Source: https://api.parliament.uk/historic-hansard/lords/1969/feb/13/foreign-compensation-bill-1
Timestamp: 2019-04-23 08:00:38+00:00

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I have great sympathy with the noble Lord, Lord Chalfont, for not wanting to get involved in legal points, but I wish to raise with him now not a legal point but a point of fact. My noble friend Lord Dilhorne suggested that surely it was our moral duty to try to return to the rightful owners the assets that had become the property of the Custodian of Enemy Property and are held in this country. My noble friend asked the Minister whether any attempt had been made to find the rightful owners and, if so, could the noble Lord please tell us. Surely, if it is possible to return the money or assets, we should do so. This is not a legal point and I should be grateful if the noble Lord could give a reply to it.
Before the noble Lord replies, I wonder whether I could make the question a little more specific. As I understand it, the situation in relation to the ceded territories—because although this Amendment relates only to them, the same applies to the Baltic States—is that registrations of claims made under the 1959 Order (No. 1968) were to be registered by British, Dominion and Commonwealth nationals in relation to expropriations of property in the ceded territories. Under this Bill it is now proposed that they should rank pro tanto with other claims on the fund which has been released, or is going to be released, under the Bill and which includes £35,000 of the money which belongs to people formally resident in the ceded territories and who are not necessarily the same people who are registering claims under the 1959 Order.
594 The noble Lord, Lord Chalfont, said, and rightly, that so far as people who are now inside the Soviet Union are concerned, whether they live in the ceded territories or anywhere else in the Soviet Union, the Soviet Union has renounced any claims they may have on the £35,000 which we hold in this country, but probably there are people who are not nationals of or within the control of the Soviet Union who have claims on that £35,000. Some of them may be, here and some may be spread over the rest of the world.
The noble Lord has also said that under Clause 1(3)(b) and (c) there is power in the Treasury to direct that the Foreign Compensation Commission shall pay people who come forward with proper claims and who are not Soviet citizens but who are outside the Soviet Union, and they have done so. Is it the policy of the Government that anybody who produces a proper justifiable claim against this money shall be paid out of this fund of £35,000 or, if the moneys are going to be lumped together, put of the whole amount, before anybody else who registered their claims under the 1959 Order is paid? And if they are going to direct that, are they going to direct that those people who can make these justifiable claims be paid in full, notwithstanding that those who register under the Order may have to accept a partial payment of their claim because the fund is not large enough? If we could have an answer to this question, it would be extremely helpful and we should know to some extent where we are.
The position, as I understand it, and as the noble Viscount has said, is that the Soviet Union have now undertaken not to pursue claims against the United Kingdom and, so far as they are able to do so, they will discourage their nationals from pursuing such claims. Of course, as the noble Viscount has said, it is possible that others may come forward with claims and they would have the benefit of Clause 1(3) of this Bill. What we have tried to do here is to produce a Bill which will give some sort of finality to all these claims.
What has been happening over a great number of years, and what is likely to 595 happen if this process goes on, is that people who have been waiting, in some cases for thirty years, for their claims to be made good, may have to wait for another thirty years. Some of them, indeed, will be dead by the time this issue is settled. So what we are trying to do is to produce a Bill which will lump all the assets together—surely this is the only sensible way of approaching this question—irrespective of whether they are the assets of people who formerly lived in the ceded territories or in the Baltic States, and claims will be settled from the whole of the assets. I think the noble Viscount will agree that the question of whether a person making a claim was formerly resident in one of the Baltic States or ceded territories is an historic accident and that we should not suggest that, because the assets relating to the ceded territories are only £35,000, while the rest belonged to the Baltic States, therefore the restitution should be made pro rata.
To answer the noble Viscount's specific question, we have not sought to find all the owners of this property, who may be scattered all over the world. I think he will agree that the onus is upon those concerned to come forward with their claims and not on the British Government to find them. After all, they have already had 19 years in which to do so. Some of them are coming forward and, as the noble Viscount suggested, they will get their share of the assets, which will include the £35,000 which are the assets relating to the ceded territories.
With great respect, the noble Lord has not really answered either of my questions. May I take him up first on the last thing he said. If claims are put forward—I will come back to the question of whether the onus is on the owners or the British Government—is it the policy of Her Majesty's Government that upon making a proper claim and having it recognised against some part of this £35,000, the claimant shall be paid that claim in full? Or are they to rank so that they receive only the same proportion of that claim as others claiming against this fund, whether they claim as the original owners or as people whose property has been expropriated? That is the first question. I want to know why they are going to get paid in full if other 596 people are going to be paid only in part —because, after all, ex hypothesi they will have established that it was their money that they are claiming.
The other point is this. I wonder whether the noble Lord would explain to the Committee a little further why the onus is upon the owners and not upon the Custodian to find out who they are. This money was vested in the Custodian, as I understand it, because it belonged to technical enemies, and in the case of Rumania to actual enemies—I cannot remember the exact dates, and it may be that they were only technical enemies. That money was invested because it belonged to specific people. Therefore, the Custodian must know to whom it originally belonged. Moreover, as I understand the Order under which he is holding it, he is holding it in a position which is akin to that of a trustee. I do not believe it accords with the normal way in which trustees deal with their property that they should say: "Although I know, or I have a strong suspicion, who this money belongs to, I am perfectly prepared to give it away to somebody else unless fairly soon the person to whom it belongs comes and puts in a specific claim to me." I do not think that this is the way that one normally deals with things as trustees, and I do not believe that this is the way that we should deal with things when we are acting as international trustees. I challenge the noble Lord about the onus, as to who it is who has to show that the people are entitled. I should like the noble Lord to answer those two points.
So far as the second part of the noble Viscount's remarks is concerned, this is, as he has made quite clear, a matter of opinion. He has said that in his opinion this is not the right way to conduct the affairs of the Custodian in the case of this particular property. I can only say that the Government's view is that the onus is indeed upon those who have a claim on this property to come forward and make it. That is our view. The noble Viscount may disagree with it, but this is not a matter of fact, or indeed a matter of law; and, as I say, it is our view that the onus is upon them. The answer to the first question, more specifically, is that if these people come forward and make a proper claim, which is authenticated, they 597 will get the property standing in their name; that is to say, they will get it in full and not by way of dividend.
As I was connected with these questions for some years—admittedly, it was some years ago—I hope that I may be allowed to intervene briefly in this debate. I do not see how the Government can be expected to find the owners of property, who may be anywhere in the world, and some of whom may be dead. But I suggest that the time has come when the Government ought to fix a date beyond which claims will not be accepted—or perhaps they have already done this; and, if so, I apologise for my ignorance.
I think the time has come to consider the rights of our own people in this matter, who have had very legitimate commercial and private claims against the Soviet Union and against the Baltic States, which have gone unanswered for years and years. All this time this money has been in the hands of the Custodian of Enemy Property, steadily depreciating, as money unfortunately does, and we have watched the rights of our people and their claims get smaller and smaller and smaller. After years (and heaven knows how long it has taken!) we have succeeded in reaching an agreement with the Soviet Union. It has required patience, persistence and an enormous amount of diplomacy, but at last we have reached agreement about the way in which this should be handled. I think that the rights of our own people ought now to be considered. There is no other way in which their claims can be met, and I think this represents a reasonable way of doing it.
I think that if the ceded territories were to be excluded, then all sorts of anomalies would result, and it would be most unfair to a number of people with very varied claims affecting the parts of the countries concerned which were ceded in full de jure to the Soviet Union. I feel that the Foreign Office and Her Majesty's Government would come in for great criticism if they settled one lot of claims without settling the other lot of claims. Therefore it seems to me better, both in practice and in equity, that all these claims should be taken together and settled as is now proposed. I venture 598 to suggest that it would be desirable not to press this Amendment.
There is one point that puzzles me very much, particularly after the speech made by the noble Lord, Lord Hankey, in which he mentioned claims against the Soviet Union. I understand what he says, but what puzzles me so much about the ceded territories is why we separate them from the rest of the Soviet Union. I can quite understand the proposition that we have to legislate specifically for the Baltic States, because of the difficulty of there being nobody whom we recognise as de jure entitled to speak for them; but in the case of these ceded territories we recognise Russia as entitled de jure to speak for them. So I cannot quite understand the legal basis of this complete separation of the ceded territories from the rest of Russia.
I was rather staggered by the legal arguments put forward by the noble Viscount, Lord Colville of Culross, when he said that the onus should be upon the Government to go out and seek the claims, rather than that the claimants should put forward their claims to the Government. This all seemed to me to be contrary to what many of us who are ordinary, non-legal citizens encounter in our everyday lives. We see in our newspapers advertisements, inserted by solicitors, which say: "We are the administrators of Mr. Smith's estate. Will all people having claims against the estate of Mr. Smith please send details of their claims immediately to Brown, Brown and Jones, Solicitors? "Surely, that is completely in keeping with the line which Her Majesty's Government are now taking.
Perhaps I might ask the noble Lord a question. This is getting very difficult legally, but this is a lay question of practical incidence which may clear up some things. Before the war my company used to ship cotton to cotton spinners all over Europe. Many of these cotton spinners were in Eastern Europe, and I have no doubt that some of them were "gobbled up" by the Russians. I am no longer connected with the firm, but I have no doubt that they have debts. Suppose we were owed £100,000 by spinner A, and spinner A 599 had a balance in London of £5,000 with the Custodian of Enemy Property; and suppose we were also owed £100,000 by spinner B, who had no such balance in London, should we go to the Custodian and get our £5,000 in full, or would the two claims be put together, and should we get a dividend out of the £5,000 based on the £200,000 claim?
I have listened carefully to the answer given by the noble Lord, Lord Chalfont, to the questions raised in this debate. I should like to say, first of all, to the noble Lord, Lord Hankey, that I am the last person to wish that those who suffer losses as a result of Soviet action should not get some compensation for those losses. But that is a quite separate question from consideration of whether it really is right to use the moneys and property which formerly belonged to other persons to meet those particular claims, and to use that money without giving the former owners the opportunity of establishing their entitlement to it and the return of it.
As I said in moving this Amendment, I can see no objection to the distribution of the unclaimed balances, or of the balances which arise—because, although there are claims, they have not been established—among certain creditors. So, really, one of the questions here is as to that: the rights of the people to whom this property belonged. In that connection the noble Lord, Lord Chalfont, has, I think, with great respect, rather confused them with the people who are claiming in respect of losses. He said two different things, too. He said that these former owners would be able to claim and would get their share of the assets. Then he said a little later that if they established their claim they would get that claim paid in full.
May we have it from him quite clearly (I may have misunderstood him) first of all whether he would agree that nothing has been done so far to invite former owners to come forward and claim? Secondly, would he agree—I am not suggesting (I do not go so far as my noble friend) that the Custodian can trace all these people—that some opportunity should be given to them now, and 600 announced, so that they can come forward and claim? As I said in moving this Amendment, if they do not claim within a stipulated period, then I agree with the noble Lord, Lord Hankey, all that is left can be treated as unclaimed and distributed.
Before we leave this Amendment, I hope that I shall get an answer from the noble and learned Lord the Lord Chancellor on the legal points I raised, which are very relevant to this Amendment. The noble Lord, Lord Chalfont, said that if this Amendment was carried the claimants in relation to property in the ceded territories would not be included in the distribution and would be left with no prospect of compensation. I think those were his words. As I see the position, this particular provision, as I said, is wholly superfluous. If I understand the 1939 Order all right, the powers are already there for the Board of Trade to give directions to the Custodian to dispose of the property vested in him as the Board of Trade directs. That is one of the questions I want answered. Why are we making this provision? There can be a question of a difference of opinion—I recognise that—as to whether all the assets we have in our possession should be pooled, whether they arise from the ceded territories or from the Baltic States together, to meet the claims of claimants.
Another possibility is to say that the claimants in respect of the ceded territories can claim on what has been collected in respect of those territories; namely, £35,000. But I do not think that the noble Lord's position is really tenable in the light of what my noble friend, Lord Conesford, has said. Why distinguish between the claimants in relation to property in the ceded territories, over which we recognise the Soviet Union has de jure rights, and why distinguish them from claims from other persons in relation to other parts of the Soviet Union? It seems to me that the Baltic assets—what I might call the Baltic creditors—constitute quite a different class. I should have thought that it was morally right to treat that class as a separate class and not to lump all the ceded territories with the Baltic territories and, at the same time, leave out all the creditors in relation to other parts of Russia.
