganda by General Amin. I have personal experience of ill treatment being imposed on innocent people by a tyrant. I have spoken previously about crimes against humanity in your Lordships’ House. I would like to declare that I am the co-chair of the APPG for the Prevention of Genocide and Crimes Against Humanity.

I commend the noble Lord, Lord Alton, on this amendment, which sends a clear message that the UK will not be associated in any way with regimes found by law to be committing genocide. The amendment would mean that regulations made under this Bill to authorise the implementation of trade agreements would be revoked if the High Court of England decides that they should be, on the grounds that a signatory to a relevant trade agreement has committed genocide.

The amendment would also grant the right to persons or groups of persons belonging to national, ethnic, racial or religious groups that have been subjected to genocide to oblige the UK courts to request that a trade agreement be revoked. It is right that the High Court decides, as the court will be impartial and decisions will be arrived at logically.

In 2017, the Conservative Party published the Kigali declaration affirming our commitment to prevent and punish genocide. The declaration states:

“Whether at home or abroad we will seek to protect individuals and groups who are targeted because of their identity, from hate crime to genocide to violent extremism. Our responsibility to protect begins at home but extends around the world.”


This requires us to ensure that any potential violation of human rights is considered before doing business with any country. If the United Kingdom maintains trade agreements with states committing genocide, we risk being seen as complicit in these crimes and we send a message that our trading partners may commit genocide without any consequence.

This amendment must be accepted, because the UK is a signatory to the UN Convention on the Prevention and Punishment of the Crime of Genocide and the 2005 Responsibility to Protect commitment. Furthermore, the International Criminal Court in 2001 incorporated the Rome statute into English law. These commitments mean that we have a legal and moral obligation to act against genocide.

I and other Members of your Lordships’ House spoke on Second Reading of the Medicines and Medical Devices Bill about the treatment of Uighurs and Falun Gong in China. Evidence of the Uighur genocide is growing. The Network of Chinese Human Rights Defenders has estimated that 1 million Uighurs have been detained and organs are being harvested on a massive scale. The Australian Strategic Policy Institute report suggested that 80,000 Uighurs were transferred out of Xinjiang between 2017 and 2019, and they are likely working under forced labour conditions while supplying global brands.

The proposed amendment is modest. The United States has gone much further to condemn and punish those responsible for those human rights abuses. Earlier this year, Congress passed the Uyghur Human Rights Policy Act, which places sanctions on officials responsible for oppression of Uighurs in Xinjiang. US companies with operations in Xinjiang have been compelled to ensure that their supply chains are free from forced labour.

Furthermore, US Customs and Border Protection has issued five withhold release orders barring imports from such producers of cotton, apples, hair products, computer parts and other goods in the Xinjiang region. The House of Representatives recently passed the Uyghur Forced Labor Prevention Act with almost unanimous support from both main parties. If this law, which now has to go to the Senate, is passed, it will ensure that goods made with forced labour in the Xinjiang region will not enter the US market.

Through these Acts, the United States holds the Chinese Government accountable and ensures that Americans do not benefit from goods created by forced labour or under potential genocide. This amendment goes some way towards this, by giving UK courts the option to remove trade co-operation with states found to be perpetrating genocide, establishing a principle that may be taken further in future legislation.

Trade Bill

Lord Hope of Craighead Excerpts

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Thursday 8th October 2020 Grand Committee

Therefore, I hope that the Minister, in responding, will support the principles behind our two Amendments 61 and 62 and, if he has any technical objections rather than objections in principle, will come back at Report with government amendments that we can all support.

[Lord Hope of Craighead (CB) [V]]

My Lords, it is a pleasure to follow the noble Lord, Lord Hain. I find myself in agreement with much of what he said. I speak to Amendments 26 and 27 in this group. As we have heard, they both address the same point about engagement with the devolved Administrations when a Minister of the Crown is exercising the powers conferred by this clause. I am grateful to them for raising this subject, which I raised at Second Reading. As I think the Minister will recognise, how devolution is addressed in the Bill is most important and has to be handled wisely, as the noble Lord, Lord Wigley, so rightly said.

Of the two amendments before us, I prefer that in the name of my noble kinsman Lord Stevenson of Balmacara. That is because the context for this discussion is the making of orders by delegated legislation, which is the privilege of Ministers, not of legislatures. Obtaining the consent of the relevant Minister in the devolved Administrations, rather than of their legislatures, seems the better and easier route in this context. But that is a side issue; the issue of principle matters. I agree with and endorse the points that the noble Lords proposing these amendments made in support of them.

I take this opportunity to thank the noble Lord, Lord Grimstone, for the very helpful reply he gave to a letter that I wrote to him, after Second Reading. This came about because I happened to be in the Chamber and took part in the debate personally, so I was able to take advantage of the opportunity, which noble Lords participating virtually do not have, of catching a moment with the Minister afterwards. I asked him why, as was the case, he had not answered the questions that I put to him in my speech. The noble Lord, Lord Stevenson, also noted the lack of any response to them, as he recalled when he was speaking in this debate yesterday. Very kindly and without hesitation, the noble Lord, Lord Grimstone, invited me to write to him instead, and gave me his email address. That is how this letter to me came about, and I am most grateful to him for the generous way he responded to my inquiry.

While I do not agree with everything it says, this letter has provided far and away the best and most thorough explanation that I have received for the Government’s approach to amendments asking for consent to be obtained from the devolved Administrations to be put in the Bill, and why they have almost always been refused. Although I greatly regret the refusal, it at least shows that the Government are thinking about the issue.

