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Page 29, line 25, leave out ("service") and insert ("giving or serving a notice or other document").

On Question, amendment agreed to.

Clause 76, as amended, agreed to.

Clause 77 [Powers of court in relation to service of documents]:

5.15 p.m.

Lord Fraser of Carmyllie moved Amendment No. 21:


Page 29, line 38, leave out subsection (5).

The noble and learned Lord said: This subsection serves no useful purpose. The point is already covered by Clause 76(6). I beg to move.

On Question, amendment agreed to.

Clause 77, as amended, agreed to.

Clauses 78 and 79 agreed to.

Clause 80 [Notice and other requirements in connection with legal proceedings]:

Lord Fraser of Carmyllie moved Amendments Nos. 22 to 25:


Page 30, line 37, after ("application") insert (", appeal").
Page 31, line 8, after ("application") insert ("or appeal").
Page 31, line 11, after ("application") insert ("or appeal").
Page 31, line 17, after ("application") insert ("or appeal").

The noble and learned Lord said: In moving Amendment No. 22, perhaps I may speak also to Amendment Nos. 23, 24 and 25. As is obvious, these are very minor drafting amendments. Legal proceedings also cover appeal proceedings which need to be specified. I beg to move.

On Question, amendments agreed to.

Clause 80, as amended, agreed to.

Clause 81 agreed to.

Clause 82 [Minor definitions]:

Lord Fraser of Carmyllie moved Amendment No. 26:


Page 32, line 11, leave out ("where the seat of the arbitration is") and insert ("for a court").

The noble and learned Lord said: In moving Amendment No. 26, perhaps I may speak also to Amendment No. 27. Both amendments are designed to clarify the definition of "question of law".

As drafted, it is possible that the definition may be interpreted to mean that where the seat of the arbitration is outside England and Wales or Northern Ireland, questions of law include those other than the law of England and Wales and Northern Ireland. That is not the case. Our objective is to make it clear that there is

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no question of appeal in respect of a matter of foreign law. To put the matter beyond any doubt, the amendment substitutes the court in England and Wales or Northern Ireland as the defining factor rather than the seat of the arbitration. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 27:


Page 32, line 13, leave out ("where the seat of the arbitration is") and insert ("for a court").

On Question, amendment agreed to.

Clause 82, as amended, agreed to.

Clauses 83 and 84 agreed to.

Clause 85 [Modification of Part I in relation to domestic arbitration agreement]:

On Question, Whether Clause 85 shall stand part of the Bill?

Lord Hacking: I address your Lordships not only on the issue of whether Clause 85 should stand part of the Bill but the accompanying Clauses 86, 87 and 88. As noble Lords may have noticed in the Marshalled List, the opposition to these clauses standing part of the Bill is directed to whether there should be separate treatment in the Bill between domestic and international arbitrations. It is my submission to your Lordships that the time has now come to remove that distinction. It relates to the difference in powers of the courts in the staying of court proceedings when an arbitration is in existence and it relates to the right to contract out by an exclusion agreement from court intervention on termination of preliminary points of law under Clause 45 and on appeals on points of law under Clause 69.

The distinction between domestic and international arbitrations only came about when Parliament enacted the New York Convention on Recognition and Enforcement of Foreign Arbitration Awards of 1958, which was done in the Arbitration Act 1975.

Lord Donaldson of Lymington: I think the year was 1979.

Lord Hacking: I am looking at the noble and learned Lord, Lord Donaldson. It was in the Arbitration Act 1975, which was the one that dealt with the New York convention and the power of the court to stay court proceedings when there was an arbitration. The difference between the two was that in order to comply with the New York convention it had to be a mandatory power to stay the court proceedings when there was in existence a valid arbitration--that is to say, an arbitration under a valid arbitration clause--but with domestic arbitrations it was still left discretionary with the court.