601 That is one point on which, I agree, opinions may differ. But what I suggest is that there is no moral right to any distribution unless the former owners are given the opportunity of claiming and unless it is clear that their claims will be met in full before any distribution takes place. But I ask that I should get an answer, I hope from the noble and learned Lord the Lord Chancellor, to the legal questions that I asked in moving this Amendment, because they are very pertinent, not only to the consideration of this Amendment but to our later consideration of other clauses of and other Amendments to the Bill. In the hope that we shall now receive an answer on those points, will stop talking.
Before the noble and learned Viscount sits down, may I ask him how his argument is affected by the fact that Article 4 of the Agreement in the White Paper under reference provides for a settlement, along with other claims, of claims by the holders of unredeemed notes issued by the Government of the Union of Soviet Socialist Republics to the British Joint Stock Companies, the Tetiuhe Mining Corporation and Lena Goldfields Limited of London irrespective of the nationality of such holders"? Does not that mean that claims against other parts of the Soviet Union are partly covered?
No, I certainly do not think it means that; and that is certainly quite a distinct and separate question, which is subject to a separate Amendment. We shall be discussing that in due course.
There is one other point I wanted to mention and the noble Lord's intervention has reminded me of it. It is this. There has been a discussion with the noble Lord, Lord Chalfont, about claims by persons residing in the Soviet Union —persons who were former owners and who are now in the Soviet Union. Surely they are bound by the words of Article 2 of the Agreement, whereby The Government of the Union of Soviet Socialist Republics will neither on its own behalf nor on behalf of its physical and juridical persons pursue these claims. If that be so, the claims in relation to persons now in territory over which the Soviet Union rule de jure would surely be debarred completely. 602 But with regard to the others who are not in that position, I suggest that we really have no right to dispose of what was their property without first giving them an opportunity, which I gather they have not had at present, of establishing their entitlement to it.
I will try to deal with the points that various noble Lords have brought up, not necessarily in the order in which they were brought up but in the order which enables me logically to try to point out to the Committee that what we are doing is not only necessary—the noble and learned Viscount has suggested that it is unnecessary —but right. Various noble Lords have suggested that it is wrong. First of all, the 1939 Act, to which the noble and learned Viscount referred, conferred powers for a specific purpose or for a series of specific purposes. The noble and learned Viscount will, I know, appreciate this if he refers to Section 7 of the Act. What we are doing now is not one of those purposes. Therefore, I think the noble Viscount is wrong in arguing that the Board of Trade already have adequate powers to deal with this situation. That is why we have felt it necessary to draft and introduce this Bill, in order to confer those powers.
The noble Lord, Lord Conesford, asked why other parts of the Soviet Union are not included in the Bill if the ceded territories over which the Soviet Government have a de jure authority are included. I think the point here is that all the post-1939 claims against the Soviet Union arose in connection with the Baltic States and the ceded territories—everything since 1939. In 1959 the then Government agreed to leave on one side all pre-1939 claims, and these were the ones that related to the revolutionary period and covered the rest of the Soviet Union.
May I now come to the vexed question of giving people the opportunity to come forward and make their claims for property which originally belonged to them? The Custodian, of course, knows (perhaps I had not made this sufficiently clear, although it may be clear to other noble Lords) to whom the property originally belonged, but if these people are in the Soviet Union, then, as the noble and learned Viscount has just pointed out, the Soviet Government has withdrawn its claim on their behalf. If they are 603 not in the Soviet Union, who knows where they are? They have left the Soviet Union, they are somewhere else, and I do not believe noble Lords would suggest that the onus is upon Her Majesty's Government to go round the world finding them. The onus must be upon them to come forward and make a claim.
In answer to a point made by the noble Viscount, I repeat—and if I misled the Committee I apologise—that if they do come forward to make a proper, authenticated claim they will get the property standing in their name in full —not a dividend. We have not set a date for coming forward; Clause 1(3)(b) is open-ended. But eventually the fund will be exhausted. However, we want to hold something back from this fund to the very end for such claims, and we will consider setting a time limit when the end of this process is in sight. I think that the people concerned have had an opportunity to come forward and make these claims. I contest the assertion of the noble and learned Viscount that they have not had a chance to do so. They have had a chance and they have had a long time to do it. Some have done so, and some have not.
I come back to the point I made on Second Reading and made earlier in the Committee, the point made very forcefully by the noble Lord, Lord Hankey, which is that we must now as a Government look to the claims and rights of our own people in this matter. This has been going on for a long time. If we do not now produce an effective Act of Parliament in pursuance of the Agreement which after long and patient diplomacy we reached with the Soviet Union, these people who have been waiting for their money, or some part of it, for many, many years, will continue to wait for many more years. I believe it is the duty of the Government now to see that there is some finality in these claims.
I understand that the noble and learned Viscount has some very cogent points of law to argue here, and I have no doubt that my noble and learned friend the Lord Chancellor will deal with those in due course. I would simply urge upon the Committee the need for common sense in this whole affair. We are dealing here in the first Amendment with the question of whether we include people 604 from the ceded territories in the provisions of this Bill. I believe that we should. I believe that the historical accident that they used to live on one side of a border or another is not sufficient reason for dealing with them in a different way. I believe that the sensible and humane and right thing to do is to lump all these assets together and to make payments to people, whether they come from the Baltic States or the ceded territories. May I answer a question put by the noble Lord, Lord Hawke. It was a hypothetical question and I realise, better than anyone else, the difficulty of answering such questions, but in this case I think the answer is that the person would get a dividend as a United Kingdom claimant on both elements of the claim the noble Lord mentioned. That is what I am advised.
We are obviously going to have a great deal of argument, but I believe that the arguments are perhaps more substantial on later clauses and later Amendments than upon this one. I urge upon your Lordships the common sense of including in the provisions of this Bill the ceded territories as well as the Baltic States, and I very much hope that the noble Viscount will not press his Amendment.
I had hoped that we should hear the noble and learned Lord, the Lord Chancellor, on the points I raised. The noble Lord, Lord Chalfont, said in his first reply and has said again that we should hear his noble and learned friend on legal points. I raised several legal points in moving this Amendment. The noble Lord, Lord Chalfont, in his last reply has touched on a legal point in saying this: that it was necessary to put in this particular subsection because the provisions of Section 7 of the 1939 Act, to which I referred in my speech, do not cover this particular object That seems to me to be a fallacious argument and a fallacious reason for the inclusion of this subsection. No one suggests—at least, I do not—that the vesting order was not properly made at the time it was made. Section 7 gives power to make an Order that the property should be vested in the Custodian, and that was done under the objects that then existed. There is no need to add to the objects of Section 7 for that.
605 Now we are concerned with getting the money out of the hands of the Custodian. What I suggest, in all seriousness, to the noble Lord—and I raised it in moving the Amendment—is that under the Order which is in existence, the Custodian of Enemy Property Order, the Board of Trade can now give directions to the Custodian which he is bound to obey. And I put this question: if that be so (and it appears to me to be so) what is the point of having subsection (1)? To that we have had no answer. I should like to have an answer to that from the noble and learned Lord the Lord Chancellor before we pass from this clause.
I should like to have an answer also to the question, which is vital, of the right of property. I raised it on Second Reading and I raised it in moving this Amendment. I repeat it again. Were these people deprived of their property, of their rights to this property, or were their rights merely suspended when the property was vested in the Custodian? Or is it this Bill which is demolishing and destroying all such rights as they might have in what was admittedly theirs at one time? I think, and I hope I have the Committee with me, that we should have an answer to these questions before we proceed to consider other Amendments, because I think they are vital. I sympathise with the noble Lord, Lord Chalfont, in his difficulties. I have found the subject very difficult to understand, and I am quite prepared to be told I have not got it right. But I should like to be told, and I think that before I ask leave to withdraw this Amendment we really should be told. I do not wish to press this Amendment to a Division, but I do want to get that information now, because it might affect the course of later debates on these Amendments.
I have been consulted throughout this Bill about Clause 2(4), and your Lordships may remember that I spoke on that on Second Reading. I have not considered the law in relation to any other clause. Indeed, I could not have guaranteed to say exactly what the Bill said; I have not had occasion to read the rest of it until yesterday, when the noble and learned Viscount, Lord Dilhorne, said that he would like me to deal with his Amendments—not 606 the one we are now discussing, but Amendments Nos. 2 and 10, which are on Clause 1(2) and Clause 1(6). So, since last night, and subject to engagements which I could not avoid this morning, I have done my best to explore the situation, which is indeed an extremely complicated one.
Before one considers the law, one has of course to bear in mind the basic facts; and since the chronology is extremely long and involved it would take some considerable time to state. One starts, I suppose, from 1920, when the Government of Russia recognised the complete independence and integrity of the Baltic States. There were subsequent usual non-aggression treaties. The five points which it is desirable to bear in mind are these. First, in June, 1940, the Russians invaded the Baltic States and ordered the Dissolution of their Parliaments. Elections were held which resulted in Communists being returned to power. Secondly, those Parliaments pissed a large number of nationalisation measures expressed in general words— for example, "All transport undertakings are nationalised": just like that. The legislation purported to extend to all assets of the nationalised bodies, including assets situated in the United Kingdom. Thirdly, on August 3, 5 and 6, 1940, Lithuania, Latvia and Estonia were incorporated into the Soviet Union as Soviet Socialist Republics. Further nationalisation measures were enacted which to some extent duplicated the pre-incorporation measures; for example, the measure relating to transport undertakings was supplemented by one in relation to the shipping undertakings. Subsequently, People's Commissions went to each shipping company's office and physically took over the business. The assets of the former companies were transferred to Soviet State trading agencies—for example, the Estonian State Steamship Line.
Fourthly, in the Summer of 1941, the German armies overran the Baltic States which thereupon became enemy territory. As a result., the assets in the United Kingdom of individuals resident and companies carrying on business in those States became subject to the Trading with the Enemy (Custodian) Order, 1939. And fifthly, on December 29, 1945, Her Majesty's Government first announced their recognition, de facto, but not de fore, 607 of the three incorporations into the Soviet Union. This was done by a certificate given to the High Court in the Vapper case. The Court held that Her Majesty's Government's recognition was retroactive to at least August 6, 1940. There is a similar story involving far fewer assets from Memel and the ceded territories. Memel, being German territory, became subject to the Trading with the Enemy Act 1939 on the outbreak of war on September 3, 1939.
On these facts it would appear to me that the first thing one has to consider is: who owned these things before the German occupation? Clearly it could not have been the Custodian of Enemy Property. When I say "things", we are dealing, of course, primarily with gold formerly belonging to the Baltic central banks, but also with jewellery, share certificates and various other things. As a matter of English law, if I understand it aright, the nationalisation legislation had the following impact upon the assets in this country. A nationalisation decree is effective only with regard to property situated within the territorial jurisdiction of the Legislature making the decree. So one then has to see in relation to these things where the situs was. Under our rules of law, a chattel is situated where it lies; a debt is situated in the country where the debtor resides a negotiable instrument is situated where the paper representing the security is itself to be found; and shares in a company are situated where they can be effectively dealt with according to the law under which the company is incorporated, which is usually the place where the share register is.
So far as assets which are situated in accordance with these rules in the United Kingdom are concerned, I apprehend (I do not regard it as certain, but I would regard it as strongly probable) that our courts would not hold that the nationalisation decrees transferred the assets to the Soviet State trading enterprises. This of course, was the Russian claim. From this, it follows that since the former companies have ceased to exist, such of their assets as are situated in the United Kingdom would seem to be bona vacantia, that is to say the property of the Crown. Subject therefore to what I say later, I regard it as a matter of 608 some doubt whether the assets did or did not vest in the Custodian of Enemy Property. O course, if they are bona vacantia, the claim of the Crown would be liable to be defeated by a winding-up Order under Section 400 of the Companies Act.