I am sure that we will have to return to this in the different and much more controversial context of the United Kingdom Internal Market Bill, on which a storm is brewing with the devolved Administrations about UK market access provisions, which is every bit as powerful as that for Part 5 of the Bill. But the context here is different: this Bill is concerned with international agreements for which, although implementation is devolved, the UK Government are ultimately responsible internationally. Both the Scottish and Welsh Ministers have recommended that their legislatures give their consent to the Bill, so we are in much calmer territory, but I wish to support these amendments and to explain why.

I start by taking up a point that the noble Lord, Lord Stevenson, made at the outset of his speech. Referring to the Sewel convention, he said that the question of whether it should or could apply to delegated legislation is still open. The time has come for us to put that to bed, once and for all. It should now be recognised on all sides that the principle of the convention extends to delegated legislation by UK government Ministers in the same way as it does to legislation by the UK Parliament. In view of the importance of the matter, perhaps I can be allowed to say why that is so. I have the following reasons.

First, there is no doubt that, if he had been asked about this at the time, Lord Sewel would have said that his remark applied to the use of delegated powers too. It did not occur to any of the noble Lords who were there 20 years ago to ask him about this, because the idea that delegated powers might be used in this area was nothing like as obvious as it is now. Today, we all appreciate that Brexit could not be made to work across so many areas without resort to delegated legislation on a scale far removed from what we were used to that long ago. That is why the issue has been raised time and again during this process.

Secondly, the convention, as first formulated by Lord Sewel—recorded more formally in a memorandum of understanding and put into statutory language by Section 2 of the Scotland Act 2016—refers to legislation by the Parliament of the United Kingdom only. But we are dealing here with a convention, a political statement, and not black-letter law. What really matters is the principle that lies behind it. There is no logical reason whatever for not applying the Sewel principle to delegated legislation too.

Thirdly, we need look only to what happens in practice. There is a very high level of engagement, at official level at least, between the devolved Administrations across the board and the UK Government. There is no suggestion there that the fact that delegated legislation may be in prospect, rather than primary legislation made in this Parliament, makes any difference.

Finally, there is the noble Lord’s letter. It contains an express commitment that the UK Government will not normally legislate using the Bill’s powers—these are delegated powers—in areas of devolved competence without consent of the relevant devolved Administration, and never without consulting them first. There it is: Sewel applies here too. It applies across the board.

To cement this into our practice, so that we can refer to it whenever it is needed, we should give this commitment a name. I would call it the Sewel principle. It is striking, and to the Government’s great credit, that nowhere in the letter is it suggested that we are limited nowadays by the precise wording of the convention. It is the Sewel principle that is being applied now. Although the memorandum and statute are silent on the point, they do not exclude this approach so, please, let us say farewell to any idea that the question of whether it applies to delegated legislation is still open.

As for the reasons given in the letter for the Bill not providing that UK government Ministers must seek the consent of the devolved Administrations, I will make a few points. First, it is said that to do that would discourage consensual intergovernmental working and incentivise bringing disagreements to the courts. Reference is made to the case of the UK Withdrawal from the European Union (Continuity) (Scotland) Bill in the Supreme Court as an example of the lengthy litigation that may result. I simply do not follow that argument. Surely the best and most secure way to avoid disagreements is to proceed by consent. That is what these amendments seek to achieve. They are all about settling disagreements, as the noble Lord, Lord Wigley, said.

Trade Bill

Lord Hope of Craighead Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 8th September 2020 Lords Chamber

[Lord Hope of Craighead (CB)]

My Lords, following the points made by the noble Lord, Lord McConnell, my interest in this important Bill is in how it deals with the devolved authorities. The sensitivity of arrangements relating to trade cannot be overstated. Plans are already being made by the Scottish Government for the holding of a second referendum on independence after the elections to the Parliament at Holyrood in less than eight months’ time. This is an increasingly perilous time for those who believe in the union. Anything that might be seen as failing to respect the desire of the Scottish Government to be free to run their own affairs as they choose in this crucial area and set their own standards will be seized on by supporters of the campaign for independence. I will leave that warning on the table for now and concentrate on the Bill.

There are two points to which I wish to draw attention. First, international relations and the regulation of international trade are reserved to the UK Government here at Westminster, so the devolved authorities have no formal role in the negotiation or approval of these agreements. However, the implementation of an international trade agreement in the devolved nations is a devolved matter, and there are bound to be cases where the content of an international trade agreement will affect an area of devolved competence. We can see how the Bill deals with the exercise by the devolved authorities of their powers in that regard in Schedule 1, which states that

“no provision may be made … unless it is within the devolved competence”.

There can be no complaint about that, and the absence of any attempt now to limit what may be done here within a devolved competence is as it should be. However, we are told that:

“No regulations may be made by a devolved authority … about any quota arrangements … unless … after consulting with a Minister of the Crown.”


This looks like a constraint on the exercise of devolved powers so it needs to be explained and justified. What is the purpose of that provision? Can we be assured that it is consultation for information only and is not intended to fetter those powers in any way?

Secondly, conspicuous by its absence from the Bill is any provision about what would happen if the power in Section 2 to modify retained EU law were to be used by Ministers of the Crown to amend legislation in the devolved areas. It is often said, when issues of this kind are raised, that such powers are not normally used without the consent of devolved Ministers, but why in a matter of such importance as this does an unqualified requirement for consent not appear in the Bill? There is not even a requirement to consult the devolved Ministers before doing so, in sharp contrast to what Schedule 2 says that those devolved Ministers must do. Why not? What is sauce for the goose should be sauce for the gander. Can the Minister assure the House that those Ministers will at least be consulted and their consent sought before any such provision is made amending legislation in the devolved areas?

