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Consumer Arbitration Agreements Bill

Volume 127: debated on Friday 12 February 1988

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Considered in Committee.

Although there is precedent for taking several amendments and new clauses to a Bill after the moment of interruption, I should point out that we can proceed with amendments to the Bill only so long as they remain unopposed. If at any time an hon. Member signifies objection or opposition, the Bill will become opposed business and would have to be deferred.

Clause 1

Arbitration Agreements

I beg to move amendment No. 1, in page 1, leave out from beginning of line 5 to 'except' in line 6 and insert—

(1) Where a person (referred to in section (Power of court to disapply section I where no detriment to consumer) below as "the consumer") enters into a contract as a consumer, an agreement that future differences arising between parties to the contract are to be referred to arbitration cannot be enforced against him in respect of any cause of action so arising to which this section applies'.

With this it will be convenient to consider the following: Amendment No. 4, in page 1, line 9, at end add

'whether in respect of those or any other differences; or
(c) where the court makes an order under section (Power of court to disapply section 1 where no detriment to consumer) below in respect of that cause of action.
(2) This section applies to a cause of action—
  • (a) if proceedings in respect of it would be within the jurisdiction of a county court; or
  • (b) if it satisfies such other conditions as may be prescribed for the purposes of this paragraph in an order under section (Orders adding to the causes of action to which section 1 applies) below.
  • (3) Neither section 4(1) of the Arbitration Act 1950 nor section 4 of the Arbitration Act (Northern Ireland) 1937 (which provide for the staying of court proceedings where an arbitration agreement is in force) shall apply to an arbitration agreement to the extent that it cannot be enforced by virtue of this section.'
    Amendment No. 5, in page 1, line 9, at end add
    '(c) by leave of the court.'
    Amendment No. 7, in clause 3, page 1, leave out line 19 and insert—
    '(1) For the purposes of section 1 above, a person enters into a contract "as a consumer" if—'.

    It may be for the convenience of the House if I state that the effect of the amendments will be to reduce, not enhance, the scope of the Bill as agreed with the Department of Trade and Industry. Hon. Members will recognise the somewhat heavy hand of the Government draftsman, who has refined the Bill, particularly as it relates to Scotland. The amendments do not include anything that was not discussed and received substantial agreement on Second Reading on 29 January.

    Amendment agreed to.

    Amendments made: No. 2, in page 1, line 7, leave out `differences' and insert 'the differences in question'.

    No. 3, in page 1, line 8, leave out 'himself had recourse' and insert 'submitted'.

    No. 4, in page 1, line 9, at end add

    'whether in respect of those or any other differences; or
    (c) where the court makes an order under section (Power of court to disapply section 1 where no detriment to consumer) below in respect of that cause of action.
    (2) This section applies to a cause of action—
  • (a) if proceedings in respect of it would be within the jurisdiction of a county court; or
  • (b) if it satisfies such other conditions as may be prescribed for the purposes of this paragraph in an order under section (Orders adding to the causes of action to which section 1 applies) below.
  • (3) Neither section 4(1) of the Arbitration Act 1950 nor section 4 of the Arbitration Act (Northern Ireland) 1937 (which provide for the staying of court proceedings where an arbitration agreement is in force) shall apply to an arbitration agreement to the extent that it cannot be enforced by virtue of this section.'.—[Mr. Pawsey.]

    Clause 1, as amended, ordered to stand part of the Bill.

    Clause 2 ordered to stand part of the Bill.

    Clause 3

    Dealing As A Consumer

    Amendment made: No. 7, in page 1, leave out line 19 and insert—

    '(1) For the purposes of section 1 above, a person enters into a contract "as a consumer" if—'.

    No. 8, in page 1, line 26, leave out 'and' and insert 'or'.

    No. 9, in page 2, leave out lines 1 and 2 and insert—

    '(2) In subsection (1) above—
    "business" includes a profession and the activities of any government department, Northern Ireland department or local or public authority: and
    "goods" has the same meaning as in the Sale of Goods Act 1979.
    (3) It is for those claiming that a person entered into a contract otherwise than as a consumer to show that he did so.'.—[Mr. Pawsey.]

    Clause 3, as amended, ordered to stand part of the Bill.

    Clauses 4 and 5 disagreed to.