The position, therefore, during the period between June, 1940, and the time of the German invasion in 1941 would seem to me to be that the assets in this country of the nationalised Baltic companies were vested in the Crown as bona vacantia, and therefore probably did not become enemy property. The Crown, of course, has no intention of claiming the money for itself. It is naturally prepared, in accordance with the Anglo-Soviet Agreement, to make these things available for claimants; and the main object of Clause 1(2) is to perfect the title in the Custodian of Enemy Property so that there can be no question of this power to deal with this matter. The main object of Clause 1(6) is to prevent the filing of petitions for the winding up of companies; and the noble and learned Viscount has, I hope, observed that that is retrospective to January 5 of this year, which was the date of the introduction of the Bill.
Those are the objects of those two clauses. But all that, I should add, is subject to this: that the gold, as the noble and learned Viscount has said, was deposited with the Custodian subject to the directions of the Board of Trade. The then Government, on February 16, 1951, made an Order purporting to vest the gold in the Custodian, with power to sell. As I understand it, the reason why they did that was this. The Baltic gold was held under Defence Regulation 2A until 1951 when the Government were pressing to remove the Defence Regulations. The gold was then vested under trading with the enemy legislation. The gold was, however, subject to trading with the enemy control from the time the Germans overran the Baltic States. But as the Defence Regulation effectively prevented movement, it was considered unnecessary to take vesting action until the Defence Regulation was no longer in force. That is why nothing was done until February, 1951, when an Order was made purporting to vest the gold in the Custodian with power to sell.
609 It is therefore, I think, a matter of some doubt whether the Custodian was entitled to sell the gold when he sold it. At all events I regard it as arguable. It may be that the position had not been as fully considered as it should have been; but I have been asked to say what I think, and this is what I think. The object of Clause 1(2)—highly desirable from the point of view of all the claimants—is to make quite sure of the Custodian's position. But this may be unnecessary, for this reason: that the then Government in 1953, appreciating, I think, that in many cases, owing to difficulties of one sort or another, the Custodian might have done things his legal title to do which may have been in doubt, in Section 3(1) of the Enemy Property Act 1953 validated (if that is the right expression) whatever the Custodian had done up to that date. The position therefore, I think, what with one thing and another, is extremely obscure, and if claimants want their share of what there is, the Committee would be well advised to agree to Clause 1(2) and Clause 1(6) which will put the Custodian's position beyond doubt.
I am most grateful to the noble and learned Lord the Lord Chancellor for the exposition that he has given, which in fact has gone on (I make no complaint about it) beyond the particular subsection with which we have been dealing, because he has referred to Clause 1(2) and Clause 1(6). I found his observations in relation to both of them most helpful.
The noble and learned Lord began his speech by referring to the short time that he had had to consider these points. I think it is only fair to say that I wrote to him last week. Although it is true that I mentioned particular subsections, my recollection is that I specifically mentioned that I would be raising this question of when, or if, the right of property changed. He has told me of the difficulties in relation to that, and I must admit that I am still finding it as difficult to determine whether the effect of an Order under the Trading with the Enemy Act 1939 operates to destroy rights of property or whether it does not. I still find that point unanswered. Indeed, as the noble and learned Lord indicated, it may be that there were considerable doubts 610 whether some of this property came within the definition of "enemy property". I think that was all cured by the 1953 Act, to which the noble and learned Lord referred, but I still have not got an answer—I do not know that I need press for it now—as to whether the effect of vesting in the Custodian is so destroy the rights of ownership or not. If it does not destroy the rights of ownership, then the effect of what we are now doing under this Bill, if we pass it, will destroy them. I think we have spent quite enough time on this Amendment—perhaps too much, although I hope not. Certainly what has been said has helped me, and I ask the leave of the Committee to withdraw the Amendment.
I should inform the Committee that if Amendment No. 2 were to be agreed to, I should not be able to call Amendment No. 3.
§ VISCOUNT DILHORNE moved Amendment No. 2: Page 2, line 4, leave out subsection (2).
§ The noble and learned Viscount said: I beg to move Amendment No. 2. I can do this much more shortly in the light of what the noble and learned Lord the Lord Chancellor has just said, and I hope that he will correct me if I misunderstood him. He dealt fairly rapidly with a very intricate situation. As I understand it, this power to make an Order is required to prevent a previous Order of the Board of Trade in relation to certain of this property being challenged. If that be right—I have no objection to it happening that way; this is ex abundanti cautela because of the 1953 Act—I should have thought that subsection (2) ought to have provided that the Order already made should be treated as valid, and you would not want to take a power to make an entirely fresh Order. That is perhaps a somewhat minor point. However, I must say to the noble and learned Lord that when I read this Bill and read this subsection it gave me a lot of worry to try to find out what it meant and what its purpose was, because nothing wises said about it, so far as I can recollect, in another place.
§ One point I should like the noble and learned Lord the Lord Chancellor to confirm is this, if he would. As I see it, under this subsection as it stands, it would give power to the Board of Trade to make a new Order vesting in the Custodian property of someone who was formerly within the definition of an enemy but who, of course, has ceased to be so as we are no longer in a state of war; to bring in, as one might say, fresh property into the hands of the Custodian. I think the power given by this subsection would be wide enough to make such an Order. I take it from what the noble and learned Lord the Lord Chancellor has said—and I hope he will confirm it—that there is in fact no such intention, and that this power is merely wanted to validate beyond all doubt action that has already been taken. I beg to move.
No, I do not think that that is so. I think this subsection will give power to vest whatever the property is legally in the Custodian of Enemy Property. Indeed, it is desirable that that should be so. Under Clause 1(3)(b) and (c) it would be perfectly proper, of course, to allow a claim which may be made, even though it is not sustainable in law. But one must reflect here that there might be claims against the gold, or whatever may be here, by Baltic companies. All we have at the moment is an agreement with the Soviet Union that they will not let them claim, but I suppose if they did the agreement would not be an answer in law. We must also consider things which may belong to foreigners.
I am afraid that I cannot have made myself clear to the noble and learned Lord. I am not objecting to an Order being made validating what has been done. This property has been vested. I should have thought that it could have been done in a more simple form by saying that the Orders which had been made were not capable of challenge. I am not trying to draft. I am not quarrelling with that, but the wording of this subsection seems to me to be so wide that a fresh Order could be made bringing into the hands of the Custodian property which he has not already got. I only wanted an assurance that there was no intention of using 612 this subsection for that purpose despite the width of its language.
As I understand it, vesting Orders may be made but they will relate only to what the Custodian already has physical possession of.
in view of that assurance, which I find entirely satisfactory, I ask leave to withdraw this Amendment.
§ VISCOUNT DILHORNE moved Amendment No. 4: Page 2, line 13, leave out ("Articles 1 and 4") and insert ("Article 1").
§ The noble and learned Viscount said: I apologise for the late tabling of this Amendment which was by mistake omitted from the list I handed in. If this Amendment is accepted or carried, the effect will be that the Custodian could not pay out money, the property of residents or persons who carried on business in Baltic States and ceded territories, for the purpose of meeting claims by the holders of unredeemed notes issued by the Soviet Union to Lena Goldfields and the Tetiuhe Mining Corporation. That the Goverment have agreed to do, and we are, I think, entitled to ask why they have done it and what justification there is for taking over this liability of the Soviet Union.
§ The Committee will recollect that in an arbitration the Lena Goldfields were awarded £30 million. The Soviet Union did not accept the award and later agreed to pay £3 million and issued notes for that sum. Then when we refused to admit their claims to the Baltic gold, they retaliated by stopping payment of these notes. Mr. Whitlock, the Under-Secretary for the Foreign Office said in another place that £2.2 million was then outstanding. So only £800,000 of the £3 million the Russians agreed to pay has been paid by them, and we have now relieved them of the obligation to pay the balance. Even if we were wrong to reject their claim to the gold, that did not entitle them to dishonour the notes they had issued, and issued not only to British but to foreign persons. There can be no justification for their repudiation of their debts.
§ Now we have agreed to settle the claims on these notes with foreign and British holders, and to relieve the Russians of their obligation as if we were wrong in rejecting their claim to the gold. Mr. Whitlock described these notes as "deferred and inadequate compensation from the Soviet Government" and said: It is only just that the note-holders should be compensated, irrespective of nationality, since they all alike suffered loss as a result of the Soviet retaliation for the British action in blocking the Baltic gold in defence of British interests. That is the justification for Article 4."—[OFFICIAL REPORT, Commons, 7/ 11 /68, col. 1101.] If we were right in rejecting the Soviet claim to the gold, this is no justification at all for our relieving them of their obligation, just as there can be no justification for their action in repudiating their liability to the noteholders. I ask: why on earth did the Government agree to this? I think we should have a full explanation, but I cannot think that an explanation is likely to justify this extraordinary provision in this Agreement. Not only have we agreed to relieve the Russians of their liability, but we have also agreed to meet the claims of all the noteholders out of the Baltic assets and assets of the ceded territories, and no one can suggest that the noteholders have any claim at all on those assets.
§ We shall be discussing the payment of the £500,000 on a later Amendment. It is said that if we had not agreed to that, there would have been no Agreement. Was this the reason for taking over the Soviet liability? This is not all. We have also abandoned our claim for shipping services amounting to £1.2 million under the Ships Expenses and Freights Agreement with the Soviet Union of 1944. So, if my mathematics are correct, this Agreement, which the Foreign Secretary of the day said was very good business, is worth £4.1 million to the Soviet Government.
§ It was said in another place that the £500,000 tip was worth paying to get agreement. We have in fact agreed to pay that, and have paid it, and have agreed to relieve them of liability for £3.6 million—and for what? Just the assurance that they will not pursue their claims, claims which no Government has accepted and which, I suggest. do not bear examination. Surely, the right course would have been to say to the Russians, 614 "If you have any honest belief in your claim, let us go to arbitration about it and settle it that way". But this Government did no such thing. They chose to buy the Russian signature by paying a price out of assets which have never belonged to this country and by charging those assets with liabilities of the Russians.
§ They endeavour to sweeten the pill by saying that the £500,000 will be spent on consumer goods in this territory, and, when pressed about it, they say: "If we had not agreed, the Russians would have retaliated if we had distributed these assets which were in our hands". The instance given is that they might have retaliated by repudiating a trade agreement under which the last instalment fell to be paid in 1963. The noble Lord, Lord Chalfont, referred to that. Are we to be deterred from doing what is right by fears and threats that other people will break their contracts? If the situation were to occur again, are we really not to block the Baltic gold because of the fear that the Russians would repudiate their liability on their notes? This argument about retaliation by breach of agreement seems to me to be no justification for entering into an agreement of this sort. I must say that this seems to me to be a lamentable transaction which should be both condemned and exposed. As I have said, the Foreign Secretary of the day said that it was very good business to get this Agreement. If that is what this Government regard as good business, I am not surprised at the state of the country at present.
§ The Foreign Secretary then said that the Agreement would be subject to the approval of Parliament. He signed it on January 5, and immediately above his signature appears Article 7, which reads as follows: The present agreement shall enter into force on the date of signature. The Foreign Secretary cannot have failed to know that that Agreement did not require ratification. How came it, then, that on January 23 in another place he said that that Agreement was subject to the approval of Parliament? Signed on the 5th, the £500,000 was paid on the 12th, and the Agreement was not laid before Parliament until the 18th; and on the 23rd the Agreement was said to be 615 subject to the approval of Parliament. The Foreign Secretary went on to say: If Parliament turns it down, that will be that."—[OFFICIAL REPORT, Commons, 23/1/68; col. 210.] I referred to this statement on Second Reading.
§ The noble Lord, Lord Chalfont, in his reply spoke about ratification, and when I directed his attention to this matter he said that he could not answer it then. I ask him to deal with it now and either to say that the Foreign Secretary was wrong, in which case he misled Parliament, or to justify that statement. If—and I do not think it is the case—the Agreement is subject to Parliamentary approval, I should have no hesitation in inviting your Lordships to support me in the Lobby so as to ensure that the Soviet Union are not relieved of their liability to pay the amount due on the notes on which they have defaulted, and to ensure that their obligations do not become a charge on the Baltic assets. I should like to be told whether, having relieved the Soviet Union of the liability of £1.2 million under the Shipping Agreement, the Government are making, or will make, a claim for that on the assets.
§ Despite the Foreign Secretary's statement, I think that nothing that we can do will alter or affect the Agreement. If that be right, the only course open to us is to condemn the Government for their action, and I hope that noble Lords will join with me in doing so. It is all very well to take pride—and pride was taken in another place—in continuing to deny Soviet claims to the gold, but that has a hollow ring when the Government's conduct appears justifiable only on the basis that we were wrong to hold the Baltic gold; and it is only on that basis, it seems to me, that our taking over the Soviet liability on these notes can possibly be justified. I beg to move.