Corporate Insolvency and Governance Bill

Lord Hope of Craighead Excerpts

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Tuesday 23rd June 2020 Lords Chamber

Moved by

[Lord Hope of Craighead]

1: Clause 1, page 3, line 26, at end insert—
“(ca) a list by the directors of all known creditors of the company,”Member’s explanatory statement
This amendment is to assist the monitor in their duty to notify every creditor of the company of whose claim he or she is aware.

[Lord Hope of Craighead (CB) [V]]

My Lords, Amendment 1 in my name is the first of 32 in this group, but it has no connection with the others. Fortunately, I need to speak to my amendment only briefly and do not intend to press it, for reasons I will explain.

The amendment, which is in the same terms as one I moved in Committee, proposes an addition to the list of relevant documents that must accompany the director’s application for a moratorium. My concern has been that the system that the Bill lays down for informing creditors that a moratorium is in force, and when it will come to an end, is too weak, because the monitor’s duty is to notify only those creditors of whose claims he is aware. There is no suggestion in the Bill that he is under a duty to make inquiries. I proposed that, at the outset, the directors should provide a list of all known creditors of the company when making the application.

When the Minister replied, he gave reasons for not accepting the amendment that suggested that he had not understood my point. He said that it had never been the Government’s intention that the moratorium should be used to

“‘line up the ducks’ for a pre-pack administration”.—[Official Report, 16/6/20; col. 2092.]

He added that, as with all administrations, the likelihood of a substantial return to unsecured creditors was small. I, however, had made no mention of going into administration.

The purpose of the moratorium, as I understand it, is to keep the company alive as a going concern. However, freezing the debts for the period of the moratorium is bound to have consequences for the creditors. They might have to take urgent steps to avoid financial embarrassment until their bills are paid, such as adjusting their cash flow or seeking to extend their overdraft. They need to know what is going on. That is especially the case for creditors—many of them SMEs—whose debts are not secured. Unlike the banks and HMRC, they are likely to have nothing to fall back on if the moratorium does not succeed in rescuing the company.

The issue was too important to be overlooked, so I decided to raise it again on Report, and I wrote to the Minister to explain why. Happily, I have received his reply, which is most useful, and for which I am very grateful. The essence of it, which I want to put on the record, is that the Minister agrees that

“the monitor needs to have contact details for the company’s creditors at a very early stage … to enable the monitor to comply with their duty to notify creditors … In order that the proposed monitor can make the statements … that it is likely that a moratorium would result in the rescue of the company as a going concern, they will need to undertake enquiries into the financial position … of the company. … It is envisaged that the proposed monitor would … obtain a list of the company’s creditors”

and their relevant details as part of these inquiries.

“Guidance to this effect will be provided to insolvency practitioners … the monitor … will have to evaluate whether the information provided is of a nature they can rely upon, or whether they need to undertake further enquiries … to ensure they have a list of all creditors.”

They can also take further measures during the moratorium to obtain any information they require, and this could include information about creditors. Information and feedback on the effectiveness of the measures in the Bill will be monitored, and use could be made, if necessary, of the power in Section A6(4) to add to the list of relevant documents.

In the light of the information that the Minister has given me, I am satisfied that it would place an unnecessary burden on the directors to submit a list of the creditors when applying for a moratorium, as I was proposing. I would, however, ask the Minister to confirm two things: first, that my understanding of the position, as I have narrated it, is correct; and, secondly, that a copy of his letter to me has been placed in the Library. I beg to move.

[Lord Leigh of Hurley (Con)]

My Lords, there are seven amendments in my name and that of my noble friend Lord Trenchard: Amendments 2, 6, 7, 9, 10, 16 and 17. All seven, however, address pretty much the same point, which is to allow the directors of a company, or its monitors—both those in the UK and those overseas—to enter into a moratorium, extend its life or end it, if they believe that, even if there is no hope for the company itself, the business operating within that company is likely to be saved.

I appreciate that the Government have never seen the moratorium as part of the administration legislation —they argue that the rules on administration are adequately covered elsewhere—but it is the job of this House to help the Government by explaining how events actually evolve in the world of business and fervently hope that the Government listen to us.

I am very sorry that so many amendments from Committee did not make it to Report, in particular those from the noble Lord, Lord Stevenson of Balmacara, the noble Baroness, Lady Bowles, the noble Lord, Lord Hodgson, the noble Lord, Lord Palmer, and others. Wonderful real-world experiences were offered during Committee, primarily around the role, conduct and independence of the monitor, all of which have been lost, after being discussed in this House and the other place. That is a shame.

The issues raised in my amendment attracted quite some comment and, if I may so, approval from all sides of the Committee, I think I am right in saying. I remain very grateful to noble Lords from all sides of the House who spoke in support in the Chamber and to me directly subsequently. I am grateful to the Minister and his officials, with whom I have had some very open and helpful conversations in the past few days. I was not graced with a letter as the noble and learned Lord, Lord Hope, was; none the less, we have had a discussion.

