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Lord Hacking
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(4 months, 3 weeks ago)
Lords ChamberMy Lords, I hope that I am standing up at the right moment. I have been advised by the Table, as the only Back-Bencher available to speak in this debate, that this is the moment that I am allowed to intervene as a gap speaker. Unfortunately, I am also advised that I have to keep to the strict rules of the gap and a Whip is already showing four fingers to me, which I think indicates four minutes. All I can do is to hope that the Whips will be kind, because I was a full participant in the Special Public Bill Committee on this Bill and took part in the many thorough and detailed sessions that we had within that committee.
I am going to break away for a moment to give tribute to the noble and learned Lord, Lord Thomas, who was our excellent chairman, and also to tell your Lordships that the noble and learned Lord is sad not to be here today and has asked me to express his regret for his absence.
I will therefore concentrate on the corruption issue. This has become important since the judgment of Mr Justice Robin Knowles in the Nigeria case. He gave his judgment on 23 October 2023. Suffice it to say that in that case, two very distinguished English arbitrators came to the conclusion that there should be an award of no less than $11 billion US against the Federal Republic of Nigeria. When this came before Mr Justice Robin Knowles, in a judgment lasting 140 pages, he set the whole of this large award aside on the grounds of corruption.
In the committee, we received submissions from Spotlight on Corruption but had no time to examine this important issue further. I am therefore asking the Minister to convene, before Committee, a special meeting to be attended by the Law Commission, by noble Lords who take part in the Special Public Bill Committee, and other noble Lords, to consider the issue of corruption and whether we should address that in Committee. This is a very important issue, and I cite from a distinguished international arbitrator who says:
“Corruption is today one of the greatest challenges facing international commerce and has serious detrimental effects on markets, efficiency, and public welfare”.
I know that from my own days as an international arbitrator, when I arbitrated a number of commodity cases relating to Ukraine and Russia. Corruption was evident all the time, and we had to be very careful in reaching our decision.
Of course, this can be pushed over to another day for another arbitration law reform, but they come very few and far between. There were 17 years between the 1979 and 1996 Acts, and it has now been more than 20 years since the 1996 Act, so I suggest that this should not be pushed over to another arbitration reform Bill; it should be addressed now and in committee.
My noble friend would have heard my worry that the opportunity for arbitration reform is an opportunity that does not arise until a number of years have passed. Can he give any assurance that, as corruption is a serious issue—I think he recognises that—this Government will support this further investigation into corruption and whether any legislation relating to arbitration law should be brought in, and fairly swiftly?
We are always open-minded about addressing problems. We need to scope out the true extent of the problem, which is why I have offered to write to noble Lords about the responses that we may have received—I do not know the answer to that—to the letter written by the noble and learned Lord, Lord Bellamy, when he was the Minister concerned.
I turn to other points. The noble and learned Lord, Lord Bellamy, was very gracious to me in his opening, and I thank him for that. I certainly intend to behave as a Minister as he behaved when he was a Minister, and to consult with colleagues across the House to try to make sure that we focus on the real issues of difference between us, rather than any other matters that may distract us. I will take a leaf out of his book about how I conduct myself in trying to achieve that.
The noble and learned Lord asked about the possibility of carryover for uncontentious Bills between Parliaments. I will bring that comment to my noble friend’s attention. I do not know what the reaction will be, but it seems a sensible idea to me.
The second point the noble and learned Lord made concerned the choice of seat. I had a discussion with the noble Lord, Lord Wolfson, about this very issue, and my opening speech referred to it. I agree that we should have confidence in our judges, and perhaps some extra words can be added to the explanatory notes to reflect the position. We have undertaken to look at that.
The noble and learned Lord also raised an issue concerning Clause 13. I will have to write to him about that as well, as I am not sighted of that issue.
In conclusion, this Bill achieves a balance. It neither seeks to fix what is not broken, nor does it sell short the potential of our jurisdiction. Growth is a fundamental mission of this Government, and this Bill plays its part. I thank all noble Lords who have taken part in this short debate, and I look forward to interacting with them as the Bill progresses.