The noble Viscount in moving the Amendment spent a good deal of time attacking the Agreement and attacking the Government for coming to that Agreement with the Soviet Union. Therefore I think it logical that before I come to deal with the Amendment itself I should say a word, as he has asked me to do, about the status of the Agreement. He is, of course, right 616 in saying that this Agreement is not subject to the approval of Parliament; it was never intended to be subject to such ratification. Both sides in the negotiations approached the Agreement in the belief that it was right to have an Agreement which was not subject to ratification. As I mentioned on Second Reading, one reason that Her Majesty's Government believed that it was wise to do this was a fear that the Soviet Government, perhaps for some reason or another, would think it unwise to ratify and we should then be back where we started. I know that noble Lords have criticised this approach, but I now merely wish, for the benefit of the Committee, to put the record absolutely straight.
If the noble Lord is going to do that, I hope that he will explain the then Foreign Secretary's statement.
Yes, I shall hope to satisfy the Committee about the apparent discrepancy between the statement of the then Foreign Secretary and the actual situation as it is now. On January 23, 1968, as the noble Viscount has said, the then Foreign Secretary, I think in answer to a Question in another place, said: The Agreement will be subject in due course to Parliamentary approval".—["OFFICIAL REPORT, Commons. 23/1/68; col. 210.] I promised last week during the Second Reading debate to say something about it at a later stage in the Bill. I have refreshed my memory about this subject. The position then, I think, was that when my right honourable friend made that remark the Agreement had already been signed some three weeks earlier and it had been laid before the House some days earlier—in fact, to be precise, on January 18. Whatever my right honourable friend said at the time, it was obvious from the context of the Agreement itself that it was not subject to Parliamentary approval.
If the noble Viscount will allow me to finish, I think that he may conceivably be satisfied with what I have to say. I think that it was obvious from the context that it was not subject to Parliamentary approval. I believe that what my right honourable 617 friend meant, and what it was evident he meant—it is apparent from the Preamble to this Bill—is that, as a result of the Agreement, legislation would be needed to authorise the distribution of the assets envisaged as a result of the Agreement. What he said may not have been that, but that is what he meant.
The noble Lord will admit that, whatever he may have meant, he said quite specifically that the Agreement would be subject to the approval of Parliament.
Indeed, one only has to consult the OFFICIAL REPORT to see that that is so. I can only suggest that what my right honourable friend said on that occasion and what he meant were not entirely congruent.
May I now move on to the Amendment itself? When we approached the negotiations to this Agreement—and whether noble Lords believe this to be a good Agreement or not I can only say that Her Majesty's Government believe it to be a good one (and I might point out, in passing, that of course this is not a matter of the Government's gaining anything or engaging in some kind of tournament with the Soviet Union, about who can get the most out of a negotiation or Agreement of this kind)—the object was that the people making these claims could have them satisfied. And nothing would achieve that but Soviet renunciation of the claims against us, and a similar renunciation of our claims against them so that the assets could be realised and distributed. When we approached these negotiations it was on this basis, and on the basis, too, that the Government would submit all outstanding claims against the Soviet Union which arose after January 1, 1939.
Now in 1959, the two Governments agreed to include within the negotiations the question of the Soviet default on the Lena and Tetiuhe State Notes. The question of these outstanding Notes was discussed with the Soviet Union during the course of the detailed talks which we held between 1965 and 1967—the talks that ended in the Agreement. Article 4 of the Agreement of January 5, 1968, contains an undertaking that in settling the claims which they presented Her Majesty's Government will from the assets make a settlement of the claims of the Note 618 holders. Whether the noble and learned Viscount believes this Agreement was a good one or not, the Agreement was made; it was not subject to ratification, and the Government undertook in that Agreement to settle from the assets the claims of the Note holders. The assets are those to which the Soviet Government renounced its claims in Article 2 of the Agreement.
That did not mean, of course, that the Notes would be settled in full; the holders would receive the same dividend as other claimants. These Notes were issued to two British companies and they were redeemable at intervals extending to 1949, in one case, and to 1954 in the other. They were redeemed regularly up to 1940, and as the noble and learned Viscount is well aware, in 1940 the Soviet Government stopped payment in retaliation for our action in blocking the Baltic gold. This was action which we took, as I have tried to convince the house, in defence of British interests generally. But there is every reason to suppose that had we not taken this action, the Notes would have been redeemed in full many years ago.
To sum up, then, the reasons why I am opposed to this Amendment are as follows. First, the Notes formed part of the negotiations with the Soviet Union and therefore helped to swell the size of our claim. Secondly, as I have said, they are the subject of an express provision in the Agreement of January 5 which we signed with the Soviet Union. Thirdly, although they represent—and I admit this to the noble and learned Viscount—a direct Soviet obligation, the fact remains that their default on this obligation occurred as a result of our blocking of the Baltic gold—an action which we took, as we believed, and still believe, in our: own interests. For all those reasons, then, we believe it right that the assets in this country which become available for distribution following on the Agreement, should be used to compensate not only the British claimants against the Baltic States and ceded territories, but also the Note holders. I hope that in the light of this explanation, the noble and learned Viscount will not press this Amendment.
May I express astonishment at one fact which I believe to be very important? The Foreign Secretary in another place made a state- 619 mend of the greatest importance which was completely wrong. May I say at once that of course I acquit him of any bad faith. Ministers in both Houses, and of both Parties, from time to time make important mistakes in answer to questions. But I am quite certain—at least I hope I am right in this—that the very efficient Department, the Foreign Office, for which the noble Lord is a spokesman, noticed that mistake and informed the Foreign Secretary of it and of its importance when he returned to the office. I thought that the universal custom in such a case was that the Minister came down to the House on the following day and said, "Inadvertently. I am afraid I made a blunder yesterday and misled the House and then made the correction. I remember the noble Lord, Lord Shepherd, once doing this and saying that he had inadvertently make a mistake (I think in interpreting a Statute), and, of course the House at once accepted what he said. The Rules of our House say that one cannot even thank him for it; but the Minister comes and makes that statement and that ends the matter. That would have been the way to treat this case.
It seems to me quite appalling that on a matter of this importance the Foreign Secretary should, however inadvertently, have misled the House and then not sought an opportunity of putting matters right. It is all the more important because, as I endeavoured to show on Second Reading—I am now expressing only my own view—had this Agreement ever been submitted to either House of our Parliament for ratification, I do not believe it would have received ratification. I must say that for some years I listened with great respect (although I was in the opposite Party) to the late Ernest Bevin representing the Foreign Office and valiantly fighting, according to his lights, for British interests. What he would have thought of this Agreement almost passes one's imagination. I wish to confine myself to that single point. I think it is quite astonishing that the Foreign Secretary did not come to the House of Commons and correct his gross mistake.
Of course I take note of what the noble Lord has said. But I am sure the Committee will forgive 620 me if I do not comment in any substance upon what occurred, or did not occur, in another place on that particular occasion. Perhaps I might, however, make one comment on the simple facts of the case, which are that whether my right honourable friend actually said what he meant to say on that occasion is one matter. But whether he actually misled anybody, in the serious way the noble Lord has suggested, I venture to contest, for the simple reason that, as I have said, when he made this remark the Agreement had already been signed and laid before Parliament, and it was clear for anyone who could read to see that the Agreement was not subject to the ratification of Parliament. Therefore, whatever may have been the mistake that was made, whatever noble Lords opposite may think about the failure to correct it formally, I suggest that it is a gross exaggeration to say that Parliament or anyone else was misled. The facts of the case were there for anyone to read.
The noble Lord has done his best and I do not think he had too easy a task. But may I say this to him, before we leave the matter of this answer to a supplementary question? I cannot agree with him that Members of another House may not have been misled. I say that because this particular answer of the Foreign Secretary was referred to many times in the course of the debates on this Bill in another place. There was never any correction. There was never any explanation such as the noble Lord has given. I know that in another place—it does not matter to what Party a Foreign Secretary belongs—people pay great attention to his words, and one expects Foreign Secretaries to use words with great care, as they usually do. It may be that I would not have been misled. I might have thought that there was something which I did not understand when the Foreign Secretary came down and said something of that kind about that Agreement. But I must say that I think it was most unfortunate that all through the discussions on this Bill in another place the explanation which the noble Lord has given to the Committee to-day was not made. I thank him for that explanation to-day. I accept it, and I do not propose to pursue the matter.
621 With regard to payment to the noteholders, I must say that the noble Lord's explanation of why that was agreed to does not seem to me to amount to the least justification for it. In moving this Amendment, I said that as I thought we could not affect the Agreement if we carried the Amendment it would mean that we were preventing the Government from implementing something that they had agreed to, however wrong it was of them to agree to it. If, of course, the Foreign Secretary's statement had been taken at its face value, that would have been a different matter. As my noble friend Lord Conesford has said—and I agree with him—I do not think either House of Parliament would have ratified this Agreement if it had been subject to ratification. But as it is there, I certainly do not think that it would be right for me to press this Amendment to delete this provision, however bad I think it is that we should relieve the Soviet Union of the liability which they have on the notes that they issued. I therefore ask leave to withdraw the Amendment.
§ The noble and learned Viscount said: This Amendment, again, is one which I can move, I hope, very shortly. It is a probing Amendment. The Explanatory Memorandum says that the purpose of the Bill is to make provision in order principally to enable compensation to be paid in respect of claims covered by Articles 1 and 4 of the Agreement. The inclusion of these words, "or other similar claims", means that the Baltic assets can be used to meet claims not covered by but similar to those covered by the Agreement. That is as I understand it. I ask this question: is it really thought that the Agreement is not comprehensive? And in the context here, how does one interpret the words "similar to" having regard to the variety of claims covered by the Agreement—the claims in respect of the Lena notes, the claims for shipping services and the claims in relation to property rights and banking, commercial and financial interests? One thing at least which is 622 clear is that the inclusion of these words widens the Bill very considerably, and we have not heard a word so far about the reason for their inclusion.
§ Of course, the more claims there are which are included the less there viii be for each claimant. We know that the assets amount to £6,535,000. From that has to be deducted all the Custodian's costs, and—perhaps I may have the noble Lords' attention; I know he is having a little difficulty—we know that 13ritish claims amount to £15 million. We have been told by the noble Lord that those claims may be inflated, but we have been told of part of them which certainly, I should think, could not have been inflated. There is £2,200,000 due on the Lena notes, £2.75 million due on the external bonds, and:£1.3 million claimed by Her Majesty's Government. Surely that is not inflated. Could we b told what it is for? It is not for the shipping services, I hope, in respect of which we have relieved the Soviet Union of liability. Then, £1.25 million for commercial debts and hank balances, and £.7.5 million for nationalised properly and shareholding. That was the make-up of the £15 million as revealed in debates in another place.
§ If all the claimants are to be treated equally, it does not seem very likely that they are going to get a very large proportion of their claims. But by the inclusion of these words, "or other similar claims", it seems to me that the Treasury is given power to enlarge the number of claimants very considerably, and that will further reduce the share of the claimants who are covered by the Agreement. I do not know why those words are there, and I ask the noble Lord to explain. I beg to move.
Before I come to the question of this particular Amendment, I wonder whether I might revert. as I think it is an important matter that has been raised, to what the noble and learned Viscount said in his last few words before he withdrew the last Amendment. which meant that I therefore did not have an opportunity to intervene. He suggested, I think, that at no time during the debates on this Bill in another place was the disparity between what my right honourable friend said and what he meant referred to and made clear. I would 623 refer him to a statement made by my honourable friend Mr. Whitlock in the course of the debate which appears in column 1130 of the Official Report of that debate.
On November 7, during the Second Reading of the Bill. If the noble Viscount will look at the second paragraph of column 1130 of the Official Report for that day, I think he will see that my honourable friend in fact referred to this disparity and explained to the honourable and gallant Member who had asked the supplementary question what he thought my right honourable friend had meant. I think it right to point out that this was referred to in the course of that debate, and was not ignored quite as comprehensively as the noble Viscount has suggested.