There seems to be a fixation with rescuing the company. The company is no more than a vehicle. I think all this stems from the Enterprise Act, where there was confusion in the debate, but I hope there is no confusion now and that we can all agree that we want to arrange matters as best we can so that businesses and jobs, not necessarily companies, survive a liquidity crisis and stay alive. It may well be that sometimes an administration is helpful and a sensible outcome, but the current drafting puts pressure on the monitor to try to save a company where, frankly, there may be no point.

Likewise, the desire to avoid pre-packs is misguided. Yes, there have been some abuses, which have been public and well-documented, but they are small and typically relate to small insolvencies, and the Small Business, Enterprise and Employment Act created the excellent pre-pack pool, which is now in real danger of collapse as a result of this Bill. I welcome Amendment 45, in a later group, which addresses this point.

There is concern that pre-packs favour one particular purchaser, the existing owners, as they have the advantages of knowing the business and speed, so a moratorium in those circumstances is perfect. The time extension allows the monitor to ensure fair play on information access and for new buyers to be sourced and approached. However, it will be very difficult for a monitor to tell the court that administration is not likely. In fact, it will be the reverse. I spoke to an insolvency practitioner only last week who is working on a particularly troubled business right now, with some 10,000 employees and more than 30 different companies. Not all of them will be saved; at least some will go. However, the rest could be saved and the entire business could be saved, but under these proposals he will not get a moratorium, despite being certain that a solution can be found. He cannot take a group approach because under English law each company is a separate entity. He is beside himself in despair at this proposed legislation. Very few real-world rescues are ever done with existing entities. It is not always a bad result that a business is bought through administrators. If creditors lose out, at least there is a chance to recoup some of those losses through future trade.

I am a little worried by the withdrawal of the Henry VIII powers in government Amendments 3, 8 and 11 in this group, as their removal may restrict the Government from making helpful changes. The Government are clearly more swayed by the appeal of the noble Lord, Lord Stevenson, than by mine. I ask the Minister to think again about whether those amendments achieve what he seeks. I hope he will listen to petitioners, some of whom he has now met with me, and commit at the Dispatch Box to consider a change, as sought in these amendments, if it is clear that business recovery will be impeded without the proposals that my noble friend Lord Trenchard and I seek. If the Bill does not give sufficient time for directors and monitors to find a sensible way out for businesses, there will simply be closures and asset realisations. I look forward to hearing what the Minister will say and very much hope that he will give me some assurances that the Government will find a way to keep an open mind, because I believe that if there were a Division, the House would support these amendments.

--- Later in debate ---

[Lord Callanan]

I do not think that I used the word “leaking”. We want the moratorium to be a light-touch procedure with the minimum level of bureaucracy. Of course, it goes without saying that any information being disclosed from whatever source of a company’s intention to go into this procedure could have serious adverse consequences if certain creditors seek to pre-empt the operation of the moratorium. However, we have built concessions into this part of the Bill. I hope noble Lords will be able to accept them. I take on board the noble Lord’s points, although I did not use those words.

[Lord Hope of Craighead [V]]

I am very grateful to those noble Lords who spoke in support of my Amendment 1. I am grateful to the Minister as well for giving me the two assurances which I sought when I introduced the amendment.

I feel that there was a note of some disappoint from some noble Lords that I would not press the amendment, so I will explain very shortly why I took that decision. The letter that was circulated—I am grateful to those responsible for doing that—sets out in some considerable detail the various points which one needs to bear in mind as background to the wording of the Bill. It does, of course, require one to give rather more weight to the guidance than what one finds in the Bill’s wording, which I said was somewhat weak, but I am prepared to accept that guidance and test the matter against the point which the Minister made in Committee that adding a burden on to the directors of the company when a company needs to enter into the procedure as quickly as possible would be undesirable if to do so would be unnecessary.

That really is the essence of the point I asked myself: am I satisfied, in view of what the Minister said in his letter, that the burden would indeed be unnecessary? In the end, the answer to that question was yes. For these reasons—and I express my gratitude again to the Minister for his helpful letter—I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Corporate Insolvency and Governance Bill

Lord Hope of Craighead Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 16th June 2020 Lords Chamber

[Lord Mendelsohn (Lab) [V]]

My Lords, I will speak to Amendment 3 and make some general observations.

Amendment 3 relates to the recognition of the appropriate debts of creditors. In particular, one must be concerned about smaller businesses, which may well suffer as creditors and unsecured creditors from such a transaction. While these may be smaller crumbs of comfort than the overall Bill, it is absolutely right that businesses that fall into this process properly recognise the full extent of the debts that they owe so that statutory interest is recognised as a cost and a consequence for them. It is right that these debts should be appreciated and recognised in the statements that the monitors have to put forward. I hope that the Minister will consider the Government introducing this measure, not just to make sure of the full amount that is owed to a company because of late payment and late settlement of their debts but also because it sends an important cultural message.

I support some of the measures introduced by other Members of this House. In particular, it is very important that we probe the Minister for much more detail about the role of the monitor. We must look at the qualifications, skills and independence of the people who will occupy those posts, as well as the costs.

Here I am concerned that the impact assessment itself shows that very little work has been done on the likely operating mechanisms of the Bill. The figures that it uses are from a study in 2010, and I hasten to add that in the last decade we have seen a significant increase in the rise of professional service costs, and the costs in the impact assessment do not fully recognise those.