Lord Hacking
Main Page: Lord Hacking (Labour - Excepted Hereditary)Department Debates - View all Lord Hacking's debates with the Ministry of Justice
(3 months, 1 week ago)
Lords ChamberMy Lords, before I address my amendment, I would like to express to your Lordships complete support for this Bill. I had the honour to be a member of the Special Public Bill Committee, so ably chaired by the noble and learned Lord, Lord Thomas. I sat through all the hearings and then sat with my co-members of the committee throughout our deliberations.
Perhaps I can do no better in expressing my support for the Bill than to quote from the Explanatory Notes. Paragraph 6 reads as follows:
“The intent of the Bill is to further the principle found in section 1 of the Arbitration Act 1996: to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense. Thereby, the aim is to fulfil the policy objective of ensuring that the Act is fit for purpose and that it continues to promote the UK as a leading destination for arbitrations”.
I now move to my amendment and, as I do so, I express thanks to my learned friend—or rather, my noble friend—the Minister. Unfortunately, he does not take the “learned” with his name, although he is very learned. I am very grateful to him for his letter to me of 15 August on the corruption issue. I have read the entire contents of that letter and express gratitude without reserve, but I am afraid to tell your Lordships—for reasons that I will now develop—that the reply in this letter is not complete.
First, we must look at the extent of corruption and I am afraid that it is bad news. There is the Nigeria case and the judgment of Mr Justice Robin Knowles on 23 October 2023; nobody in this Committee knows more about that case than the noble Lord, Lord Wolfson of Tredegar, KC, who took the role of a senior counsel throughout the long hearings before Mr Justice Knowles. The fact is, however, that in the arbitration proceedings resulting in that case, there were two very distinguished English arbitrators—former judges of the High Court—who made a very large award of $11 billion. Because of the corruption that was found by Mr Justice Robin Knowles, that very large award had to be set aside in its entirety.
Moreover, this is not the only case where corruption has evidenced itself. The charity under the title of Spotlight on Corruption has identified three recent cases in which serious corruption was found. There was the Mozambique case before the UK Supreme Court in September 2023; the Steinmetz case before the ICSID tribunal in Paris in May 2022; and the BSG case before the LCIA in April 2019. So this is a serious problem and I remind your Lordships of what I said at Second Reading: that I have had experience as an arbitrator in commodity arbitrations relating to Ukraine and Russia, where corruption was most evident, often with the bribing of officials to obtain export licences.
My Lords, I thank the noble Lord, Lord Wolfson, for welcoming me to my current position; I am very glad that he has 20/20 eyesight and is looking at these matters so closely. I am also thankful to my noble friend Lord Hacking for initiating this debate. He said very clearly when he introduced his amendment that he supports the Bill, and I am grateful for that. He is again raising the issue of protecting the arbitral process against corruption, and of course that is extremely important. Having considered this very carefully, the Government’s position is that our framework already provides a robust regime and that no law reform is necessary. A tribunal, like a court, must always guard against fraud and corruption, and I will explain what mitigations our existing regime already provides.
Under Section 33 of the Arbitration Act 1996, the tribunal is already under a duty to “act fairly and impartially”, and to
“adopt procedures suitable to the circumstances of the … case”.
An arbitrator who is corrupt would fail in their duties under Section 33. Furthermore, the arbitrator’s appointment can be revoked by the parties under Section 23, or an arbitrator can be removed by the court under Section 24. An arbitrator who acts in bad faith loses their immunity under Section 29 and can be sued.
When arbitral proceedings are tainted by fraud or corruption in the arbitral process, any arbitral award can be challenged in court under Section 68 for serious irregularity, as indeed was successfully done in the recent case of Nigeria v P&ID, which we heard about earlier. Indeed, the reason why arbitral corruption is currently a talking point is that the court identified corruption and prevented abuse in that case. Arbitral awards can also take account of corrupt conduct and deprive a corrupt party of any arbitral award which is sought to permit fraud or corruption. It would be unenforceable as contrary to public policy under Section 81. It is possible for an arbitrator to publish their award and denounce the fraud publicly. In ruling an award to be unenforceable, the court can also publish its judgment publicly. The scheme under the 1996 Act is sufficient and has not revealed any deficiency in practice.