It was then continued--and the noble and learned Lord, Lord Donaldson, is quite right to draw attention to it--in the 1979 Act. He played a great part in the creation of that Act when he was chairman of the Commercial Court Committee. Then the distinction was stretched into the new provisions of the 1979 Act which prevented parties to domestic arbitrations contracting

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out of the court intervention proceedings unless the agreement to do so had taken place, as I recollect, after the arbitration had started. It also prevented the contracting out of the special category cases, which have now gone from the Bill.

That is the history behind it. The reason why I urge your Lordships to abandon now the distinction starts from a commonsense position. The commonsense position, is it not, is that we should have one arbitration law and that we should not have arbitration laws of different application? There is also concern about European Community law, but if the noble Lord, Lord Lester, wishes to raise that point I will leave that with him because it is much more within his knowledge than mine.

As long as we keep this distinction between domestic and international arbitration, it means that the parties have different rights and we therefore have the bizarre situation that when two English-based construction companies, as I quoted at Second Reading, are in dispute with one another, one set of arbitration rules apply, but if an English construction company should be in dispute with an overseas construction company in an arbitral process, then a different set of rules apply.

Your Lordships will have read Chapter 3 of the DAC report in which the arguments for and against the continuation of the separate distinction of domestic arbitration were carefully considered. Your Lordships will therefore have noted that the DAC Committee, having considered all the alternative arguments, is clearly of the view, that there are no grounds to continue this distinction. Indeed, until I spoke yesterday to the noble and learned Lord, Lord Mustill, I understood his departmental advisory committee report of June 1989 was also of the same mind. In paragraph 108(4), when referring to the new arbitration law and the recommendation that we should have a new and improved Arbitration Act (rather than adopt the model law), it was his committee's view that the new law should in general apply to domestic and international arbitrations alike, although there would have to be exceptions to take account of treaty obligations.

For all those reasons, I submit to your Lordships that the time has come to remove this distinction.

Lord Mustill: Perhaps I may suggest, in opposition to the noble Lord, Lord Hacking, in a limited sense, that this Committee is not the occasion to contemplate such a large-scale revision of the Bill in its existing form. It is plain enough from what is written in the report, which has been such an admirable help to us all, that the matter is open to further consideration and that the shape of the Bill, as drawn, enables Parliament to think again if it concludes that the arguments for making international and national arbitrations homogeneous are sufficient to carry the day.

However, I would make just two points. First, the Bill is explicitly stated to be modelled on the model law. The model law is a model law on international commercial arbitration. It was never contemplated by those who prepared the draft of that model law that it would have

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anything to do with domestic arbitration at all. I speak from personal experience because I was there throughout almost the entire debate and I can say this.

It was regarded in many quarters as extraordinary that the United Kingdom should even contemplate having the same law for international arbitration as it did for domestic arbitration. Very many European countries take the view that the two types of arbitration are completely different, governed by a different philosophy and different practical considerations, and to make them homogeneous is wrong in principle. I do not necessarily say that that is a correct view. All I am saying is that if we were to make our law homogeneous, we would be putting ourselves out of step with a great deal of thinking in the arbitral community worldwide.

I wish to make it plain that I am not opposing the suggestion, but it raises delicate issues which require wider consultation on this point which there has not been opportunity to hold. It is for that reason alone that I would respectfully oppose the proposal that these clauses should not stand part.

Lord Donaldson of Lymington: I apologise for having got the Act wrong. I do not have my copy of my noble and learned friend's book with me, and no doubt he will correct me if I make any other errors. My recollection of this problem stems from the work done by the Commercial Court of Appeal, of which I was Chairman before the 1979 Act, and in that situation I was as it were Lord Diplock's junior. I know that he felt very strongly, as I do, that it is important that there should be a body of case law stemming from arbitrations, and it is important that it should not be possible for arbitration law, if one can call it that, to go off into free orbit unrelated to the law administered by the courts. It may be improbable that would happen, but nevertheless if there is an unfettered right to exclude any resort to the courts at all, there is a very real danger that would happen.

Faced with that situation, what happened in the 1979 Act was that domestic arbitrations were put in a special category to which were added insurance and one other category--I cannot remember it.


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