Common European Sales Law

Debate between William Cash and Stephen Phillips

Wednesday 7th December 2011 Commons Chamber

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

I rise to make a short contribution to the debate, and to make some of the points that were made to my hon. Friend the Member for Stone (Mr Cash) and others on the European Scrutiny Committee by the City remembrancer of the City of London, who has provided us with a briefing that contains a number of salient observations on the measure, which are important for the House to consider in deciding whether the motion should carry.

The first and most worrying of those observations—I attribute these views not at all to the City of London or the City remembrancer; these are my words—is that there is considerable concern that the measure is the thin end of a uniform contract wedge that is being deployed by the Commission in an attempt to undermine the universality of English contract law, which is used in transactions not only between businesses within the EU but across the world, where, alongside New York law, it is the predominant way in which international trade is regulated. I should like to hear more from the Minister on that.

Were there any doubt that the Commission has in mind that the proposed regulation is the thin end of a uniform contractual wedge, it would be removed by article 15, which makes clear that the Commission would be obliged to review the measure after five years,

“taking account of…the need to extend the scope in relation to business-to-business contracts, market and technological developments in respect of digital content and future developments of the Union acquis.”

Given that the Justice Commissioner has already indicated that he plans to announce consideration of a European common insurance law next year, there ought to be grave concern on both sides of the House that the measure is the first step in an attempt to impose upon this country a uniform European contract law. I suspect that many hon. Members would be extremely concerned about that.

The second concern to which it is worth drawing the House’s attention is the speed with which the draft regulation was drawn up. It was drawn up in a very short period of some 11 months by a so-called expert group which, I must tell the House, consisted predominantly of academics. It consisted for the most part not of those who actually practise law or indeed of those who would have the option to use this contract law were it to be introduced. In those circumstances, if the proposals were to go ahead, there would, in my respectful view, need to be a much greater consideration of what practitioners have to say on the subject of contract law and the draft regulation, and a much greater consideration of what business wants.

Those are two initial concerns about the regulation, but there are others. Essentially, the regulation would establish an optional contract law that would lie alongside national contract law, but that could cause conflict between almost identical contractual situations as they apply between those who are negotiating within the EU, and possibly even between those within member states. The position would essentially be that someone who selects the option of the EU contract law might gain greater rights than someone who does not do so—the latter, through the application of conflict of laws rules, would have the contract containing his rights and obligations subjected to some wholly different system of law. That must be a grave concern, because it could result—naturally—in different decisions being taken by national courts in relation to precisely the same facts, depending on which law applies. That might be acceptable when the laws that apply are of different nations, which would be selected pursuant to established conflict of laws rules, but it cannot, in my judgment, be acceptable when the laws in question are on the one hand common law, as in this country, and on the other hand an optional community contract law, both of which none the less hold sway in the same jurisdiction. That is therefore a very great reason why the measure is not in the interests of the City of London, or of this or any other European country.

Establishing a new contract law—even one that has been written by a group of academics—is, moreover, destined to lead to much greater litigation, uncertainty, increased costs, and increased transactional costs, because there will be no established body of law and no binding juridical opinion by reference to which those who are obliged to be consulted on difficult legal problems arising out of contracts can form settled views as to the correct answer in respect of their clients’ rights, entitlements and obligations.

Growing that body of law—it could grow only in this country, where we have a system of precedents—could take several decades. If small and medium-sized enterprises, and perhaps even larger businesses, adopted the optional contract law, their rights and obligations would necessarily be unclear during that time. That is not only most unsatisfactory from the perspective of those who seek to do business in international markets, but wholly unsatisfactory from the perspective of the development of the law.

[Mr Cash]

On the question of legal base, does my hon. and learned Friend recall that originally the Secretary of State for Justice took the view that he had doubts over whether article 114 was appropriate? There was then the question of whether article 352 might not be more appropriate. Unfortunately, because of the enactment of the European Union Act 2011, primary legislation had to be passed before the Government could give their consent to the adoption of the proposal on article 352. Therefore, there is a serious question over whether there has been complete compliance not only with the principle of subsidiarity but with the legal base.

