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Baroness Symons of Vernham Dean: My Lords, Her Majesty's Government are, of course, well aware of

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the extremely worrying situation that is developing in Kashmir. I hope it will help if I give a little more detail of what we understand to be the position on the ground. Several hundred Kashmiri militants have crossed the line of control into India-held Kashmir. They are holding ground there to a depth of several kilometres and appear to be digging in. The area is mountainous and some of the militants' positions are located at about 17,000 feet above sea level. As my noble friend has pointed out, the Indians have responded by deploying a division of troops in the area and by carrying out air strikes. The fighting marks a worrying escalation in the conflict around the line of control.

It is important for everyone involved in this situation to act with as cool a head as possible. Accordingly, we have instructed our acting High Commissioner in Pakistan and our High Commissioner in New Delhi to urge their host governments to do everything that they can to calm the situation, to reduce the risk of escalation and to reiterate their commitment to seeking a peaceful solution to their bilateral problems. We made these points yesterday to the Pakistan High Commissioner in London.

Baroness Rawlings: My Lords, I welcome the fact that the Minister agrees the impetus for a just and lasting solution to the longstanding dispute over Kashmir must come from India and Pakistan themselves. Does the Minister consider that our influence in seeking to prevent the escalation of this most recent conflict by urging both India and Pakistan to resolve their differences and defuse the growing tensions in Kashmir through dialogue was in any way influenced by the Foreign Secretary's trip to the region in 1997 and the comments attributed to him at the time?

Baroness Symons of Vernham Dean: No, my Lords, I do not believe that. As the noble Baroness knows, and as your Lordships discussed on 20th April, this tension over Kashmir has resulted in a conflict which has lasted for over 50 years. Sometimes the conflict worsens and sometimes it is in abeyance. The fact is that both India and Pakistan are well aware that we are ready to help if we are asked. However, we recognise that any offer of help, whether it comes from the United Kingdom, the United Nations or from whatever country or institution, has to be acceptable to both sides if it is to stand any chance of success. We continue to urge both sides to do everything they can to resolve their differences. As I said to the House when we discussed this matter in April, we also believe that any solution, if it is to last, must involve and must reflect the views of the people of Kashmir.

Lord Dholakia: My Lords--

Noble Lords: Next Question!

Lord McIntosh of Haringey: My Lords, I think we must move on to the next Question.

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Consolidation Bills: Joint Committee

11.32 a.m.

The Lord Chancellor: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That, pursuant to Standing Order 49, the following Lords be appointed to join with a Committee of the Commons as the Joint Committee on Consolidation Bills:

E. Alexander of Tunis, L. Clyde, V. Colville of Culross, V. Dilhorne, L. Hacking, L. Campbell of Alloway, L. Hobhouse of Woodborough, L. Janner of Braunstone, B. Mallalieu, L. Meston, L. Razzall, L. Strabolgi;

That the Committee have power to agree with the Commons in the appointment of a Chairman; and

That the minutes of evidence taken before the Committee from time to time shall, if the Committee think fit, be printed and delivered out.--(The Lord Chancellor.)

On Question, Motion agreed to.

Local Government (Functions and Standards): Select Committee

The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the Commons message of yesterday be now considered and that a Select Committee of eight Lords be appointed to join with the Committee appointed by the Commons, to consider the draft Local Government (Functions and Standards) Bill, published in the Command Paper entitled Local Leadership, Local Choice (Cm. 4298);

That, as proposed by the Committee of Selection, the following Lords be named of the Committee:

L. Bassam of Brighton, L. Bowness, E. Carnarvon, B. Hamwee, L. Marlesford, L. Pilkington of Oxenford, L. Ponsonby of Shulbrede, B. Thornton;

That the Committee have power to agree with the Commons in the appointment of a Chairman;

That the Committee have leave to report from time to time;

That the Committee have power to appoint specialist advisers;

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That the Committee have power to adjourn from place to place within the United Kingdom;

That the minutes of evidence taken before the Committee from time to time shall, if the Committee think fit, be printed and delivered out;

That the Committee shall report by 31st July;

and that the Committee do meet with any Committee appointed by the Commons on Tuesday 15th June at half-past three o'clock in Committee Room 4.-- (The Chairman of Committees.)

On Question, Motion agreed to.

Contracts (Rights of Third Parties) Bill [H.L.]

11.33 a.m.

Report received.

Clause 1 [Right of third party to enforce contractual term]:

Lord Hacking moved Amendment No. 1:

Page 1, line 17, leave out ("does not confer") and insert ("confers")

The noble Lord said: My Lords, with the leave of the House, I shall address the House on my four amendments in this grouping; namely, Amendments Nos. 1, 2, 3 and 6. I wish also to make a few preliminary points. First, I extend an apology to the noble and learned Lord the Lord Chancellor and to other Members of your Lordships' House for having been unable to participate either at Second Reading or in Committee and then coming forward with a number of amendments on Report. I have taken the opportunity to read carefully Hansard of both the Second Reading and the Committee stage.

Secondly, I thank the noble and learned Lord the Lord Chancellor and his officials for providing considerable assistance during the long gap since the Committee stage on 2nd February. Thanks to their great co-operation I believe we have made much progress. In so far as I am now proposing a number of amendments at a fairly late stage in the passage of the Bill I still counsel that we--when I use the term "we" I speak of Parliament in its larger sense--have plenty of time to get the Bill right because, of course, it has yet to proceed to the other place.

The main purpose of tabling all the amendments is to improve, or attempt to improve, what I believe to be a good Bill. This is a pure law reform Bill, and I urge upon your Lordships that the opportunity should not be missed to express the Bill in the best language possible. We should be able to pick up the Bill when it becomes an Act, whether we are lawyers or laymen, and read clearly from its terms what are the principles it seeks to establish, and how it seeks to achieve those principles. It has to be said that English parliamentary drafting has not been a model of clear exposition. There have been some notable exceptions which stand out like bright

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stars in a fairly cloudy heaven. For example I refer to the Sale of Goods Act of the latter part of the previous century and the Occupiers' Liability Act 1957.