Perhaps I might now explain the underlying reasons for the phrase "or other similar claims "which the noble and learned Viscount has asked me to do—and I am glad to have an opportunity to do this. We know that there exist a few claims that were not registered under the Foreign Compensation Order of 1959. As noble Lords will recall the 1959 Order was closed for applications in 1964, but subsequently, and before settlement was reached with the Soviet Union, some additional claims were reported to us. These claims, it seems, could have been registered under the Order of 1959 if there had been more time. It was decided not to present any of these late claims to the Soviet Government, and they were not therefore the subject of negotiation. But the amount involved is not great—certainly not great enough to have affected the terms of the Agreement with the Soviet Union. As my right honourable friend the Parliamentary Secretary said in another place on November 7, it is the Government's intention to bring these late claimants within the terms of the distribution order; that is to say, everybody who could have registered a claim but failed to do so. That is the meaning of the words "or other similar claims", and in the light of that explanation I hope the noble Viscount will not press this Amendment.
I take it from what the noble Lord has said that the 624 "other similar claims" are all claims which have been received already, too late for admission before, and that there will not be any new class of claims which will be covered by these words.
That indeed is the position as I understand it.
I regard that as satisfactory, and I ask leave to withdraw this Amendment.
§ VISCOUNT DILHORNE moved Amendment No. 9: Page 2, line 34, leave out subsection (5).
§ The noble and learned Viscount said: I am afraid I am moving a lot of Amendments to-day, but this, I think, is one of the more important. The subsection which this Amendment proposes to leave out is that which provides for repayment to the Treasury of the £500,000 which has been variously described as a tip" or "bribe" paid to the Russians. I should like to remind the Committee shortly of the history in relation to that. After Mr. Kosygin's visit in 1967 a communiqué was issued in which it was announced, with something of a flourish of trumpets, that a final settlement would be reached of these matters and that £500,000 would be paid out of the Baltic assets to the Soviet Union. It was almost a year later that the Agreement was signed and it was provided by Article 5 that the Government of the United Kingdom should from the Baltic assets—and I stress those words—pay the sum on January 12. The Government paid the sum to the Soviet Union, not out of the Baltic assets but from the Contingency Fund. So in fact the Government did not strictly adhere to the Agreement they had signed. Of course the Russians did not object to that because they got the money.
§ The Government duly paid the money on January 12; and it was paid, I think, without that payment being revealed at all to Parliament at the time. The first mention of it that I can find was on January 17 when, in a Written Answer to a Question—and, of course, Written Answers do not always attract attention—-the Government revealed what had been done. As the noble Lord has said, the Agreement was presented to Parliament on January 18. Curiously, the print of 625 it does not contain the date on which it was presented. One wonders why. It contained the month; but it contained no full date. Why was that? The item was included in the Supplementary Estimates passed in another place. That is all the past history. Now we are asked to agree to the payment of £500,000 out of these assets—not to the Russians, because they have already been paid—to the Treasury.
§ I must say that the way in which the Government have handled this matter seems to me to show a contempt for Parliament. I think that through what is called the "pay-roll vote" they may think that they can get anything rubber-stamped in another place. Be that as it may, their course of conduct in relation to this matter seems to me to indicate a certain feeling of discomfort and disquietude about it. Without this payment they might not have had the Agreement. Be it so, it would have been much better not to have got an Agreement than to have agreed to pay this money out of assets to which the Soviet Union had no claim.
§ Mr. Whitlock the Under-Secretary, stated on the Second Reading in another place: Neither this nor any other British Government could have handed the assets over to the Soviet Union. I am sure that both sides of the House would have rejected such a solution as completely intolerable."—[OFFICIAL REPORT, Commons, 7/11/68, col. 1132.] I agree with him that to hand over the assets would be completely intolerable. But I find it equally intolerable that we should hand over £500,000 of these assets to the Soviet Union and so diminish the fund available to those who have suffered losses as a result of expropriation by the Soviet Union.
§ What can we do about it? It is perfectly clear that we cannot alter the agreement; but we can delete this subsection. If the Minister had been a member of a local authority which had behaved in such a way presumably they might be surcharged. That cannot happen. If we take out this clause we shall not be breaking any agreement with the Russians, but we shall be showing our disapproval in the only way we can; and we shall also give another place another opportunity of considering this matter. I feel at this moment that this is the course we should take. I hope 626 your Lordships will agree with me and thus record our condemnation. I beg to move.
I have little to add to what my noble and learned friend has said. I wholeheartedly support what he has said and I shall certainly follow him into the Lobby if we are not given satisfaction on this point. There is a further matter in relation to this subject to which I would call your Lordships' attention which makes it really even worse; that is, that a full month elapsed between the time the money was paid and the time when the payment was revealed in the Supplementary Estimates. This seems to me to be an extraordinary way to behave. The whole of this Bill seems to be regrettable in the extreme. I hope that noble Lords will support the suggestion of my noble and learned friend Lord Dilhorne that we show, in this House at least, our strongest disapproval of this sort of behaviour. We were not given the opportunity to do anything about it earlier. There was nothing we could do about this Agreement. I am quite certa n that it would have been strongly opposed had the opportunity been there to oppose it. Here seems to be an opportunity, at least for us in this House, to show how strongly we disapprove of the way Her Majesty's Government have behaved. I should like to say how wholeheartedly I support the Amendment of my noble and learned friend.
Together with others, I support this Amendment partly in order to reverse an insult to Parliament. It is painful and deplorable, but I am afraid by no means untypical today, that the insult should be delivered by Ministers of Her Majesty's Government. There are, as has been pointed out, two offences contained in this subsection. The more obvious to the world at large is the payment itself: half a million pounds of somebody else's money, paid over as a "bribe" to the very felon who has robbed the victim of everything else that he possessed in the world, The second offence is that this act was carried out not simply without the approval of Parliament but without its knowledge. I am referring now directly to the £500,000 paid to the Soviet Union but slightly less directly to the realisation of 627 the Baltic assets, the sale of gold, from which we are being asked to legalise the payment to the Russians that has already been made. My noble and learned friends Lord Dilhorne and Lord Conesford have stigmatised the Government on this point already. I think it pertinent to mention it as they did and that the Government should be reminded of it again in this context.
One of the qualities of the noble Lord, Lord Chalfont, which I think—perhaps I am wrong—is sometimes overlooked is that he is or can be a "comic" of some distinction. He is the rarest, or among the rarest, in that particular vocation. He is a "deadpan" comic. He can stand up and say, as he did last week at the Dispatch Box: A good deal of concern, and indeed some violent criticism, was expressed of the fact that this Agreement was reached without being subject to ratification. Perhaps at the outset I should say that neither side in the negotiations wanted to make this Agreement of 1968 subject to ratification".—[OFFICIAL REPORT, 4/2/69, col. 69.] He also said—and he has repeated this to-day: I can only say that it was never the intention during these negotiations to have an Agreement subject to ratification" (col. 70). It seems to me to be bad luck on the noble Lord that this did not, as it deserved—when he said it here last week and when he repeated it to-day—bring the House down. Indeed, neither side in the negotiations wanted to make the Agreement subject to ratification—but for quite different reasons. Mr. Kosygin knew that in his country ratification was a formality and a waste of time Mr. Wilson knew that in his country—in our country—had Parliament been given the chance before ratification or implementation, there was a lively possibility that Parliament would have chucked it out. In an axiomatic sense, Mr. Wilson's contempt of Parliament in this instance sprang from a respect for Parliament, in knowing what Parliament is likely to do if given the chance.
There was another aspect in which the noble Lord, Lord Chalfont, exercised his comic genius. He went through the performance of taking umbrage at expressions such as "tip" and "bribe" in describing this half a million pounds. He said at another point [col. 65] in answer 628 to my noble friend, Lord Balfour of Inchrye: If you wish to say we 'bought' an Agreement, the fact is that we agreed with the Soviet Union that in return for this small and modest sum"— everything would be "hunky-dory". That is not the expression he used, but mine is briefer and more descriptive.
It is interesting that in the calculation of the present Government half a million pounds is a small and modest sum when it belongs to somebody else. It could go some way to explaining the exuberant borrowing which Her Majesty's Government have done in their five eccentric years of office. The noble Lord said that the use of emotional and exaggerated terms such as "tip" and "bribe" and so on was "all good political knockabout '"—very fair and friendly of him. But a second or two later he said, and I quote directly: I do not believe that £500,000 was too great a price to pay for the advantages of an Agreement."—[OFFICIAL REPORT, 4/2/69; col. 64.] If that does not describe a tip or a bribe I wonder what it does describe. It is the noble Lord himself who is a master of knockabout, and in that guise we can raise our hats to him.
There was something else in his speech which could have been classified, I suppose, as humour in a Rabelaisian sense, but which I found far less to my taste in the context of this series of debates. He said: I was taken to task by one noble Lord for expressing the fate of the Baltic States in terms which he clearly thought were understated and objective…had t turned aside to deal one way or the other with the morals of this or that particular course of international action twenty, thirty or more years ago. I might indeed have kept your Lordships here until well into the night."—[OFFICIAL REPORT, 4/2/69; col. 59.] I do not know what the half-life of a moral principle may be in the calculations of the present Government, but the remaining part seems to have diminished pretty rapidly since 1964. We did not demand that the noble Lord should keep us well into the night, but to ignore the immorality of the Soviet action some 24 years ago, and to profit by it two years ago, was something he could not expect this House to allow to pass without comment and rebuke.
629 The subsequent words which he quoted did nothing very much to exonerate him. It is true enough that in the course of his Second Reading speech the noble Lord expressed sympathy and compassion repeatedly, but not for the true victims of what he again and again called "this wretched history". It is because we think that the most wretched passage of this whole wretched history is being written now, at the dictation of Her Majesty's Government, that these Amendments are being moved.
The noble Lord, Lord Chalfont, said with feeling, on that earlier occasion, that the interest of the claimants is what is at stake here. In what way is Soviet Russia, who has been given first call on payment—advance call on payment—a claimant in this sense? He spoke of the legitimate preoccupation of the claimants. What was the legitimate preoccupation of Soviet Russia? In the next Amendment we shall be pleading the case of other claimants, equally deserving to those embraced by the noble Lord's compassion but which the Bill seeks to exclude. We shall come to that. Because it seems to us immoral and intolerable that the despoiler of those potential claimants should be rewarded eventually out of the money which belongs to them explains a certain ardour in my approach and the conviction with which I shall follow my noble and learned friend into the Lobby if he chooses to divide.
I had thought, wrongly, that we were going to conduct this debate on a certain level of objectivity. I began to have doubts about that when I saw the noble Lord, Lord St. Oswald, enter the Chamber. He has indeed succeeded in lowering the debate to his normal level of pugnacity and personalities. I shall not attempt to refute any of the references he has made to my character or to my performance. I can only say that if he holds me in high esteem as a comic, I can think of no better judge.
I pass from this rather unsavoury exchange of personalities to deal with the Amendment which I understand the noble Lord was supporting. May I first explain to the noble and learned Viscount the apparent delay 630 over the announcement of the payment of the £500,000 to the Soviet Union? It could not have been announced to Parliament on January 12 because Parliament was then in Recess. The earliest date at which a Written Answer could be laid was January 17, the date upon which that Written Answer was actually given. I mention this point merely to clear up the apparent delay in the announcement of this payment.
As to the question of the payment itself, I fear that my reply to the noble and learned Viscount's Amendment is bound to be a very brief one, and bound to be, in essence, a repetition of what I said on Second Reading. I suggest to the Committee that we shall get no further by referring to this payment as a "tip" or a "bribe" or in any other emotive and contentious way. We did pay to the Soviet Union the sum of half a million pounds. We could not have got the Agreement, which we think is essential to the claimants, had we not paid that money over. If noble Lords wish to call that a tip, a bribe, a consideration, a payment, a price or anything else, I invite them to consult Roget and use any term that they like to use. I can only say that we thought it essential to get this Agreement and we believed it right to make this payment in order to get it.
There is another aspect which is different from the question whether or not the Government were right do this, and that is the suggestion that in some way there has been a contempt for Parliament by the way in which it was done. I reject utterly the suggestion that the Government held Parliament in contempt in making this payment. The arrangement made with the Soviet Union was that the money should be paid over one week after signature of the Agreement. Noble Lords have attacked the Agreement and I have listened with great care to the terms in which they have attacked it. Nevertheless, the Agreement was made, and it was made not subject to ratification, because, as I said, both sides were anxious to resolve this long-standing question once and for all.