We do not have a full appreciation of what skills are required for this, and I strongly support the notions expressed by my noble friend Lord Stevenson that there are many others who we might want to introduce into this area who have appropriate skills that are recognised by professional accountancy bodies. Many people who have been involved in the turnaround industry would do very well at this task—much better than qualified insolvency practitioners. I would be interested to hear the Minister’s comments as to how the Government will look at the appropriate skills that are required for someone to successfully be able to carry out the role of a monitor, including the measures to try to ensure the proper independence of the monitor, that they have a real view for the potential future success of the business and that they are not beholden to any particular class, but particularly those who are connected parties.

However, I strongly support the amendment, which addresses the difficult question about the time for a monitor. This process should be given an extended period, and it would be worth while in the first instance extending the first period to ensure that we do not go through a quick cycle to make sure that it is there.

On the amendment in the name of the noble Lord, Lord Leigh, while many people will consider this to be a difference without a distinction, he will be able to express the nature of his interpretation.

It is important also to probe the Minister on the fact that we have seen that many businesses, particularly at latter stages, like to structure themselves in such a way that they can move a variety of the different connected parts of the business through different processes, and will disaggregate the overall enterprise and take individual companies to be able to crush suppliers or deal with the dispensing of staff during that period. It is important that the application of a company’s business helps us ensure that companies do not act inappropriately and section off parts of their businesses, as we saw just a couple of days after Second Reading, with one of the most disgraceful pre-packs of all time. A connected part of a business was crushed in order to eliminate the full suppliers, and it isolated a particular business rather than the whole enterprise. It will be important for the Minister to give us some reassurance that the definition of a company does not allow businesses to game the system, or allow some form of recourse or interpretation that makes that possible.

[Lord Hope of Craighead (CB) [V]]

My Lords, I will speak to Amendment 4 on the Marshalled List, which is in my name.

The context for what I propose is to be found in new Section A8, which requires the monitor, as soon as reasonably practicable after the moratorium comes into force, to notify every creditor of the company of whose claim he is aware, giving notice of when the moratorium came into force and when it will come to an end. The importance of this duty is highlighted by the fact that the monitor commits an offence if he fails without a reasonable excuse to comply with it. That is as it should be, as the creditors need to know about the moratorium as soon as possible, because it has such an obvious effect on them and their interests. Their right to recover the debt is effectively frozen for the duration of the moratorium. That may have significant adverse effects, which may need to be provided for urgently to avoid the creditors’ financial embarrassment. But the monitor’s duty to notify the creditors extends only to those of whose claims he is aware. There is no suggestion anywhere in the Bill, so far as I can see, that the monitor is under a duty to make inquiries. Therefore, the provision, as it stands, is a rather weak protection for the creditors, whose interests will inevitably be disadvantaged by the moratorium, against which they are being given no right to object.

In that context, I am proposing an addition to the list of relevant documents in new Section A6. These are the documents that must accompany the directors’ application for a moratorium. The amendment seeks to add to the definition of “the relevant documents” in Section A6(1) a list by the directors of all known creditors of the company. The aim of the amendment is to ensure that the monitor has access to this information as soon as possible. That is because he really does need it, if the performance of his duty to notify is to be effective for the protection of the creditors. The directors are, of course, in a much better position to say who the creditors are than the monitor, who is a newcomer to its affairs. Adding this list to the definition will greatly strengthen the effectiveness of the duty to notify in new Section A8. It will enable the performance by the monitor of his duty to notify to be much more effectively scrutinised, and enforced, if necessary, than it would be if all that can be done is to rely on what he happens to be “aware” of.

I should explain that the need for a provision of this kind was drawn to my attention by the Law Society of England and Wales. The wording of it has its support, and I invite the Minister to look at it very carefully. I appreciate, of course, the pressure the Minister is under to get the Bill through as soon as possible, and that the time he may need to get clearance for any amendments to it is also very limited. I would therefore be content if the Minister would give an assurance that he will indeed look at this matter and at the gap in the creditors’ protection that it exposes, perhaps with a view to an amendment by regulation under the power provided by Clause 18(1)(a), as R3 suggests, once the way these measures are working out in practice has been tested in the marketplace.

[The Deputy Chairman of Committees]

I understand that the noble Lord, Lord Lennie, does not wish to speak, so I call the noble Lord, Lord Hodgson of Astley Abbotts.

Corporate Insolvency and Governance Bill

Lord Hope of Craighead Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Tuesday 9th June 2020 Lords Chamber

[Lord Hope of Craighead (CB) [V]]

My Lords, this is a formidable Bill. Some years ago, I edited the chapters on companies and insolvency law in a practitioners’ textbook and I used to practise in this field myself, so I have some insight into how extensive and complex these subjects are. I pay tribute to those responsible for putting the Bill together. At first sight they appear to have covered the ground very well, but their product has been a challenge for us in this House as we try to master this emergency Bill in such a short period of time.

I have no problem, in principle, with the temporary provisions about meetings of companies and other bodies, or the extension of the periods for filing accounts and providing information for the registration of changes in corporate governance. These are sensible measures in a situation where deadlines of that kind are incapable of being met. The wrongful trading provisions and the provisions about corporate insolvency, however, need to be looked at more carefully. Concern has been expressed about the phrase,

“the court is to assume that the person is not responsible”,

in Clause 10, which is about the suspension of liability for wrongful trading. Can the Minister tell the House whether this assumption is intended to be irrebuttable? If it can be rebutted, the protection the clause offers will be less certain than the word “suspension” in the clause suggests. Directors, who, as has been pointed out, may be subject to action for other breaches of duty, will need to know where they stand in this respect.