    New Clause 1

    Power Of Court To Disapply Section I Where No Detriment To Consumer

    '(1) The High Court or a county court may, on an application made after the differences in question have arisen, order that a cause of action to which this section applies shall be treated as one to which section 1 above does not apply.
    (2) Before making an order under this section the court must be satisfied that it is not detrimental to the interests of the consumer for the differences in question to be referred to arbitration in pursuance of the arbitration agreement instead of being determined by proceedings before a court.
    (3) In determining for the purposes of subsection (2) above whether a reference to arbitration is or is not detrimental to the interests of the consumer, the court shall have regard to all factors appearing to be relevant, including, in particular, the availability of legal aid and the relative amount of any expense which may result to him—
  • (a) if the differences in question are referred to arbitration in pursuance of the arbitration agreement; and
  • (b) if they are determined by proceedings before a court.
  • (4) This section applies to a cause of action—
  • (a) if proceedings in respect of it would be within the jurisdiction of a county court and would not fall within the small claims limit; or
  • (b) if it satisfies the conditions referred to in section 1(2)(b) above and the order under section (Orders adding to the causes of action to which section 1 applies) below prescribing the conditions in question provides for this sectionto apply to causes of action which satisfy them.
  • (5) For the purposes of subsection (4)(a) above proceedings "fall within the small claims limit"—
  • (a) in England and Wales, if in a county court they would stand referred to arbitration (without any order of the court) under rules made by virtue of section 64(1)(a) of the County Courts Act 1984;
  • (b) in Northern Ireland, if in a county court the action would be dealt with by way of aribitration by a circuit registrar by virtue of Article 30(3) of the County Courts (Northern Ireland) Order 1980.
  • (6) Where the consumer submits to arbitration in consequence of an order under this section, he shall not be regarded for the purposes of section 1(1)(b) above as submitting to arbitration in pursuance of the agreement there mentioned.'.—[Mr. Pawsey.]

    Brought up, read the First and Second time, and added to the Bill.

    New Clause 2

    Orders Adding To The Causes Of Action To Which Section I Applies

    '(1)Orders under this section may prescribe the conditions referred to in section 1(2)(b) above; and any such order may provide that section (Power of court to disapply section 1 where no detriment to consumer) above shall apply to a cause of action which satisfies the conditions so prescribed.
    (2) Orders under this section may make different provision for different cases and for different purposes.
    (3) The power to make orders under this section for England and Wales shall be exercisable by statutory instrument made by the Secretary of State with the concurrence of the Lord Chancellor; but no such order shall be made unless a draft of it has been laid before, and approved by resolution of, each House of Parliament.
    (4) The power to make orders under this section for Northern Ireland shall be exercisable by the Department of Economic Development for Northern Ireland with the concurrence of the Lord Chancellor; and any such order—
  • (a) shall be a statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979; and
  • (b) shall be subject to affirmative resolution, within the meaning of section 41(4) of the Interpretation Act (Northern Ireland) 1954.'.—[Mr. Pawsey.]
  • Brought up, read the First and Second time, and added to the Bill.

    New Clause 3

    Arbitration Agreements: Scotland

    '(1) In the case of a consumer contract to which, by virtue of subsections (2) to (4) of section 15 of the Act of 1977 (scope of Part II of that Act), sections 16 to 18 of that Act apply, an agreement to refer future differences arising out of the contract to arbitration cannot be enforced against the consumer in respect of a relevant difference so arising except—
  • (a) with his written consent given after that difference has arisen; or
  • (b) where, subject to subsection (2) below, he has submitted to arbitration in pursuance of the agreement (whether or not the arbitration was in respect of that difference); or
  • (c) by virtue of an order under section (Power of court to disapply section (Arbitration agreements: Scotland) where no detriment to consumer) below in respect of that difference.
  • (2) In determining for the purposes of subsection (1)(b) above whether the consumer has submitted to arbitration, any arbitration which takes place in consequence of an order of the court under section (Power of court to disapply section (Arbitration agreements: Scotland) where no detriment to consumer) below shall be disregarded.'.—[Mr. Pawsey.]

    Brought up, read the First and Second time, and added to the Bill.

    New Clause 4

    Power Of Court To Disapply Section (Arbitration Agreements: Scotland)Where No Detriment To Consumer

    (1) Subject to subsection (4) below, the Court of Session or the sheriff ("the court") may, on an application made after a relevant difference has arisen, order that section (Arbitration agreements: Scotland) above shall not apply as respects that difference.
    (2) No such order shall be made unless the court is satisfied that it would not be detrimental to the interests of the consumer were the difference to be referred to arbitration in pursuance of the arbitration agreement.
    (3) In determining for the purposes of subsection (2) above whether there would be any detriment to the consumer's interests, the court shall have regard to all factors appearing to be relevant, including, in particular, the availability of legal aid and the relative amounts of any expenses which he might incur—
  • (a) if the difference is referred to arbitration; and
  • (b) if it is determined by proceedings before a court.—[Mr. Pawsey.]
  • Brought up, read the First and Second time, and added to the Bill.