The Government oppose legislative reform here precisely because it is unclear what additional benefit it would provide over the current regime, which provides both parties and arbitrators with routes to challenge and address corrupt conduct, as well as duties on the arbitrator to ensure fair and proper proceedings. A new, untested measure may simply introduce uncertainty for both parties and arbitrators.
The 1996 Act and the modernising impact of this Bill are designed to ensure robust and efficient arbitral proceedings. Our framework provides this balance and well equips the tribunal and courts to deal with corruption. The Government will continue to support the sector’s efforts on arbitral corruption. We will keep track of initiatives that are under way, such as that of the ICC anti-corruption task force, to which a number of noble Lords referred, and engage with the sector to push for the swift adoption of best practices as they are developed. I hope that this explanation reassures my noble friend and that he will withdraw his amendment.
To go a little further, as noble Lords are aware the previous Government wrote to leading arbitral institutions seeking views on the mitigations that are currently in place and whether more are needed. I understand that responses were received from the Chartered Institute of Arbitrators, the International Chamber of Commerce, the London Court of International Arbitration, the London Maritime Arbitrators Association and the Grain and Feed Trade Association, in addition to the Law Society and the Bar Council.
All those institutions mentioned mitigations they had in place against corrupt conduct. None expressed support for amending the Arbitration Bill to strengthen anti-corruption. In addition, concerns were raised that a one-size-fits-all approach would be ineffective and risk unintended consequences. Nigeria v P&ID was raised as a highly unusual case where the court effectively performed its proper role in setting aside the award. Where a role was suggested for the Government, it was in ensuring that the courts continue to be equipped to provide checks in cases put before them, as they did in the Nigeria case, and to engage in discussions with the sector and promote its work combating corruption.
The noble and learned Lords, Lord Bellamy and Lord Thomas, and the noble Lord, Lord Beith, raised the issue of the letters and whether they could be published. I am unable to share those letters. The noble and learned Lord, Lord Bellamy, can see the letters that were responded to when he was a Minister, but they were written specifically to him in that role. I would not necessarily be able to see those letters, which would create a difficult situation. I understand that a couple of letters came in when the new Government were formed. But I can say with complete confidence that the substance of those letters was explained and explored within the letter that I wrote to the noble and learned Lord, Lord Bellamy, which is in the public domain. I am confident that if I was wrong somehow in asserting that the substance was inaccurate, those various bodies would be able to draw that to my attention. I am confident that the substance of the letter I wrote on 15 August is completely accurate. I hope that noble Lords will accept that.
A number of noble Lords spoke of their reasons for opposing my noble friend’s amendment. They said that it might well be duplicative, unnecessary and problematic in various ways, which they explored. I have to say that I agree with the noble Lords who made those points.
In closing on one point, the noble Lord, Lord Wolfson, asked about relevant arbitral bodies being given a nudge regarding corruption. They are of course perfectly able to do that. It would be beneficial, and maybe they should remind themselves that they have that responsibility to give a nudge if they suspect corruption in particular cases. So, having said all that, I ask my noble friend to withdraw his amendment.
My Lords, it is my intention to withdraw my amendment, but perhaps I could say just a few words after a fairly long debate on it. First, I thank those noble Lords—there were several—who accepted the principle that I sought to express. It was nice to have that support but, as was very clear, not one noble Lord accepted my amendment. Therefore, I am not exactly in a strong position to press it now, or indeed on Report.
I did not realise when I cited three cases put before us by Spotlight on Corruption that the noble Lord, Lord Wolfson, was counsel on every one. So he has extensive knowledge—greater than that I gave him credit for in my opening words.
One thing that has been missed in this debate—it was the first point I made—is that I wanted us, by legislation, to set out our standard. I described the first importance of my amendment as putting a flag in the ground so that the world may know that, in arbitration proceedings where England is the seat of the arbitration, we will not countenance corruption and fraud. I still think that is an important point.
I did not know when I got up to speak that there would be such a formidable line of noble and learned Lords alongside me, including the former Lord Chief Justice, who has not actually spoken but who has a devastating commitment to good argument, so I am not inviting him now to make any interventions because he will make some argument that will totally defeat what I am trying to say.
