My Lords, I will speak to the amendment standing in my name, which seeks to insert a mechanism for ensuring the independence and the qualifications of an arbitrator appointed under
the code by reference to the provisions of this Bill. It generates, I would argue, a valuable opportunity for the Minister to explain a very complex part of this legislation, which, without an explanation in the Official Report of our deliberations, I fear may not be understood by those who come to apply, or seek to apply, the provisions of this Bill in relation to the code.
As we have already heard, this is a unique piece of legislation, because the basis of it is a code that is owned by the Competition Commission. If the code is repealed, then all this legislation becomes redundant. I embarked on the amendment of this particular part of the Bill because of my then limited understanding of both the arbitration legislation as it applied in England and Wales and the Arbitration (Scotland) Act 2010, which has been passed by the Scottish Parliament and, in part, now applies to Scotland, but which is not yet fully commenced. I was unsure how all these things interacted, but I was certain that at some stage it would be necessary for either the Government to make it perfectly clear that the provisions of that legislation, which were carefully debated and thought through both in this Parliament and the Scottish Parliament, and were designed to generate an independent and properly qualified process of arbitration, would properly be applied to this legislation when enacted and to the processes that it was creating. The more I got into it, the more I began to appreciate just how important that was.
With the leave of the House, I will take a few minutes to explain some of this complexity but will leave it to the Minister to explain how all this works. In my discussions with the noble Baroness and her Bill team, both of whom have been extraordinarily generous with their time and in explaining this, we have between us uncovered areas in which this Bill and the code could be improved. I have not endeavoured to do that in this particular amendment, and have removed other amendments that I proposed, because I am confident that at some stage in the progress of this Bill the Government will themselves bring forward some amendments that deal with those issues that have now been uncovered.
This amendment, on plain reading, concerns the qualifications and appointment conditions for an arbitrator under the Bill and has had the benefit of shining a spotlight on a particularly unclear and potentially confusing part of the Bill. To understand how this Bill works, one has to understand the interaction of the arbitration provisions in the Bill with the existing arbitration laws in England, Wales and Northern Ireland, and also with the arbitration provisions in the code itself. It is not easy to follow all this. We are not helped by the fact that the Explanatory Notes compound this lack of clarity rather than resolving it. In particular, paragraph 30 states that the provisions of the Arbitration Act 1996 will “broadly” apply and that,
“the Arbitration (Scotland) Act 2010 will broadly have a similar effect in applying the Scottish Arbitration Rules, except so far as this would be inconsistent”,
with the groceries supply order or the Bill. That was not intended to be clear. It is intended just to report the position which is quite difficult to work out.
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When one interrogates this process closely, one discovers that the provisions of the 1996 Act and the 2010 Act—which are partly enacted by this Bill, but I will come to that in a moment—do not broadly apply; they apply entirely. Arbitrations under the Bill will be statutory arbitrations. One would think that it would therefore follow that the 1996 Act would apply in England, Wales and Northern Ireland and the Scottish legislation would apply to statutory arbitrations in Scotland. However, that is not the case because the Act having been passed in 2010, the Scottish Executive, who have responsibility for bringing its provisions into effect, have specifically said that they do not yet apply to statutory arbitrations. So the ingenious answer in this Bill to that problem is that Clause 21 has the effect of applying those provisions of an Act of the Scottish Parliament, which is not yet in force in Scotland, to arbitrations under this Bill. Apparently the Scottish Government have agreed, and that is to be celebrated. It is not something that the current Scottish Government will tell many people in Scotland, but they have agreed to legislation passed by the Scottish Parliament that is not yet in force as far as statutory arbitrations are concerned being applied to statutory arbitrations under this Bill and code. I welcome that. Indeed, in an earlier debate we had in relation to this Bill, I tried to encourage the Government to have that sort of relaxed attitude towards relationships between Scotland and the rest of the United Kingdom, but I was unsuccessful.
For those of us who are anoraks about devolution and, in particular, devolution to Scotland, the question arises of whether a step like this in the constitutional settlement we have requires a legislative consent Motion of the Scottish Parliament. It appears that the Government’s position and the consensus from BIS, the Office of the Attorney-General in Scotland and the Scottish Government is that an Act of the Scottish Parliament is not required to bring into force legislation in relation to the operation of UK legislation. I would not be surprised if I am losing a number of people in this argument, but I am not really concerned about that because I am only pointing out how complex this is and why it is important that the Government explain how this will work so that the supplier who thinks that he may have something that needs to be attended to by this process has some idea about what he is getting himself into.
Whether an Act of this Parliament in relation to a matter that would otherwise be devolved requires a legislative consent Motion depends upon the application of the purpose test. In other words, is the purpose of this legislation to do with competition law or arbitration law? If it is to do with competition law, it is reserved and Acts of this Parliament do not require legislative consent Motions, even if they encroach upon arbitration law, which is devolved and is an area where the Scottish Parliament has passed an Act that the Scottish Government have quite deliberately not brought completely into force. I am not going to ask your Lordships’ House to debate the purpose test in relation to this legislation because the Government are very clear that it is to do with competition law and it would appear that the Scottish Government agree with them
but, interestingly, I do not think anybody has asked the Scottish Parliament what it thinks, but that may be an irrelevance as far as this is concerned.
These are interesting questions. In circumstances where other comparatively trivial matters about the relationship between the Scottish and UK Parliaments and the UK and Scottish Governments have occupied us sometimes for hours in Scotland, how do we come to a situation where an accommodation like this can be created without any recourse, in any circumstances, to either Parliament? This is an interesting and welcome thing to do and I hope that it is a forerunner to a degree of co-operation between our respective Parliaments that we have not seen until now. However, I suggest and predict that this apparently unclear and untransparent way of enacting law makes it difficult, apart from anything else, to know which parts of the Scottish Arbitration Act 2010 are in force and which are not. In some circumstances, it also makes it difficult to work out where it is best and which law applies to an arbitration that comes from this complicated process of the code, our Bill, the 1996 Arbitration Act applying to England, Wales and Northern Ireland and parts of Scotland’s 2010 Act that we are now bringing into force. It would have been much easier for the Scottish Government just to have implemented the 2010 Act in a way that was consistent with all this, but apparently we have got beyond that.
I shall try to avoid the temptation to start discussing which jurisdiction will apply to arbitration, although I have a speaking note about it. There is a question about whether a Scottish supplier will be defeated by the operation of these provisions. A retailer might want his arbitration to be conducted under the rules in Scotland, but find that he is stuck with it being conducted under the rules in England. I will leave that hanging; it may be a debate for the other place. I am not sure that lifting up this particular stone and discovering what was underneath has been of great benefit to your Lordships’ House. Given the discussions that have taken place between me, those advising me, the noble Baroness and her Bill team, I hope that we may get a degree of clarity from the response to this amendment, which will then be there for others to take advantage of.
At least one good thing has come out of this: the groceries code order needs to be amended because it no longer reflects the state of law in Scotland. At some stage, an amendment will have to be brought to this Bill to create the mechanism to change the order. I am happy to leave the noble Baroness and her deeply skilled Bill team, who are across all this in some detail, to explain when that is going to happen. However, it would better if it happened before the Bill left your Lordships’ House so there cannot be any criticism from the other place that we are not doing our job comprehensively. That is crucial at this particular time. It would be helpful if that could be done before the Bill leaves your Lordships’ House.