The Agreement included an undertaking to hand the money over to the Soviet Union one week after signature. We therefore did so in pursuance of the Agreement. It was not practicable at the 631 time to make the payment direct out of the assets. Therefore the payment was made initially from the Civil Contingencies Fund and, as the noble and learned Viscount has said, in March, 1968, a Supplementary Estimate in respect of it was approved in another place. Subsection (5) of Clause 1, which the Amendment seeks to leave out, enables the Exchequer to be recouped from the assets. In effect the money was only lent by the Exchequer and it has now to be repaid.
I cannot really believe that noble Lords opposite, who have expressed such indignation—sometimes in what one might call almost theatrical terms—against this Agreement are moving this Amendment in order to suggest that this sum of half a million pounds paid to the Soviet Union should remain with the Exchequer rather than be paid out of the assets. That would seem to me an extremely perverse way of asking this Committee to register its disapproval of the Agreement; because what that would be doing would be saying that the small sum—and I repeat "small sum"—we paid to the Soviet Union in consideration of this Agreement should now be paid by the British taxpayer rather than by the claimants to the assets which we have realised. I cannot believe that that is the object of this Amendment, and I very much hope that, having expressed his indignation in suitable and measured terms, the noble and learned Viscount will not press it.
I should like to say a word or two, having listened to this debate, I hope in a rather more objective way than noble Lords opposite. I find it very difficult to understand how noble Lords opposite can lash themselves into this state of white-hot indignation looking back on the way they behaved when they were in charge of the business of this country over a period of something like fifteen years.
Thirteen years, if you like, but you did nothing to help these people during the whole of this time. Now, just because you dislike bargaining with the U.S.S.R. you whip yourselves up into this state of violent indignation 632 about something you ought to have done yourselves. Very often in a situation of this kind it is impossible to negotiate without paying something. What does negotiation mean except doing one's best in a situation which is often a difficult one? Obviously in this case it was not an easy one. I think that anyone looking at this situation would say, "It is high time these people were no longer kept out of their money." Do noble Lords opposite want to go on keeping them out of their money for ever just for the purpose of spiting the U.S.S.R.? It is really ridiculous.
As usual, the noble Lord, Lord Chorley, has shown his complete misapprehension of the case. He regards it as absolutely essential that we should get a Russian signature to a piece of paper before we can distribute assets which are in this country. The Government have also taken that view.
What did the noble Viscount do about distributing this money when he was a member of the previous Administration?
The noble Lord, I dare say, is fully in favour of distributing other people's property without any regard to who was the owner of it. The whole case for the Government depends upon the essentiality of getting agreement with the Russians before the distribution of any of these assets. That we challenge. The noble Lord, Lord Chalfont, says that it was worth paying £500,000 out of the Baltic assets to get the Russians' signature, because otherwise there might have been retaliation. They might have repudiated their obligation under an earlier agreement. Are we really to be deterred from taking a proper course by that kind of threat? Ought we not to have said that, if they want to persist in these claims, arbitrate about them and we will meet them in arbitration and thresh it out that way? But the Government did not do that. They said that they will not distribute until they have an agreement with the Russians that they agree to their dealing with this money which has been in their hands. They pay that price for it.
§ VISCOUNT DILHORNE moved Amendment No. 10: Page 2, line 42, leave out subsection (6).
§ Lordships' House, but we can mark our condemnation of this course of conduct by our Vote to-night, and I invite my noble friends to support me in cutting out this particular provision from this Bill.
§ Their Lordships divided: Contents, 63; Not-Contents, 39.
Abinger, L. Drumalbyn, L. Lansdowne, M.
Amherst of Hackney, L. Dundonald, E. Lauderdale, E.
Ashbourne, L. Ebbisham, L. MacAndrew, L.
Auckland, L. Egremont, L. Malmesbury, E.
Audley, Bs. Elgin and Kincardine, E. Merrivale, L.
Belstead, L. Elliot of Harwood, Bs. Milverton, L.
Bessborough, E. Emmet of Amberley, Bs. Mowbray and Stourton, L.
Bledisloe, V. Falmouth, V. Nugent of Guildford, L.
Brooke of Cumnor, L. Ferrier, L. Rankeillour, L.
Brooke of Ystradfellte, Bs. Fortescue, E. Rathcavan, L.
Clwyd, L. Glasgow, E. St. Aldwyn, E.
Colville of Culross, V. Goschen, V. [Teller] St. Helens, L.
Conesford, L. Gowrie, E. St. Oswald, L.
Craigavon, V. Grimston of Westbury, L. Sempill, Ly.
Craigmyle, L. Hawke, L. Somers, L.
Cromartie, E. Headford, M. Teviot, L.
Daventry, V. Horsbrugh, Bs. Vivian, L.
Denham, L. Inglewood, L. Windlesham, L.
Derwent, L. Jellicoe, E. Wolverton, L.
Dilhorne, V. Kilmarnock, L. Yarborough, E.
Beswick, L. Hill of Wivenhoe, L. St. Davids, V.
Bowles, L. [Teller] Kennet, L. Segal, L.
Brockway, L. Kilbracken, L. Serota, Bs.
Burton of Coventry, Bs. Latham, L. Shannon, E.
Carron, L. Leatherland, L. Shepherd, L.
Chalfont, L. Lindgren, L. Sorensen, L.
Champion, L. McLeavy, L. Stonham, L.
Chorley, L. MacLeod of Fuinary, L. Strabolgi, L.
Crook, L. Milner of Leeds, L. Williamson, L.
Douglass of Cleveland, L. Moyle, L. Willis, L.
Faringdon, L. Noel-Buxton, L. Wise, L.
§ Committee in another place on November 19, gave an explanation which I must confess I find it somewhat difficult to relate to the terms of the subsection. The subsection purports to amend subsections (4) and (5) of the Enemy Property Act 1953. The Title of that Act says: An Act to make provision as respects things done, in relation to enemy property or property treated as enemy property, in excess of the powers conferred by the law relating to trading with the enemy… 635 That is part of the Long Title. That was, if I may summarise it, an Act to validate certain doubtful transactions under the Trading with the Enemy Act, and that, as we now understand it, is the purpose of subsection (2) of Clause 1.
§ Having done that, Parliament, in its wisdom, by Section 3(4) of that Act, provided that if at the time of the dealing the property was not in fact enemy property—if it did not come within the definition of "enemy property" under the Trading with the Enemy Act—the owner of that property could still recover it. But subsection (3) is limited in its scope by Section 1. Section 1 says that Section 2 and Section 3 relate only to transactions or dealings (as they are called) which took place within the period beginning September 3, 1939, and ended with the passing of the Act on November 29, 1953. So, as I understand it, if I have read it aright, under Sections 3, 4 and 5 of the Enemy Property Act, if those sections were not amended, and the dealings took place between those dates and the owner of the property could show that it was not really enemy property within the definition, then the owner of the property, whoever he might be, if he could trace the property into anyone's hands, could recover it. I hope that the noble and learned Lord the Lord Chancellor will agree with me that that was the effect, putting it shortly, of subsections (3) and (4) of Section 3 of the Enemy Property Act.
§ It is against that background that one has to consider the terms of this subsection. So far as I can see, this subsection does two things. It says that these particular subsections of that 1953 Act, shall not operate so as to authorise the recovery after 5th January 1968 of any former property of a Baltic State or ceded territory, except property which on any of the relevant dates belonged to or was held or managed on behalf of an individual, or of any proceeds of such property…. I will stop there. It seems to me that the effect, so far, of this subsection is to cut down the right to recover property which was wrongly treated as enemy property to property which was owned by individuals. I can quite see that, in this Bill or somewhere, you want to make it quite clear that the property with 636 which we are dealing is to be treated as enemy property. But I cannot for the life of me see why, if you do that, you want to do anything affecting subsections (4) and (5) of Section 3 of the 1953 Act, because those subsections (and indeed, that section of the Act) apply only to dealings—and "dealings" means by the Custodian and others—in the period which I have mentioned.
§ The Under-Secretary, in the course of ate debate, said some things about this which I found very curious. He said: Subsection (6) relates to assets which were covered by Soviet claims and, therefore, by the Soviet undertaking in Article 2 of the Agreement. It does not relate to the privately owned assets of individuals, because the Soviet Government's claims were to businesses, partnerships, companies et cetera and not to privately owned assets. Pausing there for a moment, is this particular subsection to be interpreted, when it talks about "property of an individual", as excluding any assets he holds in a partnership, or any assets he holds in the shares of a company? It would seem so from what the Under-Secretary said. He went on to say: Subsection (6) would prevent a Soviet State trading enterprise into which a former Baltic company's business had been taken from claiming the return of the company's property in this country, and also prevent a creditor of such a company from recovering the property. The subsection is completely justified by the terms of Article 2 of the Agreement. I should have thought that that was certainly not the case, because Article 2 of the Agreement says in terms that the Soviet Union will neither on its own behalf nor on behalf of its physical or juridical persons pursue with the…United Kingdom or support claims arising after 1 January 1939. and so on. Is it the case that the Government are not prepared to rely upon the signature of the Soviet Union to that undertaking and think it is necessary to bolster up the position by restricting the right to recover property to individuals, and only property in relation to dealings taking place within that area? Because if this Agreement means what it says as to the Russian obligation, it would seem quite impossible that you would have a claim to any of this property by a Soviet State trading enterprise, because that would be contrary to the Agreement signed by the Soviet Union.
§ I must say that I find the inclusion of this particular provision very puzzling; and I find the final words of this subsection even more puzzling, where it says: …any such property or proceeds (except as aforesaid) recovered by virtue of those subsections between that date and the passing of this Act shall be re-transferred or repaid, as the case may require. That appears to me to mean that if anyone has recovered into his possession assets which were held by the Custodian under subsections (3) or (4) of the Enemy Property Act 1953, and he had only recovered on the basis that they were not really enemy property at all, then, if I understand these final words correctly, although he has succeeded in getting his property back into his own possession, they seem to me to re-transfer this property back to the Custodian. I find that very astonishing. I cannot believe really that I have interpreted it correctly, and that is why I say that this is a probing Amendment. But if it be the case that these final words are put in to deprive people again of property of which they were deprived, which they got back, and they are now to be deprived of it again, then at a later stage I certainly think we should have an Amendment to cut out those words, and I certainly should like to have an explanation in regard to the earlier words on the points that I have mentioned. I beg to move.
What the noble and learned Viscount has said about this subsection is, broadly speaking, correct, subject to the following. The subsection relates to assets which were covered by Soviet claims and therefore by the Soviet undertaking in Article 2 of the Agreement. It does not relate to the privately owned assets of individuals because the Soviet Government's claims were to businesses—partnerships, companies, et cetera, and not in general to privately owned assets. The subsection has the effect of preventing two possible types of action designed to recover assets. First, it would prevent a Soviet State trading enterprise from seeking the recovery of property standing in the name of a former Baltic firm which was nationalised under legislation passed in the Baltic States before they became enemy territory. This type of action is thought to 638 be unlikely in view of the Soviet Government's undertaking, but it is thought right to provide for it. The second possibility is that a creditor of a nationalised Baltic firm might take proceedings for a winding-up. It is to deal with those two cases.
As I said very clearly when I was dealing with a previous subsection, it is retrospective to January 5, 1968, which I think I inadvertently described as the date of the introduction of the Bill: it is of course the date of the Angle-Soviet Agreement. It is intended to be retrospective to that date.
I wonder whether the noble and learned Lord the Lord Chancellor, or indeed his noble friend Lord Chalfont, could explain just a little more about this. My noble and learned friend Lord Dilhorne spoke about the assets of a partnership. I do not know whether or not those would be covered by the expression "held or managed on behalf of the individual". Equally, of course, I do not know what the assets are—and who were their owners—that are still in the hands of the Custodian in relation to either the Baltic States or the ceded territories. That is one point that has not been answered and I think it ought to be; because I cannot see any reason why the partnership should not claim, and it does not come within the definition of the type at claims what we have already heard are being put forward, or were being put forward, and have now been abandoned by the Soviet Union under Article 2 of the Agreement. That is one point that is not clear.
