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Lord Chalfont: My Lords, I have not taken part in the proceedings of the Bill in this House. However, one of the reasons why few people took part and why the Bill has not received from outside the attention that it should have received is that there was a misunderstanding about its general scope and purpose. That was due in part to its departmental sponsorship--the origins of the Chemical Weapons Convention are in the Foreign and Commonwealth

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Office--and in part because some of the briefing concentrated on academic and non-military aspects of the impact of the convention.

However, as one who with the late Lord Mulley was in at the birth of the Chemical Weapons Convention more than 30 years ago, it is a great pleasure to see the convention come in this form to your Lordships' House. The legislation is of enormous importance and significance. As the noble Lord, Lord Peston, said, chemical, biological and microbiological weapons are among the most horrifying engines of war ever to be invented.

In commenting on the noble Lord's wish that we should see the end of such weapons, I point out that one of the great problems which faces us is their proliferation. The fact that Her Majesty's Government are taking a leading part in this way underlines their commitment to the cause of limiting the proliferation of all weapons of mass destruction and the means of delivering them. I therefore conclude my one and only brief contribution to the proceedings and congratulate Her Majesty's Government on taking a leading role in the matter.

On Question, Bill passed.

Arbitration Bill [H.L.]

3.36 p.m.

Lord Fraser of Carmyllie: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Arbitration Bill, have consented to place their prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament, for the purposes of the Bill.

Bill read a third time.

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

Lord Fraser of Carmyllie moved Amendment No. 1:

Page 34, line 1, leave out from ("(2)") to end of line 2 and insert (""arbitration agreement" and "seat of the arbitration" have the same meaning as in Part I (see sections 3, 5(1) and 6).").

The noble and learned Lord said: My Lords, in moving Amendment No. 1, I shall speak also to Amendments Nos. 11 and 12. They are small, tidying-up amendments. The purpose of Clause 101 is to bring into Part II of the Bill the definition of certain terms which are used in Part I. It is largely redundant as the linkage is either already made in the text of Part II or a separate definition is provided. The clause can be omitted but it is necessary to make the linkage between Parts I and II for those terms which are not already covered. That is achieved by the amendments. I beg to move.

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On Question, amendment agreed to.

Clause 88 [Power to repeal or amend sections 85 to 87]:

Lord Fraser of Carmyllie moved Amendment No. 2:

Page 34, line 33, leave out subsection (2).

The noble and learned Lord said: In moving Amendment No. 2, I shall speak to the remaining amendments on the Marshalled List. I regret that having done so, I must take a moment or two longer to explain what we are doing. I indicated on Report that I would be bringing forward at Third Reading an amendment to Clauses 89 to 93, which provide for consumer arbitration agreements. The revised text is covered by Amendments Nos. 3, 4 and 5. Amendment No. 2 is paving in nature and the other amendments are consequential.

We decided at a late stage in the preparation of the Bill that it would benefit from the inclusion of provisions relating to consumer arbitration agreements. The Bill is more comprehensive as a result, and I have no doubt that we made the right decision. On reflection though, and in the light particularly of the comments made by my noble friend Lord Hacking, I believe that there is room for improvement in the way that the issue is treated in the Bill.

I wish to make it clear from the outset that, in proposing these changes, the protection which consumers enjoy under current legislation on consumer arbitration agreements is not intended to be watered down. Indeed, the reverse is the case; the rights of the consumer are strengthened in certain respects.

Noble Lords will be aware that the Bill as drafted restates for England and Wales and Northern Ireland the provisions of the Consumer Arbitration Agreements Act 1988. On reflection I now believe that, with two limited changes, it would be possible to rely on the Unfair Terms in Consumer Contracts Regulations 1994. That implements EC Council Directive 93/13 EEC on unfair terms in consumer contracts. Paragraph 1(q) of Schedule 3 to the regulations refers specifically to:

    "excluding...the consumer's right to take legal requiring [him] to take disputes exclusively to arbitration".

There are several advantages in that approach. It will remove the link with the definition of domestic arbitration agreement in Clause 85 of the Bill. The effect of that definition is that consumers in other member states do not have the same protection as UK nationals and, as my noble friend Lord Hacking has commented, this distinction raises questions in terms of EC law. Whatever the position on that, the difference is in any case undesirable. The Unfair Terms in Consumer Contracts Regulations, based as they are on a European Community Directive, accord the same rights to consumers throughout the European Economic Area.

Secondly, it remedies the unsatisfactory situation where we have two pieces of overlapping legislation--the Unfair Terms in Consumer Contracts Regulations 1994 and the Consumer Arbitration Agreements Act 1988. In the treatment of arbitration the two pieces of legislation overlap but are at the same time marginally but significantly different in certain key respects. This could

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be confusing for consumers and their advisers. Consumers need a clear and simple statement of their rights which they can access with the minimum of difficulty. The amendments before your Lordships focus on the 1994 regulations. At the same time we have strengthened the rights of consumers by incorporating the best features of the 1988 Act, which can therefore be repealed. This approach enables us to make a contribution to achieving clarity and simplicity in legislation which is an important feature of our work on deregulation. At the same time we are shortening the Bill by two clauses. I am pleased to be able to deal with this example of what I believe is called "double-banking".

Your Lordships will see that we intend to make all consumer arbitration agreements non-binding where the claim does not exceed a certain level. In the 1994 regulations terms in consumer arbitration agreements have to be shown to be unfair before the consumer is not bound by them. We have decided not to include a specific limit on the face of the Bill in the interests of flexibility. It will be seen that we have included an order-making power for this purpose. The intention for England and Wales and Northern Ireland is to follow but not to be bound by the limits set for small claims court based arbitration. Claims above the level set will of course be covered by the provisions of the 1994 regulations, so that if shown to be unfair will not be binding. I have also widened the definition of "consumer" slightly to keep it in line with the 1988 Act.

Noble Lords will wish to be aware that nothing in these provisions affects statutory arrangements for small claims arbitration; for example, in relation to England and Wales, the rules under Section 64 of the County Courts Act 1984. The effect of avoiding a term requiring the consumer to go to arbitration may be that his claim will be subject to such procedures but, although they have the same name, they are of course different in a number of respects. It is the case also of course that statutory arrangements incorporate certain safeguards.

I propose that these provisions of the Bill should apply to Scotland as well as to England and Wales and Northern Ireland. Your Lordships will be aware that Scotland has its own arbitration law and the rest of the Bill applies only to England and Wales and Northern Ireland. However, the Unfair Terms in Consumer Contracts Regulations apply throughout the United Kingdom and there is distinct merit in having common provisions for consumer arbitration agreements in this Bill. Otherwise there might be a risk of re-introducing confusion into an otherwise clear and straightforward system.

I apologise for taking a few moments to spell that out, but it is a complicated area and I believe that I should give an explanation of what the changes entail. I beg to move.

3.45 p.m.

Lord Hacking: My Lords, I thank the Minister for moving these amendments on two grounds. First, he has shortened the Arbitration Bill by two clauses. It is regrettable that he could not shorten it further but we are very grateful to him for that. Secondly, I am grateful

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to the Minister for meeting some of my anxieties in relation to the issue of domestic and international arbitration. My noble friend knows--and I shall return to it when we debate the Motion that the Bill do now pass--that I wish him to go further and to abolish altogether the distinction between domestic and international arbitration.

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