Lord Holmes of Richmond
Main Page: Lord Holmes of Richmond (Conservative - Life peer)(1 year, 6 months ago)
Other BusinessMy Lords, it is a pleasure to take part in this Committee stage. I declare my interests, previously declared in the Special Public Bill Committee, as adviser to Circulor, a supply chain traceability business. I also thank the Minister for his extremely helpful letter of 17 February and the clerks and everybody else who helped to make the committee process such a pleasure to be part of, including colleagues on the committee.
The key points on this element, as perfectly set out by the noble and learned Lord, Lord Thomas, are these. Through the careful crafting and drafting, not least by Professor Green of the Law Commission, we have the dual benefits and necessity of interoperability with the MLETR and other states that have adopted it, and all the benefits of common law and the judgments, thus far, of English courts and that similar jurisdiction moving forward. In taking this approach to the adoption of the MLETR into English law, we have that benefit and necessity of interoperability and, as has been stated, hundreds of years of English law opining on this subject. It goes to the heart of the Bill. However, as the noble and learned Lord pointed out, it is probably worth saying, as it is not stated in the Bill, that the sole purpose and intention of the Bill, for want of any doubt or any cloud in anyone’s mind, in this country or internationally, is interoperability with the MLETR and with bringing forward the benefits of English law to that end.
I, too, will add a short word in relation to this point. First, I thank the Minister for making so clear that the purpose of the Bill is consistency and interoperability with the MLETR, and I hope that the message to the Law Commission and to draftsmen in the future is to put that in the Bill.
During our evidence sessions, we spent some time, as the noble lord, Lord Lansley, has so eloquently explained, looking at legal techniques, particularly those employed in Clause 3(1). The technique employed in the Bill enables electronic documents to be possessed, in contradistinction to the legal technique of using exclusive control as the equivalent of possession, as was done in Singapore. It is essential to stress that, for all practical purposes, the result will be the same. Both techniques ensure interoperability under the common legal regime to be established by the MLETR.
We were lucky in both the oral and the written evidence that we received, particularly from the judge in charge of the Commercial Court, Mr Justice Foxton; from Mr Andrew Taylor in his submissions on behalf of the UK branch of the Comité Maritime International, which has done so much to ensure uniformity of maritime law; and from a large body of distinguished academics, including Professor Sir Roy Goode, Professor Louise Gullifer, Professor Miriam Goldby, Professor Alex Mills, Professor David Fox and Professor Andrew Steven, who effectively gave evidence to the same effect: that there was an advantage in the continued use of the concept of possession for electronic trade documents, in contradistinction to simply adopting exclusive control in its place.
Here, trade documents are in a different category from other forms of control over electronic documents and digital assets. The two advantages can be summarised as follows. First, retaining the concept of possession more easily enables the law relating to electronic trade documents to be developed by building on the established law relating to paper documents so carefully developed over the centuries and with worldwide applicability.
Secondly, although in my view this is likely to be of only minimal practical significance, and I certainly hope that it is, there could be an exceptionally rare case in which the requirement of an intention to possess—I would prefer to stick to the English rather than to “animus possidendi”—arising from the continued use of the concept of possession might permit a court to deal in a just way with a case in which something unanticipated has unfortunately gone wrong.
There are those two advantages, but I stress again that the fact that Singapore has chosen a slightly different route to that adopted in the Bill is, for all practical purposes, immaterial to interoperability.
My Lords, in many ways, this went to the heart of our discussions in the committee—understandably so, because it is so central to the Bill. In many ways, possession is 9/10ths of the Bill. The position of possession in English law is why it is critical to enable full understanding in this country for those who will seek to avail themselves of this new law when it comes into force with all good speed. It is just as important internationally to enable understanding of why the Bill was constructed around the concept of possession.
I will first say a word of thanks to the Law Commission, and to Professor Sarah Green in particular, for the excellence of its work. It is also right to thank those who submitted evidence in writing to us and those who gave oral evidence at quite an early hour on a Thursday morning. We were fortunate about the timing, in that we had the opportunity to request written evidence with the hiatus of Christmas. Although that may have made some people spend more time over Christmas on the interesting subject of bills of lading than they would have liked, it enabled us to start our oral evidence with a very firm body of written evidence. Having to compress it all into the usual 28-working day period may not have been to anyone’s advantage. I hope that the opportunity will be taken to think again about the procedure for written evidence; we certainly found the accident of what happened highly beneficial.
However, that benefit would not have been achieved without the great diligence of our clerk, George Webber, and his assistant, Louise Andrews, who laboured mightily to get the evidence in and to make so many phone calls in a very short period to ensure that we had a full book of evidence. I also thank them for organising all the transcripts and other documents. A special thanks is due to them both. I am sure I speak on behalf of everyone in saying how grateful we are.
Having said all that by way of thanks, I ought to temper it by saying that the work of the Law Commission, diligent and hard-working though it was, is the easy part of the process with which this Bill is engaged. Our part in this very agreeable committee has been very easy. As experience always shows, it is easy to change the law. The difficult bit is getting people to use it and move. It is important to stress that the formidable task lies ahead: changing the habit of centuries. However, there is a huge prize here and I am sure that we will get there.
First, I am confident that His Majesty’s Government will do all they can to publicise to other Governments the move that the United Kingdom has made to adapt its law so as to be based on interoperability under the MLETR. I was greatly encouraged by the evidence we received on what other states are setting about doing, and by discussions I had with another major trading state last week on the steps it has taken and the benefit it has had from seeing what we are doing. The UK has set an excellent example of the way forward and we should not be reticent and hide our light under a bushel.