I believe that there is now a new movement afoot--this was shown in the Arbitration Act 1996--to return to the clear exposition of those earlier statutes. My purpose therefore in proposing the amendments is to achieve clarity on the face of the Bill. In this endeavour we are lucky to have a Lord Chancellor who has had a long, distinguished and diverse practice at the English Bar and who has come immediately from practice to take his place on the Woolsack. I am confident that my noble and learned friend has not forgotten the headaches that he had--and which we all have as practising lawyers--in trying to explain to clients the meaning of Acts of Parliament where the language is obscure and complicated.

I turn specifically to Amendments Nos. 1, 2, 3 and 6. We need to identify the main thrust of the Law Commission's proposals. They can be encapsulated, I believe, in two proposals: first, that the Law Commission has advised that a third party should be able directly to enforce his rights and not be kept out by the old contract rule of privity of contract--he, of course, not being a party to the contract; and, secondly, that parties to a contract should not be entitled to impose burdens on a third party.

As the Law Commission recognised from the beginning of its deliberations, the situation is a little more complicated than that. When parties to a contract have set up conditions under which a third party is to receive the benefit, it is right that the third party should only receive that benefit under those conditions. This goes to the root of the freedom of contractual relations and to the freedom of the promisor and the promisee in agreeing the contractual terms. The Law Commission's recommendation to accommodate that concept is incorporated in Clause 1(4) of the Bill.

The Law Commission also recognised from the beginning of its deliberations that there are other complications. When parties agree in the terms of the contract that the liability of the promisee should be limited or excluded, then the third party should be able to receive the benefit of the contract plus the limitation on liability. Perhaps I may take a simple example. If in a construction project the employer agreed in a contract with the main contractor that the liability of the main contractor should be limited to putting right what went wrong in construction and that he should not be liable for consequential damage, it is clearly right that the third party--in this case the sub-contractor who was doing a particular piece of work on that contract--should also enjoy the same limitation of liability. Therefore the third party should be liable only to put right what he has got wrong and should not be liable for consequential damage, if that is the agreement between the employer and the contractor. That provision appears in Clause 1(6) of the Bill.

There is also the other side of the coin; that is, the position of the promisor in an action with the third party. In exactly the same way as the third party is not in a contractual relationship with either of the two parties to

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the contract, neither is the promisor in contractual relations with the third party. It is clear that if the promisor is involved in a dispute with the third party he should have similar protection; in other words, he should be entitled, as against the third party, to the same rights and remedies to which he would be contractually entitled in a dispute with the promisee. That is extensively covered in Clause 3 of the Bill.

I know that I am addressing your Lordships in some detail at this stage, but I am outlining the concepts which run through all my amendments. By addressing your Lordships at a little length at this stage I shall be able to shorten my argument on the further amendments.

Having established those concepts, the next question is: how does the Bill deal with them? So far as concerns the third party, that is dealt with in Clause 1(4); so far as concerns the promisor, it is dealt with in Clause 3(2)(a). Since Clause 3(2)(a) is very similar to Clause 1(4), I need refer in detail only to Clause 1(4). It states:

    "This section does not confer a right on a third party to enforce a term of a contract otherwise than subject to and in accordance with any other relevant terms of the contract". The court or arbitrary tribunal--I shall be seeking to persuade your Lordships that arbitrary tribunals should be included--which adjudicates on the issue will have to undertake a fairly complex exercise of establishing what is the relevant term of the contract and how it fits into the relationship between the third party and the promisor or promisee. Inevitably there will be different results, different conclusions and conflicting decisions. I recognise that my amendments go further than the recommendations of the Law Commission, but Amendments Nos. 1 and 2, which relate to Clause 1(4), provide a simple and clear way of dealing with that problem; that is to say, the third party takes the benefit of the contract under the same conditions as exist between the promisor and the promisee unless otherwise expressly provided in the contract. A similar provision--I have not tabled an amendment--should be made in Clause 3. It seems to me that that would be a sensible way of dealing with the matter. It would also have the advantage of a clear exposition of the rights of the different parties, which can be clearly read, understood and applied from the face of the statute.

Of course, the result would be that the third party would become bound to terms in a contract to which he was not a party, but that is the whole nature of this much needed law reform. The third party, by the very nature of his position, is not a contractual party. As I have already illustrated, the third party, in any event, under the terms of the Bill will have a number of provisions placed upon him by a contract to which he was not a party.

So far as concerns Amendment No. 3, that makes absolutely plain on the face of the statute a proposition which is entirely in accordance with the terms of the Bill. It states:

    "The contract may provide that the third party's right to enforce a term of it is subject to limitations and conditions which do not apply to the promisee".

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    That fits neatly into Clause 2, which establishes the third party in the same position as the parties to the contract unless there is a different agreement within the terms of the contract.

I have spoken at some length. I have also had the opportunity to speak to the noble and learned Lord the Lord Chancellor prior to the Report stage. This is a difficult matter and I do not expect an immediate answer from the noble and learned Lord. However, I would ask him to consider the rationale of my argument and give the matter further thought. On that basis, I beg to move.

11.45 p.m.

Lord Meston: My Lords, the Bill is the result of a long overdue and long drawn-out process of law reform. Like the noble Lord, Lord Hacking, we all want the resulting statute to be workable and comprehensible. As to his first group of amendments, I understand them to be saying what the Bill says, albeit in a different way and more concisely. I am not entirely persuaded that his amendments add very much substance to the Bill.

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