The other is this. The noble and learned Lord the Lord Chancellor did not deal with the last words. It is simply a matter of fact. Has any money been transferred since January last year or has it not? If it has not, then I suppose there is no harm in these words because they do not mean anything and never will mean anything. If, however, any money has been transferred—I appreciate that it does not cover the case of individuals; it covers only the case of companies—is this a case that has already happened whereby the Soviet Union has been in breach of Article 2? Because that must be the type of case that is being envisaged in this particular part of the subsection; and if so I think the Committee ought to know about it. If the Soviet Union, as I suspect, has put forward no 639 claim in contradiction of Article 2 of their Agreement, what is the point of these words?
—and all this is dealing with, really, is the possible claim in winding up a company. This has not in fact happened.
May I add just this? If an individual has a right of action which is preserved by the 1953 Act, Sections 3(4) or 3(5), that right will remain unaffected by Clause 1(6) of this Bill; and accordingly he can still bring his action if he wishes, instead of claiming under Clause 1(3), though he can claim under Clause 1(3) if he wants to do so. I think there has been a good deal of misunderstanding about it.
I am grateful to the noble and learned Lord the Lord Chancellor. I thought I had got it fairly right with regard to the first part of this subsection, but he has not said anything that satisfies me with regard to the last part. I refer to the words in subsection (6), beginning at line 4 of page 3 of the Bill: and any such property or proceeds (except as aforesaid) recovered by virtue of those subsections between that date"— which I take to be January 5, 1968— and the passing of this Act shall be re-transferred or repaid, as the case may require.
At the moment there is not any.
If there has been none which has been recovered the chances of its being recovered before the passing of this Act, I would think, despite anything I may say, would be very slight indeed. I do not think that any action could proceed to judgment in the 640 time that I shall be speaking. I doubt the necessity for having those words. Perhaps the noble and learned Lord could look again at that point. I do not propose to press the matter, but those words certainly puzzled me a great deal, and what the noble Lord has said about it—I will not trouble him further about it—is not from my recollection quite in accord with what was said in another place about those final words. I do not think there ought to be any confusion about it. I will not press this point now. I ask leave to withdraw the Amendment, in the hope that the noble and learned Lord will look at those final words again.
§ The noble and learned Viscount said: I beg to move Amendment No. 11. We had a very considerable discussion on this subject at the Second Reading. I listened with great interest to the speech of the noble and learned Lord, the Lord Chancellor, on it. There is, of course, no Party interest in this matter, and, as he rightly pointed out, no Government interest in it. The whole question is whether there should in certain circumstances which I will refer to in a moment be an appeal from a decision of the Foreign Compensation Commission. May I say straight away that I would agree with the noble and learned Lord, the Lord Chancellor, and anyone else who takes that view, that the decisions of the Foreign Compensation Commission on matters which are within the sphere entrusted to them, within their jurisdiction, should be final and unchallengable; and that, I believe, was always the intention of Parliament. Indeed, from the time that the Foreign Compensation 641 Act was passed there have been, I understand, only two challenges of their decisions, one on the ground that they had acted contrary to natural justice—there had been some slip up, but I do not know the facts of the case—and that was admitted.
If the noble and learned Viscount will forgive my interrupting, that was certainly not admitted. The claimant's claim was first disallowed at the preliminary hearing. On review it was allowed, though presumably for less than the claimant wanted, and he went to the court saying that he had not been allowed to call his evidence. The Commission said that that was absolutely untrue; they intended to file an affidavit and fight the case to the House of Lords. Then they realised that the effect on the other claimants would be years of delay, and accordingly it was arranged that there should be a statement in court that there had been misunderstanding and they would review the case.
I am glad the noble and learned Lord intervened and corrected any misapprehension under which I was speaking. I am not seeking to blame the Foreign Compensation Commission. In any event, I think I am right in saying that there have been only two cases which have come before the courts since the Commission were created in 1950. One was the case to which the noble and learned Lord referred and the other the recent case. I do not know how many claims there have been, but the first thing that occurs to me is that if in all these years there have been only two claims going to the courts, is there any real need at all for a provision such as this subsection. Up till now, the noble and learned Lord will agree, the Commission could be taken to the courts on the grounds of breach of natural justice, or on the grounds that they had acted in excess of their jurisdiction, and that has happened only once.
I think it is right that it should be possible to take that action to the courts when the question is whether they have acted outside the sphere entrusted to them by Parliament. I do not think that Parliament ever intended to entrust to them the final determination of the limits of their jurisdiction. I am quite 642 sure that Parliament meant that within their jurisdiction their decisions should be completely final. I think the noble and learned Lord, the Lord Chancellor, will agree that up till now, unlit this provision is enacted, one could bring this question of jurisdiction before the courts. The case for doing so seems to me to be slight if there has beer only one case in all these years. But, at any rate, it could be done.
I understand it is the intention to prevent that in future. The argument put forward is a powerful one and it is this, as I understand it: that any litigation in the courts delays the claims of all the other claimants. That is true, but there are countervailing arguments. It claims are admitted which are outside the jurisdiction of the Commission, the amount available to the other claimants will be correspondingly reduced, and it surely is wrong if someone is refused because someone else is dealt with at that way. The answer to this difficulty seems to me to be to try to devise some procedure whereby where there is a question of jurisdiction there can be one appeal—one speedy and final appeal. That is why I have provided by this Amendment an appeal by way of case stated to the Court of Appeal, whose decision shall be final. I believe that would be satisfactory and would not involve undue delay, because an application to the Court of Appeal to have the hearing expedited, when they knew that their decision would affect a large number of claims, I should expect to be sympathetically listened to.
This Amendment may be criticised by the noble and learned Lord the Lord Chancellor on the ground that it is not complete, that it is defective in certain respects. I shall not seek to repudiate that. It does not quite meet all that I should like to see in it, and I will tell your Lordships why. I was not certain whether the appeal should lie from the provisional determination of the Foreign Compensation Commission or from the final review. I am rather inclined to think that it should run from the former, but that is a matter which is an expert matter; I should not mind which it ran from so long as it ran from one or the other. Secondly, I think there should be a time limit. If there is an appeal at all from the provisional review or the final review, whichever it be, notice of appeal 643 must be given within a short period of time or the right to appeal must be completely lost. That could be dealt with, perhaps not under the section of the Foreign Compensation Act as it stands, but by rules of procedure.
I know that this Amendment is defective, perhaps, in not dealing with those two matters, but it states the principle which I should like to see embodied in the Act. The noble and learned Lord, Lord Denning, who regrets that he has had to leave us, has told me that he completely supports this particular proposal. I commend it to the Committee. The noble and learned Lord the Lord Chancellor said that he would deal with this, that the Government still have an open mind and that they want to know what everybody thinks about it. I hope I have left no doubt what I think about it. I beg to move.
The Government have carefully reconsidered this matter, but they are not at the moment disposed to accept the Amendment. They still want to know what everybody thinks. I agree that it is a non-Party political question, a matter of opinion, but what has impressed the Government to some extent is that not one single person who is a layman, either in the Second Reading debate or when I looked round now in Committee, supports this Amendment. Lawyers, quite naturally, want everything to go to the courts. The sole support has been the noble and learned Viscount, Lord Dilhorne, and the noble and learned Lords, Lord Wilberforce and Lord Denning, but not a single layman.
May I shortly recapitulate what I said before? This actual clause does not do anything. All it does is to enable an order to be made at a future time. It is in no way retrospective; it does not apply to the case that went to the House of Lords or any of the Egyptian cases. This is simply looking to the future and enables an order to be made in the future. I should have thought that the best time to oppose it was when the order was made and not now. The sole question at issue is what the claimants would prefer. I should have thought that laymen were better qualified than 644 the lawyers to judge what the claimants would prefer.
I reminded the House last time that ordinarily when a Government has certain money to distribute there is no legal claim on the money by the claimants, even when, as in the case in which China was concerned in the last century, we found out what the claims all came to, which was 3 million dollars, and we got 3 million dollars from the Government. There was a delay apparently in distributing that among the claimants, so somebody took proceedings. The courts said, "There is no legal claim to this. Of course there is a moral obligation on the Government who have got this money for distribution to claimants to make some fair distribution of it; but they are responsible only to Parliament; they do not hold the money as trustees."
For a hundred years or more this was always done by the Civil Service or the Foreign Office. Then, in 1950, it became too much for them, so this board of three lawyers was set up in effect to do it for them. But, of course, there could be no appeal from the Civil Service. So when this matter came before Parliament in 1950, Parliament put in this special clause saying that there should be no appeal to the courts. In your Lordships' House the noble Viscount, Lord Bridgeman, speaking for the Opposition, said: Those who are in any way concerned with these claims view with great relief the idea that the share in regard to each claim compared with the global total is to be decided in England and according to English legal procedure. Everybody will be very content with that. I think we can agree with the Lord Chancellor to leave the matter in the hands of the Tribunal, and in this case not to ask for appeal."—[OFFICIAL REPORT, 27/6/50; col. 1117.] Then the matter came before Parliament again, after the Franks Committee Report in 1958, because there were at that time a number of clauses in different Statutes saying, with regard to various kinds of tribunals, "No appeal to the courts". The Franks Committee did not approve of this; and so, in 1958, in the Tribunals and Inquiries Act those clauses were removed, including the clause in the 1950 Act with regard to the Foreign Compensation Commission. But the Government, on review, thought that that was wrong, and so there was a Government Amendment to make a 645 special exception for the British Nationality Act and the Foreign Compensation Commission: The actual Amendment was: Nothing in this section"— that was the section that was going to remove most of these clauses which ousted the jurisdiction of the courts— shall affect Section 26 of the British Nationality Act 1948, or apply to any Order or determination of a court of law or the Foreign Compensation Commission… Mr. Renton (as he then was), on behalf of the Government—and I notice that in Committee (because he made an observation at the same time) the then learned Attorney General, now the noble and learned Viscount, Lord Dilhorne, was there—said: I wish to refer to the position of the Foreign Compensation Commission. We are expressly providing here that it should not be possible for people to go to the High Court in order to get an order for certiorari or mandamus against the Foreign Compensation Commission. In taking those steps it is right that we should explain why we are doing so, and I hope that the Committee will feel that there is a valid reason for doing so. The Foreign Compensation Commission is concerned mainly with making ex gratia distributions to British subjects of such sums of money as the Foreign Office manages to obtain from foreign Governments for distribution among British subjects as compensation for the loss of their property in such foreign countries. When the total sum has been received from the foreign Government, British subjects are invited to make their claims, and sometimes substantial claims are made. Then the Foreign Compensation Commission makes an award which is an ex gratia award. I am sure that it will be seen that the very fact that it is an ex gratia award is a reason for not having an appeal to the High Court on certiorari or mandamus, and secondly, the fact that this is a running operation arithmetically means that the Foreign Compensation Commission from time to time needs to know how much is left of the cake for it to distribute in order that it may make these ex gratia awards. If the exercise is held up by substantial claims being taken to the High Court for certiorari it will be very difficult for this money ever to be distributed in reasonable time. For that reason we felt that we had to make an exception."—[OFFICIAL REPORT, Standing Committee B, 15/7/58; col. 95.] That exception was duly made in another place. When the Commons Amendment came to this House, with the support of the noble and learned Viscount the then Lord Chancellor, Lord Kilmuir, it was accepted by this House.
This is what the reason has always been: that if you are going to have lawyers, from the claimant's point of view he 646 does not mind what kind of lawyer it is. Questions of construction are, in fact, from the layman's point of view always extremely "dicey". If your Lordships recollect the House of Lords case which arose under the Act, you will recall that eight judges of superior courts considered the question of construction; five of them made one answer and three made the other, but the three won because they were in the House of Lords. The other five were a unanimous Court of Appeal and two noble and learned Lords in the House of Lords. But, of course, that was not enough against three none and learned Lords in the House of Lords. It shows what a great "toss up" construction really is from a layman's point of view.