The noble and learned Lord, Lord Hoffmann, said that he thought my amendment was impractical, and of course arbitral tribunals do not have the power of investigation. The point I was making was that, at the commencement of the arbitration, the arbitral tribunal could speak to both counsel and the parties who should be present at the inaugural meeting and remind them of the seriousness of rooting out any corruption or fraud. I also point out, as a former counsel and solicitor, that when you take instruction from a client, and statements from clients’ witnesses, you have a lot of opportunity to know what is going on. So there is a role for counsel and the parties in rooting out corruption, and that is why I thought it useful to have this revision.
The noble and learned Lord, Lord Hope, said that the committee—which was so well chaired by the noble and learned Lord, Lord Thomas—had not reached any view about corruption. There was in fact a reason for that. I do not know whether the noble and learned Lord, Lord Thomas, is listening, but we received these two reports from Spotlight on Corruption at his instigation, and his view, and that of the committee, was that under the timetable we were working to, this was too big an issue for us to take on. That is why we made no pronouncement on that subject.
My Front Bench is getting a bit restless, but I am sure that there will be plenty of time to consider the next amendment. I rather get the feeling that there will be an intervention now in Committee on the Arbitration Bill and we will debate another excitement. I am withdrawing this amendment, but I hope that noble Lords have heard and agree that this is a continuing matter. I am particularly grateful to my noble friend for his promise to keep this under review—and may it continually be kept under review.
Lord Hacking
Main Page: Lord Hacking (Labour - Excepted Hereditary)Department Debates - View all Lord Hacking's debates with the Ministry of Justice
(3 months, 1 week ago)
Lords ChamberMy Lords, I will pause for a moment to allow Members of the House to leave, so that only those taking part in this Committee remain. I look to my right with some caution, because when I stood in support of my Amendment 1, I was unaware of a bank of noble and learned Lords on my right-hand side—there were three of them. Now there is only one: the noble and learned Lord, Lord Hoffman, who is sitting in his place. He told me over tea that the reason he is remaining is to oppose my next amendment. He opposed my Amendment 1 with some fierceness, and now he is staying back to oppose my next amendment.
This amendment goes back 28 years to the passage of the Arbitration Bill in 1996. I then objected to the introduction of the principle of “costs following the event”, which was in general usage in the English courts when the successful party was seeking costs against an unsuccessful party or parties. It was generally thought then that the event meant the winner won the costs, but Mr Justice Bingham—later Lord Bingham, Lord Chief Justice and then a senior Law Lord—said that was not right. It was in a case called Re: Catherine that Mr Justice Bingham said we should look at which party was responsible for what costs, and that the costs order should accordingly be made. My argument was that this obscure phraseology went against the drafting of the whole Bill.
Noble Lords who remember those days and now look at the Bill may remember that there was much praise for Mark Saville, later the noble and learned Lord, Lord Saville, who was chairman of the DAC that drafted the Bill—assisted by the secretary of that committee, the young barrister Toby Landau, and the wonderful parliamentary draftsman Geoffrey Sellars. The joy of the 1996 Act is that you can read it, passage by passage, in its clear, logical way and its clear, logical language. What a contrast that is to so many Bills that come before us—the detail and complication of many clauses cause most of us to put cold towels around our heads before we have a chance of understanding what is meant. I am not sure what the phraseology was then, in 1996, of the rules of the Supreme Court or the county court—in other words, the White Book and the Green Book—but I know now what the rules are in the new CPR. In particular, CPR rule 44.2(2)(a) says that
“the unsuccessful party will … pay the costs of the successful party”.
That is in the clearest possible language, so why should we continue to inflict upon the international community these ancient words of “costs following the event” when they are not used anywhere else? Why do international parties have to seek out the meaning? I am not suggesting that my drafting is perfect—indeed, noble Lords who have been looking at the Marshalled List will note that I made a mistake and had to re-draft—but it can all be quite simply done without any delay. For example, my drafting could be put in front of the rules committee of the Supreme Court, which can be consulted, as can the Chartered Institute of Arbitrators, the London Court of International Arbitration, the ICC and so forth. There is no cause for delay. If the drafting of my amendment is thought to be worthy of improvement, I accept that, but can the Minister—and this is the second time I am asking him, almost imploring him after the response I got to my earlier amendment—keep an open mind and not leave this strange phraseology of “follow the event” in Section 61(2) of the Arbitration Act?