Secondly, banks and others engaged in providing finance need the utmost encouragement to assist in the use of electronic trade documents. I am again encouraged by the position taken by one bank, Barclays, whose letter to us after the evidence session made clear its wish to encourage the use of digitalisation. I should add that that is not the message I have received in respect of all banks, so HMG have a great deal of work to do.
Thirdly, we can be very confident that the ICC will continue to play a prominent role. We have been particularly fortunate in the UK because of the work done by Chris Southworth, but I have also learned that people are hard at work elsewhere. It is also encouraging that moves are under way to establish a trade digitalisation taskforce, involving His Majesty’s Government, the ICC and banks. I wish it well.
However, despite all of these encouraging signs, the task is formidable. The Government must lead with great determination and energy to ensure that the UK’s leadership in getting the Bill enacted is carried through to leadership in getting those engaged in international trade to adopt electronic documents through a common legal system based on the MLETR. The prize is enormous, and it was interesting to see that even net zero is shown to benefit from getting rid of paper in this enterprise. So although the task for the Government is huge, a lot of favourable winds are behind it.
My Lords, like the noble and learned Lord, Lord Thomas, I thank everyone involved in getting the Bill to this stage, not least Professor Green and her team at the Law Commission, our clerks and team here in the House and everyone who has been involved. As a committee, we benefited hugely from the expert and excellent chairmanship of the noble and learned Lord, Lord Thomas, with all his legal experience in this space, not the least of which was an interesting case, which he recounted to the committee, involving a large consignment leaving the port of Bordeaux. All the committee members’ ears pricked up at that point, only to prick down, if ears can do so, when it turned out that the consignment was grain, rather than any product from the right or left bank of the Gironde that may perhaps have been of more interest.
The noble and learned Lord, Lord Thomas, set out the point absolutely clearly: that the Bill demonstrates what we can do when we combine common law with our new technologies. It is right that we conceive of blockchain, distributed ledger technology, AI, machine learning and all the new technologies as tools. They are incredibly powerful and may be incredibly positive, but they are still tools that we humans have to determine how to deploy.
The Electronic Trade Documents Bill is a trade-enabling, trade-empowering Bill, through the potential of electronic trade documents. In reality, however, it is at its heart a new technologies Bill—new technologies in combination with English common law, brought to bear in the area of international trade in this instance.
As the noble and learned Lord, Lord Thomas, pointed out, the most important stage is after Royal Assent, when the hugest sales job must, rightly, be done on the Bill to get traders in this country, banks and other people involved in the international trade business, like insurers, to very much get behind and use electronic trade documents. Rightly, the Bill is permissive rather than mandatory. That is quite correct, but it means that this sales job must be done.
Secondly, this sales job must be done, rightly, through His Majesty’s Government in all the international fora —through bilaterals, trilaterals and all means—to demonstrate to other nation states the benefit of incorporating MLETR into their domestic legislation. To put it plainly, what purpose would the UK passing the Bill have if other nations have not taken MLETR into their legislation and enabled that international trade, which can be done in seconds rather than days?
As the noble and learned Lord, Lord Thomas, perfectly pointed out, the benefit to the environment and net zero should not be missed in any sense here. Currently, in trade, it may take seven to 10 days for a bill of lading document to be transferred to enable a shipment to move. This was illustrated so clearly during Covid, when the planes were grounded at London Heathrow with the trade documents on board and the ships queued up outside the Port of Singapore, unable to move for want of that physical document, which is so painfully papery. The Bill perfectly addresses that, enabling not only settlement in seconds but all that carbon, which would have been wasted in flights and timing, being wiped away through the implementation of the Bill.
Can my noble friend the Minister therefore say whether he will ensure that there is real cross-department and cross-Whitehall consideration not just of what we have learned through the Electronic Trade Documents Bill process but of how we can look to every possibility, in every potential context, to combine common law with the new technologies available, for the benefit of citizen and state alike?
My Lords, I was struck by the Minister saying that today’s stand part debates are an opportunity to show our workings. He is admirably qualified to be a Science Minister on that basis.
I add my thanks to the Law Commission, to our witnesses for both their oral and written evidence, to the clerks and staff on the committee in particular and, overwhelmingly, to our chair, the noble and learned Lord, Lord Thomas, who has guided us so carefully and successfully through the thickets of the MLETR and the common law. I very much hope that the Minister and the House authorities more generally will take note of our chair’s comments on the procedure and the serendipity of the fact that we had time successfully to get the evidence and so on. If we had not had the intervening period of Christmas, this would have been extremely difficult.
I fully endorse—as opposed to indorse—what the chair said about the hard part being the practical application and adoption of the Bill. He mentioned the letter from Barclays, which is worth a little consideration because it is very encouraging. It came in rather late, but it expresses quite an appetite from its customers for the Bill, which bodes well:
“Our customers want trade to be simpler, faster and more digital, enabling them to complete trade deals in hours and days rather than weeks and months … The security and compliance of trade will also be strengthened through the proposals in the ETD Bill … The proposals in the ETD Bill will also result in a significant reduction of the estimated 25 billion paper documents generated and couriered around the world each year”—
the noble Lord, Lord Holmes, made this point. That net-zero aspect is extremely important in all of this. The letter says,
“Overall, we are confident that the … Bill will be a positive boost to UK trading”.
On implementation, the Barclays letter picks up the point about the new trade digitisation task force. It would be useful if the Minister could give us a little more information about that, if he has any, particularly in relation to some of the points raised by the noble Lord, Lord Holmes, on the duty or opportunity for the taskforce to encourage the adoption of new technologies, which will of course be absolutely crucial. The letter, again, stresses the need for UK leadership, so the trade digitisation task force will clearly have an international engagement duty. It would be useful if the Minister could unpack that a little so that we know that the Law Commission’s work, which we carried on, will bear fruit in due course.
We very much hope to see that the Bill has all the advantages set out in that Barclays letter.