The curious thing is, that if the Amendment proposed by the noble and learned Viscount had been the position in that case, the opposite answer would have been given, since the Court of Appeal always said that they were not at all satisfied that the construction of the Commission was wrong. So I am really thinking of the people. I would quote two letters: I am 76 years old and I believe you could help me by giving me some part of my claim. I have no old-age pension because my late husband got ill in 1948. He wily paid six months' National Health Insurance stamps; therefore, I am not entitled as a widow or as an old age pensioner. And again: I am a British war refugee. In 1939 I had to run for my life and abandon my property in Poland (Russian occupied). I lost houses, furniture and personal belongings, including income from rent. In 1963 I had coronary thrombosis, and since 1967 I am unemployed due to cataract. I had an operation nine weeks ago but unable to work. According to the enclosed documents it was up to the Russians to settle claims, but now it is up to the British Government only. Please, for the sake of justice to hundreds of victims as myself, vote in favour of the Bill". These people have waited about thirty years. Those who are still alive are pretty old. What they really want is that somebody should make a determination and that they should get their money. Of course the Government have no interest in this, or no axe of any kind to grind and are simply doing what they think best for the claimants. But they find themselves in agreement with the Labour Government of 1950 and the Conservative Government of 1958, and they think 647 that what is best in the interests of the claimant is not to bring in the lawyers but for the lawyers on the Commission to make a speedy determination of the claims so that they can get their money. It is on those grounds that I hope the Committee will not accept this Amendment.
Since the noble and learned Lord the Lord Chancellor has chided laymen for not having taken part in this discussion I shall risk sticking out my neck. On Second Reading I told your Lordships that as a layman I viewed this proposal with a considerable degree of anxiety. I also told your Lordships that I had read the observations of Professor Wade, and of the Chairman of the General Council of the Bar and the President of the Law Society, and that I was impressed both by their arguments and by their eminence. I went on to say that I realised that legal luminaries sometimes disagree. This is what is happening this evening. I told your Lordships that I proposed to listen to all the arguments and would then make up my own mind. I have now done so, and without any doubt whatsoever I wish to say to your Lordships, and to the noble and learned Lord the Lord Chancellor, that I shall support the noble and learned Viscount's Amendment.
I personally regret that it does not include in it something to ensure expedition, but I understand that this can be achieved through a sympathetic attitude of mind. I do not know whether this is enough in itself, but I think I must just read again the words used by Professor Wade, in view of what the noble and learned Lord the Lord Chancellor, has said—rather appealing, I thought, to our emotions. I understand that; I know that the noble and learned Lord is concerned with the feelings of the claimants, old people, who have had to wait a long time. This is the sort of thing that would appeal to my heart, but at the same time I think I must find myself in the strange position of being in disagreement with the noble and learned Lord on a point of law. Professor Wade wrote: The law's delay, like its uncertainty and expense, is a tempting reason for sacrificing justice to speed". 648 I suggest that here the noble and learned Lord is inviting us to sacrifice justice to speed, and I would not wish to be a party to this. If it were possible to devise an Amendment along the lines that my noble and learned friend Lord Dilhorne has suggested, and somehow or other ensure that there is not unnecessary delay, I feel that this would be the right thing to do. The noble and learned Lord the Lord Chancellor has invited the opinion of a layman, and I have given it. Meanwhile, I shall support the Amendment of my noble and learned friend, and hope that perhaps something may be done to improve it in this one particular respect.
I want to add only a few words, few because I speak as a lawyer rather than as a layman, and also because the main reasons for supporting something on the lines of this Amendment were already explained by me on the Second Reading. The alternatives before us are very narrow and very easy to state. The first alternative, which is the Government's alternative, is this. The moment this Bill is passed, and an Order in Council is made under it—and your Lordships know that such an Order cannot be amended when it is laid before the House— the whole thing will be handed over to the Foreign Compensation Commission for determination: a body which does not have to give reasons for its decisions, and whatever it does there is no recourse whatever to any court of law. That is one alternative.
The alternative which the Amendment would propose is that the whole matter should be left to the Foreign Compensation Commission—decisions on fact, decisions on construction—subject only to this: that the Judiciary, the Court of Appeal, as proposed, is to have the power to see that the guidelines laid down by Parliament when discussing this Bill are respected. That those guidelines are of importance is surely shown by this debate. Why otherwise have the House of Commons, and this House, spent a considerable time discussing the details of what is to go into the Bill, the ceded territories and all the other details, unless these are matters of importance which the Legislature desires to see carried out?
649 The only question of principle is whether, should the Commission depart from those guidelines, somebody is to have the right to say so. If one may take a homely metaphor, which I hope is not too crude, it is as if you said to eleven people: "Right; you may go on to this field; you may play Association Football. You may appoint your own referee; you may have your own offside rules. You do the whole thing exactly as you like and nobody will interfere, but if somebody picks up the ball and runs with it, that is not Association Football and we have the right to stop you." That is the sort of area in which we are discussing this subject matter; the distinction between the fundamental guidelines and the matter of detail.
There are just two points in what the noble and learned Lord the Lord Chancellor has said that I should like to take up. The first is this very important question of delay, which I imagine is the point to which he read out the letters that he had in his hand. That, as I said, and as everybody agrees, is very important, and it is a point to which the layman attaches the greatest importance. But it is necessary to put that in the right perspective. May I give the Committee a few figures which I think can be easily followed and which will show, I hope, that the fact that the case before your Lordships' Judicial Committee, the Anisminic case, did come before the Court, and ultimately here, did not in any way prejudice the distribution of the Fund with which it was concerned; namely, the Egyptian Fund? I have taken these facts from the reports of the Foreign Compensation Commission. The Anisminic case was determined by the Commission in May, 1963. Of course, the Commission had had it before then; they knew the claim as it was pending. But as at March 31, 1963—that is, before the determination by the Commission—they had distributed no less than £17 million out of the Egyptian Fund, which was basically £27 million plus some further money added by Parliament. That is the first figure.
The second figure is this. Up to March 31, 1968 (which was during the pendency of the appeal to your Lordships' House but before its determination), the Foreign Compensation Commission had distributed out of the 650 Egyptian Fund over £29 million, which is more than the original £27 million allotted, and by all standards a very considerable sum. Not only that, but there were still 800 cases undisposed of. So while one has the greatest possible sympathy with the delay argument in principle, it does not seem from the Record as if the fact that the courts interfered in this one Anisminic case has had a very great effect or, one might say, any effect on the distribution of the money by the Commission. For that reason I warmly endorse what the noble Marquess said about the question of delay: that one should not pay for acceleration at the price of the rule of law.
There is one other point which the noble and learned Lord made: that until 1950—and indeed for about a hundred years—the whole of this matter had been handled by civil servants, and nobody had ever complained about that. They distributed it in their discretion. Why, therefore, when the Foreign Compensation Act is passed in 1950, and a Commission is set up, is provision for appeals allowed? My answer to that is this: that if you depart from a discretionary field to one of law, then you must get your legal process right. The fact that before that you operated under a different system is not a reason for operating a mutilated legal system. It is as if you have a factory which has been worked by men, by manpower, and you decide to go over to automation. That is not a reason for allowing the machines to operate without supervision. That is all that is suggested here; that there should be just this residuary final element of supervision by the courts over what the Parliament has laid down.
I will not detain your Lordships any longer. The reasons have been very well explained by my noble and learned friend Lord Dilhorne, and I simply wish to add my support for something on the lines of the Amendment, though with any necessary changes to get the machinery right and, if possible, to introduce a time limit.
I can speak only as a layman, and only with great trepidation on this matter, but the point about the delay seems to me to be an exceedingly important one. What I cannot quite follow in the argument of the noble and learned Lord, Lord Wilberforce, is how it comes to be that, 651 although the law is very well represented on the Foreign Compensation Commission, other lawyers, or lawyers generally, are not willing to consider that those eminent lawyers should be any more right, or any more wrong, than any other lawyers. Why should it be that those lawyers cannot themselves be regarded as the legal representation which is required so as to avoid the possibility, at any rate, of delay, even in a few odd cases that may happen when the matter has to go to appeal?
I agree so completely with what the noble and learned Lord, Lord Wilberforce, has said, that I should like to mention only two points. It is very bad for any tribunal to know that there is no appeal from it, no matter how much it exceeds its jurisdiction or indulges in what the law calls a nullity. That is not to make an adverse comment on a particular tribunal but applies to every tribunal of every kind.
I should like to pay my tribute to the complete respectability of the intentions of the Government in putting forward this clause—a clause which, nevertheless, I think to be wrong—since they desire speed, which is a proper desire. But the noble and learned Lord the Lord Chancellor said something which is tempting to say but which, nevertheless, is wrong. He said that Parliament in 1950 intended that the view of this Commission should be final. I know that it is most tempting to read the words and to think that, but we ought to resist the temptation. There is at least a possibility that Parliament intended the law to be precisely what the supreme tribunal has decided that it is. Parliament may well have intended that on most points the view of the Commission should be final, but that if it went quite outside its jurisdiction—supposing the Order in Council said that there were four conditions which had to be satisfied and the tribunal itself said, "We require satisfaction on six conditions"—that would require correction. The point I am making was taken by my learned friend Sir John Foster in another place. I do not think we ought to say that, because a layman reading a section of the Act of 1950 thought that the determination should be final in every case, that really was the intention of Parliament.
I have listened with the greatest care to the noble and learned Lord the Lord Chancellor. If this Amendment is carried, I suppose the chances are about a thousand to one, probably more, against a case being brought to the courts, and it is a very narrow point. I entirely agree with the noble and learned Lord the Lord Chancellor that the vast mass of the decisions of this Commission should be final and unappealable. The only issue is as to whether questions as to its jurisdiction should be subject to an appeal. The noble Viscount, Lord Addison said, "If they are all lawyers, why not leave it entirely to them." If we adopted that principle in the administration of justice, we could dispense with the House of Lords in its judicial capacity—not reform it—and could dispense with the Court of Appeal, and would have a mass of conflicting decision.
I think that is rather an exaggeration. This is a matter involving the Foreign Compensation Commission dealing with specific cases, comparatively small in number. It is somewhat of an exaggeration, therefore, to raise the whole question of the jurisdiction of the courts and the House of Lords.
The noble Viscount says that, and one knows that the vast mass of claims could not possibly involve questions of jurisdiction. But when the noble Viscount says that it is a small matter, I think I am right in saying that the Anisminic claim was something like £4 million. A question as to jurisdiction certainly should be appealable. The Chairman of the Bar Council and the President of the Law Society have both expressed that view, and not only the opinion of people engaged in actual practice but also all the judicial opinion which has been given expression to is in favour of this Amendment. Those opinions are not expressed because judges want any more work. They are expressed because they think it is consistent with justice and will improve justice. I do not want to add anything to what was said by my noble and learned friend Lord Wilberforce in his persuasive and powerful speech.
§ House resumed: Bill reported with Amendments.
§ is only one way to show him—that is, by dividing the House on this Amendment.
§ Their Lordships divided: Contents, 55; Not-Contents, 32.
Amherst of Hackney, L. Elgin and Kincardine, E. Merrivale, L.
Auckland, L. Elliot of Harwood, Bs. Milverton, L.
Audley, Bs. Emmet of Amberley, Bs. Mountevans, L.
Belstead, L. [Teller.] Falmouth, V. Mowbray and Stourton, L.
Bledisloe, V. Ferrier, L. Rankeillour, L.
Brooke of Cumnor, L. Foot, L. St. Aldwyn, E.
Brooke of Ystradfellte, Bs. Fortescue, E. St. Helens, L.
Burnham, L. Goschen, V. [Teller.] St. Just, L.
Clwyd, L Gowrie, E. St. Oswald, L.
Colville of Culross, V. Headfort, M. Sandford, L.
Conesford, L. Henley, L. Sempill, Ly.
Cork and Orrery, E. Horsbrugh, Bs. Strange, L.
Craigmyle, L. Kinnoull, E. Swansea, L.
Daventry, V. Lansdowne, M. Vivian, L.
Denham, L. Lauderdale, E. Wilberforce, L.
Dilhorne, V. Lindsey and Abingdon, E. Windlesham, L.
Drumalbyn, L. MacAndrew, L. Wolverton, L.
Dundonald, E. McCorquodale of Newton, L. Yarborough, E.
Beswick, L. Garnsworthy, L. St. Davids, V.
Bowles, L. Hall, V. Segal, L.
Burden, L. Kirkwood, L. Shepherd, L.
Carron, L. Leatherland, L. Sorensen, L.
Chalfont, L. McLeavy, L. Stonham, L.
Chorley, L. Milner of Leeds, L. Strabolgi, L.
Crook, L. Noel-Buxton, L. Willis, L.

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