My Lords, I greatly regret that the noble Lord should have cast me as his personal nemesis, particularly since it is entirely desirable that an arbitration tribunal should have the power to do what he said Lord Bingham did in the case to which he referred; that is, to distinguish between the cost of issues on which people have been successful and those on which money has been spent and on which they have been unsuccessful. However, the tribunal has such a power already.
I am sure that my friend the noble Lord, Lord Hacking, would recognise that in the end the power to award costs is entirely a matter for the discretion of the tribunal. It can take into account whether it thinks the party has spent too much or whether it has succeeded on this or that issue. All these issues can be taken into account. What it says that is salutary—this is something which attracts persons to come to London and have arbitrations under English law—is that in the ordinary way, if you have not spent too much and not lost on some issues, if you have won the case you will get your costs. That is a very attractive thing to offer to people who are about to launch an arbitration.
We have in the 1996 Act a time-honoured formula which everybody knows. They know exactly how it works and I really see no advantage in substituting a new formula, when nobody quite knows now how it is going to work.
My Lords, perhaps I might read out from Rule 44.2 of the CPR. It says that
“the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but … the court may make a different order”.
There is then considerable further guidance on the assessment of costs in the remainder of Rule 44. I can say, as a non-lawyer, that I think that is pretty clear. I note the point that the noble Lord, Lord Wolfson, made about having some sympathy with the language used, but the language which I just quoted is quite straightforward.
My noble friend Lord Hacking said that he was imploring me and he called the noble and learned Lord, Lord Hoffman, his nemesis. I might be my noble friend’s nemesis as well, because I will be arguing to reject his amendment. Of course, I thank him for tabling it. It is right that it is common practice that arbitrators already have great discretion on this matter under Section 61 of the 1996 Act. The Law Commission has made no recommendations for reform of Section 61, so we believe there is no reason for having a reform that may introduce some level of uncertainty, which we do not believe is necessary.
The previous arbitration Acts of 1889 and 1950 simply provided that costs were at the discretion of the arbitrators but the 1996 Act then provided the current default rule, which mirrored the position in the rules of the Supreme Court, which were the court rules then in force. Although the language has changed with the CPR now in force, the underlying principle is still the same. The CPR, and the RSC before them, take the view that costs should follow the event as a fair default rule. Section 61 allows arbitrators to depart from that rule as appropriate. In substance, therefore, Section 61 already allows the arbitration tribunal to award whatever costs it thinks fair.
The Law Commission received no representations from stakeholders that Section 61 was causing any difficulties in practice, and it is unusual to change the language of an Act if there is no change in principle. Indeed, it is possible that the amendment could be interpreted as a new, untested principle. In the light of this, I am grateful for the opportunity to clarify the current arrangements and would suggest that no amendment is needed. I therefore invite my noble friend to withdraw his amendment.
My Lords, I intend to withdraw this amendment but perhaps I could say a short word before I do that. Of course, I have to do it because I have no support from anybody; I am doing no better than I did 28 years ago. I still say that this is unfortunate terminology and that it would be much more sensible if we brought the description of what decision should be made by the tribunal on costs into modern language, but if noble Lords like this ancient phrase of following the event they can chase around and look at Mr Justice Bingham’s judgment in Re: Catherine and so forth.
So I am in no better position than I was 28 years ago. However, there is one point I would like to make, which the noble Lord, Lord Wolfson, correctly made when he drew attention to Section 55. He could have drawn attention to Sections 62, 63, 64 or 65, because all of them deal with various provisions that are applicable to the cost issues that the tribunal faces. I respect and agree with that. I agreed with it 28 years ago and I agree with it now, but I still think it would be much nicer if we dropped this strange phraseology of costs “following the event”.
Lord Hacking
Main Page: Lord Hacking (Labour - Excepted Hereditary)Department Debates - View all Lord Hacking's debates with the Ministry of Justice
(1 month, 2 weeks ago)
Lords ChamberMy Lords, I will briefly add to the thanks, with one exception, that the Minister gave this morning. I give particular thanks to Professor Sarah Green and to the clerk of the Special Public Bill Committee, Joey Topping, who, in the short timescale into which everything had to be compressed, did an outstanding job.