As for the moratoriums, it is not difficult to see the value of these for companies in financial difficulty, but giving protection to debtor companies that delays the taking of remedies against them by their creditors is bound to have implications for the creditors too as time goes on. It is important to get the balance right between these two competing positions. My impression is that the banks are content, for the time being, not to press too hard on companies that are in difficulties, and the property market is in such an uncertain state in present circumstances that there is little incentive for the holders of fixed securities to call them in. However, in the longer term, as creditors become less relaxed about the situation, challenges will arise that will need to be faced up to. That may be a further reason for keeping the provisions of the Bill under careful review.

I have one or two particular points to make. Further thought needs to be given to limiting debts that are eligible for priority as moratorium debts in order to avoid abuse of that privileged position and, as has already been suggested, damage to the position of HMRC as a preferential creditor, given the immense harm that situation may create, particularly for other creditors. On the notification requirements in Chapter 3(A), should the company not be required to provide a list of its creditors when making the application, to assist the monitor? As for Chapter 3(A9), should there not be a limit on the number of extensions, and an overall limit on them without the creditors’ consent? As for Chapter 5(A35), to avoid the abuse of the process should there not be an express duty on the monitor to ensure that the company does not undermine rescuing it as a going concern? I hope to come back to these and other details in Committee.

Weights and Measures Act 1985 (Definitions of “Metre” and “Kilogram”) (Amendment) Order 2020

Lord Hope of Craighead Excerpts

Wednesday 20th May 2020 Lords Chamber

[Lord Hope of Craighead (CB)]

My Lords, I am extremely grateful to the Minister for his introduction to this measure and for the clear way in which he set out the background to what we are being asked to consider. I was attracted to this measure simply because, as a lawyer, I appreciate that weights and measures are part of our law and fundamental to a great deal of what goes on in trade and in the scientific community.

However, when I began to look at the measure and its definitions, it seems that we find ourselves in an extraordinary position. The measure sits rather uneasily with the first rule of law, which is that the law should be accessible, clear and predictable, particularly where, as we find in this case, a criminal sanction is attached to a breach of the rules that the law lays down. One has to have regard to the context set by the Act itself: the Act lays down what the units of length and mass are to be for any measurement of length and mass that is to be made in this country: the yard or metre, the pound or the kilogram, as the case may be. We are given formulae that define exactly—the word “exactly” is used—how to measure a yard by reference to a metre, and a pound by reference to a kilogram.

When we look at the schedule, we see that, among other things, “METRE” and “KILOGRAM” are set out in capital letters, to highlight their prominence in the whole system, whereas everything else is in lower case. The whole process is policed, if one can put it like that, by Section 8 of the Act, which provides that no person shall use for trade any measurement which is not included in the schedule. Section 8(4) provides that a person who contravenes that provision shall be guilty of an offence which is punishable by a fine on summary conviction of up to £1,000. The word “exactly” is crucial to the whole process.

The interesting thing is that the existing definition of “metre” is sufficiently clear for the Oxford English Dictionary to publish it in full, whereas it would be very difficult to do that with what we have now. We now have a greatly expanded definition and my concern is that, if a lay man were to look at these things, he would find it frankly very difficult to understand. The definitions as they will now stand cannot by any stretch of the imagination be described as accessible or clear to members of the public. Of course, I understand the value of this for other reasons, but that is my principal concern.

Therefore, can the Minister explain in simple language how a tradesman who is trying to remain within the law should interpret these new definitions? If that is not possible, why should we adopt these since we are no longer in the EU?

Brexit: Protection for Workers

Lord Hope of Craighead Excerpts

Thursday 7th March 2019 Lords Chamber

[Lord Henley]

I am sorry that the noble Lord takes a faintly negative attitude to the announcement we have made today, particularly in the light of all that we have done—and propose to do—to improve conditions at work. I refer the noble Lord to the report we commissioned from Matthew Taylor. That report made recommendations; I forget the precise number. I will say that there were 59 and we accepted 58, although I cannot remember what the 59th, which we did not accept, was. We have taken all those recommendations on board. We will be bringing forward further legislation—after the legislation that I have been talking about, which will come with the withdrawal agreement Bill—to deal with the recommendations in the Matthew Taylor report and other matters.

I am sorry that the noble Lord comes back again to zero-hours contracts. That was something that Matthew Taylor looked at; he recognised that they serve a very useful purpose in certain conditions and saw no case whatever for legislating against them. Again, that is one of Matthew Taylor’s recommendations that we accept.

[Lord Hope of Craighead (CB)]

My Lords, one should not ignore the contribution that the European Court of Human Rights has made in the development of workers’ rights, particularly for part-time workers, for whom significant changes have been made as a result of rulings by that court in the interpretation of measures passed in the European Parliament—directives, regulations or whatever they may be. Can the Minister assure us that, in the process described in the Statement, account will be taken of developments through the court in the interpretation of the measures which are to be looked at in the process we have been told about?

[Lord Henley]

I can tell the noble and learned Lord that we are delighted that we will no longer come under the influence or aegis of the Court of Justice of the European Union, but obviously we will still take note of judgments of the European Court of Human Rights, just as we always have.

[Lord Hope of Craighead]

If I may, I remind the Minister that it is the European Court of Justice which interprets the European legislation I am talking about; it has nothing to do with the European Court of Human Rights.

[Lord Henley]

I am terribly sorry. I misheard the noble and learned Lord and thought he was referring to the European Court of Human Rights. We will continue to take account of that. We will no longer be bound by the European Court of Justice—the ECJ—but we will take note of any judgment from it. However, it will be for Parliament to make decisions about that because obviously we will no longer be bound by the European Court of Justice.

