Tribunals, Courts and Enforcement Bill [HL]

We should be grateful to the noble Lord, Lord Renfrew, and the noble Lords, Lord Thomas and Lord Maclennan, for tabling Amendments Nos. 131 and 132, which give us the opportunity to consider whether the requirement of due diligence is satisfactorily built into the Bill and to inquire of the Minister how she anticipates it will work in practice. It may be helpful to articulate in the language of the Bill and to elaborate this requirement beyond the rather minimalist language of the Bill as it is at present. It is, after all, crucial that we do everything we can to build the confidence of both lenders and potential claimants. They equally, from their different perspectives, want to see a rigorous system of due diligence operating. We should, on the other hand, hesitate if the purpose is merely declaratory because it is not part of our legislative system to ornament Bills with rhetoric so that any lay reader of the Bill can be confidently assured that the intention of the Bill is as he or she might wish it to be. The question, therefore, is whether we would be adding something substantive if either of these amendments were to be accepted and become part of the Bill. I am not quite sure whether the amendment of the noble Lord, Lord Renfrew, would strengthen or weaken the requirements for due diligence in the Bill. After all, if it is a condition of such approval that any approved institution has agreed to apply and so on, that may not take us as far as we need to go. To have agreed is not quite the same as the requirement in the amendment of the noble Lord, Lord Thomas, that the Secretary of State will need to be satisfied that the museum or gallery in question has suitable procedures in place. So, on balance, I prefer the language and precision in the amendment of the noble Lord, Lord Thomas—although I think that the reference to the excellent guidelines published by the department is a valuable component of the amendment of the noble Lord, Lord Renfrew. It is fair to acknowledge that there are real problems for would-be borrowers in carrying through due diligence. After all, by definition, they are not the owners or the possessors of the objects they wish to borrow. It requires time, resources and expert knowledge or access to expert knowledge. I was pleased, for example, to see in the new programme announced by the Heritage Lottery Fund a fund of £3 million to support acquisitions of cultural objects by museums across the country, which will be very useful for a range of institutions. It is intended that part of that money should be used to develop the knowledge and the expertise within the institutions that are going to make acquisitions. Of course, the same applies where borrowing is concerned. I make this point because there are always problems if we attempt to legislate where we are willing the end but not the means. There is a very important issue about the capacity of institutions to carry through due diligence to the standard that the department and every Member of the Committee rightly require. The DCMS document Combating Illicit Trade is admirable. Section 6 is headed ““Due diligence—What it should involve”” and on page 9 we see that there is a requirement to take expert advice. Further on in the document, on page 23, there is a lengthy list of possible sources of expert advice. I make the point that these processes—proper and necessary as they are—are time-consuming and resource intensive, both for those who seek the advice and for those who give the advice. It is further suggested in the document, also on page 9, that, if necessary, seek legal advice. The noble Lord, Lord Thomas, will perhaps confirm to the Committee that legal advice can come very dear. I appreciate that the responsibility for this extends far beyond the normal responsibilities of the Department for Constitutional Affairs, but my noble friend Lady Ashton, of course, speaks for the Government as a whole when she answers. Can she assure us that it the Government’s intention is that institutions will be adequately resourced to carry through the requirements of genuine, effective and rigorous due diligence to the high standards set out in the document? I am not aware that local authorities, for example, typically and habitually resource adequately the galleries for which they have responsibility. If the rumours are likely to be confirmed about what may happen in the Comprehensive Spending Review to the resources available to the Department for Culture, Media and Sport and, by extension, to the institutions that it funds, we have to worry about the capacity of even some of our major museums and galleries to be able to sustain the standards of due diligence on which we are insisting. The guidelines in the document that the department published a little while ago are clearly intended to lead to the adoption and practice of impeccable standards. Perhaps it would be helpful if my noble friend could make it clear that, in all this guidance, the intentions refer equally to loans as they do to acquisitions. The document does say at a late stage on page 20 that for acquisitions, read loans. It is very important that that should be clarified and emphasised. What are the implications of some of the admirable statements in this document? Section 3, on basic principles, says: "““Museums should acquire and borrow items only if they are legally and ethically sound. They should reject an item if there is any suspicion about it, or about the circumstances surrounding it, after undertaking due diligence””," and so on. Section 5, on page 7, says: "““At any stage of the due diligence process outlined below the museum may decide that there are doubts about the item’s ethical status and it therefore cannot proceed with the acquisition or loan””." If a museum in this country was interested in borrowing an item and the limitation period had expired, for example in the case of an item under which there might be a claim arising from the events of the Holocaust era or where sovereign immunity may have been established but the original processes whereby the work of art or cultural object in question came into the ownership of the museum are considered to be ethically dubious, should that institution not borrow? The document says only that the museum may decide that there are doubts about the item’s ethical status and therefore cannot receive it. I simply wonder how firm that requirement is. Otherwise, the standards expressed in the document are impeccable in all cases. The mandate set out here is that you should not proceed if there is any suspicion whatever about the item. Will the document’s principles and the models of good practice that are instanced in the document satisfy international lenders? Do we have the common definitions that are needed? A section in the de Leeuw report, which is an important document emanating from the European Union, discusses the disparity between systems of immunity in different countries and between the categories of goods that are protected under various systems of immunity. Section 3.1.2, refers to the work of the Bizot Group, an informal group of museum directors who have been working towards general principles of administrative law. What is the position in the European Union? What is our own Government’s view on the need to work towards consistency of international definitions—indeed, internationally binding commitments and laws—that would govern the question of loans of works of art and cultural objects across international frontiers? The noble Lord, Lord Renfrew, cast a scintilla of doubt on practice at the Metropolitan Museum of Art in New York. Clearly, it would be advantageous to have consistency of policy and, indeed, a single document to which the countries that wished to borrow and lend works of art all subscribed. If either of these amendments were accepted, what would be the implications for the wider policy expressed in the Bill? The Government have preferred a system of automatic immunity on the grounds that a discretionary system would be complex and costly—a discretionary system involving museums that wished to borrow works of art for an exhibition publicly designating all the individual objects they wished to borrow. The amendment of the noble Lord, Lord Renfrew, points in that direction. As it is, due diligence properly carried out is already complex and costly. If we were to move to a discretionary system, I wonder whether it would add significantly to the burden that due diligence already lays upon borrowing institutions. I certainly do not want to add any serious additional burden; I just wonder how much of a burden would be added. It is fair to say that there are already powerful pressures on institutions to practise due diligence—the sanction of the Government’s withdrawal of approval, the vulnerability of museums to criminal sanctions, whether under the Theft Act, the Proceeds of Crime Act or, indeed, possibly the famous Iraq order, and vulnerability to civil suit. Only seizure is precluded as a penalty under this legislation. Who is liable if an institution is found not to be practising adequate due diligence and may fall foul of other legislation apart from this? Is it the curator of the exhibition, the registrar of the museum responsible for the administration in this particular respect, is it the director or is it the trustees? What would be the penalties? Are the trustees expected to be clapped in irons? I do not know. However, if there is to be no significant additional burden I believe that a discretionary system would be beneficial. It is to the advantage of public confidence that there should be publicity about the items that are proposed to be borrowed, and, as the department has always noted, it would help claimants to identify objects to which they might wish to lay claim. It might discourage lenders, but other jurisdictions do it and lenders seem not to be unduly worried about their vulnerability under European Union or international law. If we were to bring in a discretionary system—and if one of these amendments is accepted, it points in that direction—it would usefully reinforce the pressure that the Government are applying on institutions to practise due diligence.