I thank the current Leader of the House and Chief Whip for getting this back when we did not get it through last time, despite their enormous efforts. They really deserve immense commendation, as does the Minister, for having put up with lawyers seeking to build perfection on perfection—something that I am sure many in this House feel inappropriate. I also thank the noble and learned Lord, Lord Bellamy, who really smoothed over some of those difficulties but did not quite get the time for matters I suspect he did not even contemplate, bringing this so speedily to a conclusion.
I will make two more general points. First, as I did not have the opportunity to thank the Senior Deputy Speaker and Duncan Sagar for getting us a bit more time in the Special Public Bill Committee—because the matter moved so quickly—if it is permissible under the rules of the House, I express on everyone’s behalf our thanks for the small change to the procedure. It should make a huge difference, because the more time there is for clever lawyers to think of points in the committee, the speedier it is to get the Bill through the House—something I hope will appeal to the business managers.
Secondly, I have a hope for the future. This morning has reminded us, if we needed any reminding, of the need to remain highly competitive. This is a good day for England, Wales and Northern Ireland—I leave Scotland out because it has its own system. We have brought our law up to date. We must find a means of doing this very rapidly, as we must keep English law— I say English law deliberately—attractive and at the forefront of use internationally, for the benefit of our whole economy.
My Lords, I give personal thanks to the Minister for his very kind words to me and more general thanks to the Government for pressing forward with this Arbitration Bill. It is very befitting that the Government should have championed this Bill through, as they are at the moment, because it was a Labour Government 46 years ago who brought forward the arbitration reform that brought about the 1979 Act.
I join other noble Lords in thanking the prominent members of the Special Public Bill Committee and the prominent Members who took part in debate in this Chamber for all their contributions. I also thank the Ministers, the noble and learned Lord, Lord Bellamy, and—I keep calling him my learned friend—my noble friend Lord Ponsonby. Special thanks to the noble and learned Lord, Lord Thomas, who quite excellently presided over the Special Public Bill Committee, and to all the supporting officials.
Particular thanks should also go to the noble Lord, Lord Wolfson, and I am sorry he is not here to receive them. When he was the Minister, it was he who referred the arbitration issues to the Law Commission. That really was the beginning of the recent story on the Arbitration Bill.
This Bill is not as fundamental as the 1979 or 1996 Acts, but it deals with some very important issues. Perhaps the most important is Clause 7, giving power to arbitral tribunals to make summary awards. Those of us who practise in the courts—I am looking across the House at the moment—are well familiar with Order 14 proceedings, and this introduces into the arbitration world the Order 14 summary judgments.
It also clears up issues relating to the seat of the arbitration, arising after the unfortunate division in the Supreme Court in the Enka Insaat case, with two Supreme Court judges on one side and three on the other. I would have preferred new Section 6A(2) not to have been included, because I believe it complicates that issue, but none the less it is there, and I am very happy to support the Bill in that condition.
However, there is unfinished business. I suggest that the corruption issue should have further consideration. We know that the ICC has a commission on this and we must wait to hear what it says, but it is certainly a matter that needs further attention.
Other matters should have consideration, including expedited hearings and dealing with the length of written submissions, which sometimes stretch over 100 or 200 pages and argue every point under the sun. There is also the use of third-party funding and the question of what disclosures should be made, as well as the power to order parties into mediation, which is used successfully in litigation.
I am sorry if I am taking a little time; I hear the Deputy Chief Whip. But it is important that we should look to the future and realise that this Bill is unfinished business.
My Lords, I simply associate myself, on behalf of these Benches and as the previous sponsor of this Bill in the previous Government, with the thanks that have been given to the entire team, not only to the special committee and its chair but to the civil servants who have supported the work. I thank the Government and the Minister himself, who worked very hard in the special committee, collaborated very closely with the previous Government and myself and has, as has been said, managed to bring the Bill forward again with remarkable speed. As the noble Lord, Lord Hacking, said, of course there is always unfinished business and we must look to the future, but we now have an extremely good base on which to do so.