Space Policy

Lord Hope of Craighead Excerpts

Wednesday 18th July 2018 Lords Chamber

[Lord Henley]

My Lords, I think that I would prefer to write to the noble Lord on that issue.

[Lord Hope of Craighead (CB)]

My Lords, there is a great deal in this Statement to be welcomed, but there are two practical issues that I wonder whether the Minister can say something about. First, who owns the land on which the proposed site in Sutherland is to be developed? Is the land already in the ownership of the consortium which is proposing to develop the site, or will it have to be acquired from another owner, either voluntarily or compulsorily?

The other question relates to the environmental consequences of what is being proposed. Is it accepted that there will have to be a full environmental impact study? I mention this because it is all very well to think of remote areas as having nothing much in them, but in fact, they often contain very sensitive birdlife, flowers and so on, and great care needs to be taken to see that the construction carried out is compatible with the nature of the environment.

[Lord Henley]

I am afraid that I cannot help the noble and learned Lord as to the ownership of that land. On the second issue, he is right to point to the environmental impact of such a Statement. I am not fully au fait with the planning processes in Scotland—which local authority deals with which issue, and what the involvement of the Scottish Government is—but obviously, this will have to go through a full planning process and in that process, an environmental impact statement will have to be produced to ensure that we know what the effect is going to be. Coming back to England, we only have to look at what happened recently on Saddleworth Moor to know that when one is dealing with highly inflammable objects in remote areas, such things obviously have to be taken into account.

Intellectual Property (Unjustified Threats) Bill [HL]

Lord Hope of Craighead Excerpts

Report stage (Hansard): House of Lords
Wednesday 23rd November 2016 Lords Chamber

[Baroness Neville-Rolfe]

My Lords, I beg to move.

[Lord Hope of Craighead (CB)]

My Lords, perhaps I may take this opportunity to say on behalf of my noble and learned friend Lord Saville of Newdigate, who chaired the Special Public Bill Committee, how much he regrets that he is not able to be present at this stage of the Bill. He has authorised me to say that he, having read all the amendments, fully supports them. The fact that they have been brought before the House in this way indicates the hard work that the committee did, and the Bill will no doubt be greatly improved by their being moved.

[Lord Lucas (Con)]

My Lords, we had some extraordinary things on this committee: a Saville committee that ran to time and a Minister who listened, took her conclusions back to her department and the Law Commission, and achieved a most satisfactory series of amendments. That is an achievement that ranks with the dervishes breaking a British square. That the Law Commission should have given in to suggestions from the House of Lords really shows what a fine Minister we have and what a fine job she has done on this Bill. All of us who sat through the committee—who thought we might be doing it all to achieve nothing—are enormously grateful to her.

--- Later in debate ---

[Baroness Wilcox (Con)]

My Lords, after being on the committee entrusted by the House with scrutiny of this Bill, I am only too fully aware of what a complex area of law intellectual property is—it is crucial that we get it right. We must ensure that we create a climate as positive as any in the world for businesses to innovate and grow, especially after we leave the European Union.

I thank the Minister for her clear thinking and her ability to make me understand exactly what was going on. I thought when I started that I would never get to the end of it all. However, it was quite amazing: with her experience as a fine civil servant who then transferred over to work in the wild business world, she came back with all kinds of straightforward thinking that I could understand and comply with.

I am confident that the Bill will make a valuable contribution to achieving this goal. It will make it easier for businesses to make legitimate threats to protect their intellectual property and for those businesses subject to unjustified threats to protect themselves. I am particularly glad that the Bill will harmonise the law across different types of intellectual property and make it simpler and cheaper for businesses, especially small businesses, which can often be the most intimidated by threats, to seek legal advice and negotiate before there is a need to involve the courts. The greater clarity created by the new category of permitted communications is most welcome in this regard. The Bill is therefore a significant improvement on the current law and has the potential to make a real difference for businesses in practice.

As a former small business owner who has been subject to threats to sue for intellectual property infringement, a consumer protection representative and a Minister for Intellectual Property, I also understand, however, quite how impenetrable intellectual property law can be for businesses. This is especially the case for small and medium-sized enterprises, which often struggle to understand complex legal points and are least able to afford expert legal advice when they encounter difficulties.

When I was running my small business, I was once contacted by a well-known company in the same industry alleging that I had fringed its intellectual property rights. It turned out that it did not have a leg to stand on from a legal point of view. Nevertheless, the whole episode still caused me and my business a great deal of disruption. While I recognise that I would have been a primary actor for the purposes of this Bill, and therefore not protected by the threats provision, I empathise wholeheartedly with those businesses for which these are crucial protections but for which intellectual property law is incredibly hard to understand.

For this reason, getting the legislation right is only half of the battle. Just as important—perhaps even more so—is how we seek to ensure that businesses understand what is in the Bill and how it helps them in practical terms. If we do not do this properly, we might as well not pass the Bill at all.

While I know from my time as a Minister that the Intellectual Property Office works hard to help businesses understand intellectual property, it needs to ensure that it keeps improving its efforts in this area. It would be unacceptable and a tragedy if even one start-up or SME capitulated to an unjustified threat to sue for intellectual property infringement out of a lack of awareness of the provisions of the Bill once enacted.