    New Clause 5

    Construction Of Sections (Arbitration Agreements: Scotland) And (Power Of Court To Disapply Section (Arbitration Agreements: Scotland) Where No Detriment To Consumer)

    (1) In sections (Arbitration agreements: Scotland) and (Power of court to disapply section (Arbitration agreements: Scotland) where no detriment to consumer) above "consumer" and "consumer contract" have the meanings assigned to those expressions by section 25(1) of the Act of 1977.
    (2) For the purposes of sections (Arbitration agreements: Scotland) and (Power of court to disapply section (Arbitration agreements: Scotland) where no detriment to consumer) above a difference is "relevant" where, if (disregarding the arbitration agreement) it were to be resolved by civil proceedings in the sheriff court—
  • (a) the form of process to be used for the purposes of those proceedings would be that of a summary cause; or
  • (b) the proceedings would come within such description of proceedings as may, by order, be specified by the Secretary of State for the purposes of this paragraph.
  • (3) The power to make an order under paragraph (b) of subsection (2) above shall be exercisable by statutory instrument made with the concurrence of the Lord Advocate; but no order shall be so made unless a draft has been laid before, and approved by resolution of, each House of Parliament.'.—[Mr. Pawsey.]

    Brought up, read the First and Second time, and added to the Bill.

    New Clause 6

    Short Title, Commencement, Interpretation And Extent

    '(1) This Act may be cited as the Consumer Arbitration Agreements Act 1988.
    (2) This Act shall have effect in relation to contracts made on or after such day as the Secretary of State may by order made by statutory instrument appoint; and different days may be so appointed for different provisions and different purposes.
    (3) In this Act "the Act of 1977" means the Unfair Contract Terms Act 1977.
    (4) Sections 1 to 3, section (Power of court to disapply section 1 where no detriment to consumer) and section (Orders adding to the causes of action to which section 1 applies) above do not extend to Scotland, sections (Arbitration agreements: Scotland), (Power of court to disapply section (Arbitration agreements: Scotland) where no detriment to consumer) and (Construction of sections (Arbitration agreements: Scotland) and (Power of court to disapply section (Arbitration agreements: Scotland) where no detriment to consumer)) extend to Scotland only, and this Act, apart from sections (Arbitration agreements: Scotland), (Power of court to disapply section (Arbitration agreements: Scotland) where no detriment to consumer) and (Construction of sections (Arbitration agreements: Scotland) and (Power of court to disapply section (Arbitration agreements: Scotland) where no detriment to consumer)), extends to Northern Ireland.'.— [Mr. Pawsey.]

    Brought up, read the First and Second time, and added to the Bill.

    Bill, as amended, to be reported.

    Bill, as amended, to be considered on Friday 15 April.

    2.37 pm

    On a point of order, Mr. Deputy Speaker. I wish it to be known that the objection to the Housing (Houses in Multiple Occupation) Bill came from one solitary Member, the Government Whip. I wish that to be recorded in the Official Report as 300 people have died in house fires.

    Order. First, that is not a point of order. Secondly, the hon, Gentleman must not seek to make a speech to explain why he thinks that it is a point of order.

    Right Of Privacy Bill

    Order for Second Reading read.

    Second Reading deferred till Friday 15 April.

    Slaughter Of Deer Bill

    Order read for resuming adjourned debate on Second Reading [11 December].

    Coal Mining Subsidence (Prevention And Public Awareness) Bill

    Order for Second Reading read.

    Second Reading deferred till Friday 15 April.

    Business Of The House

    Ordered,

    That, at the sitting on Wednesday 17th February, notwithstanding the provisions of paragraph (1)(b) of Standing Order No. 14 (Exempted Business), Mr. Speaker shall put the Questions on the Motions in the name of Mr. Secretary Ridley relating to Local Government Finance not later than one and a half hours after the first of them has been entered upon.—[Mr. Peter Lloyd.]

    Ordered,

    That, at the sitting on Thursday 18th February, notwithstanding the provisions of paragraph (1)(b) of Standing Order No. 14 (Exempted Business), if proceedings on the Motion in the name of Mr. Secretary Ridley relating to Local Government have not been previously disposed of, Mr. Speaker shall at Ten o'clock put the Question thereon. —[Mr. Peter Lloyd.]