European Union Bill

Debate between William Cash and Stephen Phillips

Wednesday 26th January 2011 Commons Chamber

[Mr Cash]

I could not agree more. My hon. Friend is right, and I am glad that the Minister also nods in agreement, because the accession is hugely important. I understand entirely that the Minister has a view about it. He has also heard the very good arguments that my hon. Friend the Member for Daventry (Chris Heaton-Harris) has made on the specific questions that arise. The Minister knows that it is a contentious issue, not least because we are also dealing with the interaction of the European convention on human rights, which came up in the statement on terrorism only an hour or so ago in this very House, and the crucial balance between security and freedom. We do not need to discuss control orders and counter-terrorism now, but I simply make the point that an enormous body of law could be affected by this.

The shadow Minister for Europe, the hon. Member for Caerphilly (Mr David), is attentive, was a member of the European Scrutiny Committee and is taking an interest in the debate. Of course, he has to be here, but I think that he would be here anyway. I find it strange that the Chamber is almost completely empty when we are considering these incredibly important issues, and it would be interesting to know whether there is any reason why. I am glad to welcome my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips), who also has great knowledge of these matters. I hope that he will contribute to the debate, because we have just discussed this point in the European Scrutiny Committee, so it is an opportune moment for us to look at the principles involved.

The Government support accession by the EU to the ECHR, as the Minister indicates. I am sorry that we got a little tetchy, but he gave me the impression that he wanted to move on from the subject fairly quickly, and I understand the necessity to move on to later amendments. Our entire proceedings, despite some considerable reservations on the one hand and downright hostility on the other, have been conducted in a civilised manner and in accordance with what I hope debates in this House should consist of, but we need to take a good look at what the provision implies, and this clause stand part debate gives us the opportunity to do so.

According to the Secretary of State for Justice and Lord Chancellor, accession will close the gap in human rights protection as applicants will for the first time be able to bring a complaint before the European Court of Human Rights directly against the European Union and its institutions for alleged violations of ECHR rights. It will enable the European Union to defend itself directly before the European Court of Human Rights in matters where EU law or actions of the EU have been impugned.

The Secretary of State also says that accession will reduce the risk of divergence and ensure consistency between human rights case law between the European Court of Human Rights and the EU’s Court of Justice in Luxembourg. That is very important. Furthermore, he says that the EU will be bound by European Court of Human Rights judgments in cases in which it is a respondent, and like other contracting parties to the ECHR the EU will need to have regard to the Strasbourg jurisprudence.

I have heard the Secretary of State for Justice express views, albeit in other circumstances, in which he has raised concerns about the extent to which the judiciary is impinging on the sovereignty of this House, and I take him at his word. If he believes that, he might also consider that the EU will have to have regard to Strasbourg jurisdiction. Sovereignty, which we have debated at some length in relation to clause 18, is directly involved in that issue.

I do not need to repeat any arguments that I set out in relation to clause 18, and I have no intention of doing so, but the principle is about the use of jurisprudence from Strasbourg or the European Union Court, the European Court of Justice, and its effect on the legislative process in this House. There is also a constitutional question for the United Kingdom about the manner in which our judiciary is using Strasbourg precedents and importing them to their judgments in our courts. The Lord Chief Justice recently criticised that, because he is worried about the impact of accession on the manner in which we make our decisions and the invasion of common law precedent.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

I hesitate to intervene on such an erudite speech by my hon. Friend, but one problem that the Minister might want to consider in the context of the clause is that accession by the EU to the convention will create essentially co-ordinated jurisdiction over some areas between the European Court of Justice on the one hand and the Strasbourg Court on the other. Indirectly, therefore, it might affect the rights of this place, because more law and jurisprudence will come from both Courts, and that might interfere with the way in which we conduct business and are expected both to represent our constituents and to make our own laws consistent with accepted doctrine of parliamentary sovereignty. I have intervened now because I think my hon. Friend will agree with that point.

--- Later in debate ---

[Mr Cash]

I am expressing the view of academics who have studied this matter, perhaps more than the hon. Lady. [Interruption.] I am not making any personal assertions. I am just saying that the evidence that we have is that the charter will lead to legal uncertainty over how human rights are applied in Europe by introducing the additional standard of fundamental rights. I am not criticising the hon. Lady, but simply replying to her question by expressing the view that is taken in academic circles.

[Stephen Phillips]

Does my hon. Friend agree that the problem that is being expressed is that there will be two competing and overlapping systems, adjudicated upon by two different Courts, which is potentially a recipe for disaster? I think that is the point that he is seeking to make.

[Mr Cash]

I have made that point and am entirely grateful to my hon. and learned Friend for repeating it. The issue is that there is a significant potential for uncertainty when there are two Courts.