I was grateful to the Minister for her comments in Committee on how the Government intend to proceed to make sure that the provisions of the Bill are communicated to business, especially SMEs, so that it has the positive impact in practice that it ought to. However, this is one of the things about which we cannot ever have too much information or too many reassurances. I therefore continue to press the Minister to assist the House and businesses with further reassurances, wherever she can, on this matter.

[Lord Hope of Craighead]

My Lords, I am sure the noble and learned Lord, Lord Saville of Newdigate, would wish me to thank the Minister for moving these amendments.

Two simple words are on the paper in front of us—“necessary” and “or”—but they are constraining words and to remove them from the Bill is a significant step to take. I am particularly interested in the extent to which the noble Baroness is prepared to increase the width of the discretion given to the judges. I can think of many cases where Acts of Parliament have sought to restrict the discretion of the judges because they were not trusted. However, in the area of intellectual property, the cases that come before the courts are in the hands of expert judges and I am sure that taking out the word “necessary” and giving them greater discretion is entirely justified and greatly improves the nature of the legislation under consideration.

I join the noble and learned Lord, Lord Saville, in thanking the Minister for taking this step.

[Baroness Bowles of Berkhamsted]

My Lords, I again thank the Minister for these amendments. I welcome that “necessary” has been removed from the judge’s discretion provision by way of Amendment 3 and its family of amendments. It was a feature of our discussions with witnesses and in Committee that the court’s ability to exercise discretion was important and that the flavour should be that the judge can do what is reasonable in all the circumstances. This is reflected in the simple words “in the interests of justice” without what might have been an unusually high or inflexible hurdle of “necessary”.

On Amendment 6 and its corresponding family, we had significant discussion during evidence sessions relating to the status of take-down notices that are sent to digital platforms and then by the platforms on to vendors. Case law had left a bit of a limbo as to whether these are threats and, if they are, whether the defence that “all reasonable steps” have been taken to find the primary infringer is too high a hurdle, especially in the digital environment, where vendors may be in remote places and it is effectively impossible to trace who may truly be the primary infringer and the customer is, in effect, the importer. Did every lead have to be pursued or, if not, how many?

There is some assistance through the Minister’s amendment that deletes “all”. This makes the defence, if it is needed, a little easier, and the word “reasonable” still retains aspects of proportionality, so the test has not been made too light in other circumstances and can adapt.

However, the amendment does not solve the lacuna of whether a take-down notice is or is not a threat, with two interim judgments—Quads 4 Kids and then Cassie Creations—indicating it was an arguable point but not deciding. This is left, as I said, in limbo.

This is a substantive point—again, too substantive for this stage of a Law Commission Bill—and there is an opportunity to pursue issues relating to digital platforms in the Digital Economy Bill. On these Benches, we are interested in doing that for the status of take-down notices, among other things. I know the Minister can give no promises now but at least it, and how it originated, will be no surprise when the issue returns.

--- Later in debate ---

[Lord Hope of Craighead]

My Lords, I am fairly new to this argument as unfortunately I was not able to be present as a member of the committee. Judges faced with the nature of this clause, in looking at the word “instructions”, would give the word a purposive meaning and would tend to look for a specific instruction as a necessary condition even if the words were not expressed in the Bill. For the avoidance of doubt, I respectfully suggest that the amendment moved by my noble kinsman has great force behind it. One would want to put the matter beyond doubt. For what it is worth, I support the amendment.

[Baroness Neville-Rolfe]

My Lords, I understand that this is an area of concern. I welcome the amendments from the noble Lord, Lord Stevenson, and the noble Baroness, Lady Bowles. I very much appreciate the noble Lord’s constructive approach to the Bill and his commitment to careful scrutiny. I think he said the amendment was probing in nature. I will start by setting out why I remain convinced that the exemption for professional advisers is so necessary, before talking about the specific amendment.

The Law Commission’s consultation demonstrated that the tactic of suing a professional adviser for making a threat has been used to hamper the legitimate client-adviser relationship. This causes problems not only for the adviser but for the client, who may as a result need to find a new adviser. I believe we heard convincingly during the evidence stages that this is a significant and common issue. It leaves rights holders in the position of having to pay indemnities before a legal adviser will write an entirely justified letter on their behalf. SMEs are more likely to be asked for such indemnities and are most affected by them.

I am aware that there were concerns regarding such an exemption, which might give rise to an increase in the use of unscrupulous threats. However, I do not agree for the following reasons. Where the professional adviser is exempt, the instructing client will remain liable. This ensures that recourse is available to those damaged by threats. A legal adviser who advises their client badly, leaving them liable for threats, risks a negligence action. The exemption does not prevent this. The exemption has been carefully and appropriately limited in its availability. The amendment would restrict the protection available for professional advisers to just those who are acting on “specific” instructions from another person.

In an increasingly global market—that was mentioned —we need to capture the many different types of foreign and domestic IP legal practitioner who may risk facing a threats action under UK law. As discussed in Committee, this should clearly include those in private practice as well as “in-house” advisers. For that reason, I do not agree that the exemption principle should apply only to the very limited category of circumstances envisaged by the amendment.

In practice, instructions come in all shapes and forms, written and oral. It is therefore unclear what would be required in order to demonstrate that an adviser was acting on a “specific” instruction. Such lack of clarity about “specific” instructions would be particularly problematic for in-house legal advisers, who are often acting on a general mandate to protect their company’s IP rights. The Law Commission agrees that the amendment risks leaving in-house advisers without protection. I apologise to the noble Lord, Lord Stevenson: I think that that is the response that he was expecting in relation to the amendment.