Legal Aid, Sentencing and Punishment of Offenders Bill

My Lords, I pay tribute to the noble Baroness, Lady Coussins, and her record in this area. Looking down the list of noble Lords who have spoken in this debate, I see the names of many with whom I have been shoulder to shoulder in many debates. I do not think that there is any division between us on that. To address the point made by the noble Lord, Lord Stevenson, about the Government’s rhetoric on human rights, I shall, to quote Tony Blair, ““leave it to history”” to make judgments about the coalition Government. However, one thing that I am absolutely proud of is that in a time of great austerity the sustaining of our aid programme and the follow-on impact on human rights around the world will always be to our Government’s credit—as, too, will their decision to implement the Bribery Act, to take the lead in international anti-corruption campaigns and to be strong advocates for human rights around the world. There is more than rhetoric in this Government’s record on this issue. I talked with the noble Baroness, Lady Coussins, and the noble Lord, Lord Stevenson, on these issues and, as they know, I am not convinced that the amendments are necessary or appropriate. Let me try to explain why. The Government believe that it is still possible to bring claims against multinational companies once our changes to CFAs are implemented, but the costs involved will be more proportionate to the sums at issue. The proposers seek to address not the validity of the claims but the iniquity of a system that can allow legal costs to escalate to significantly more than the damages at issue. It is worth emphasising at this stage that the current system of recoverable success fees and recoverable ATE insurance premiums, with the consequence of high civil costs, is not seen in any other jurisdiction in the world. However, I should emphasise that while we should do all we can to ensure that UK business continues to flourish abroad, this will never be done at the expense of violating any of the rights and laws of the host country. The Government are committed to ensuring that UK companies continue to conduct themselves to the highest standards, especially when carrying out trade and transactions in other countries. CFAs will continue to be available, but the Bill also extends another funding option, to which the noble Baroness, Lady Coussins, referred: the Government are making available alternative methods of funding—such as the use under Clause 44 of damage-based agreements, DBAs, which could be used to fund group actions against multinational companies. Some say that our proposals will decrease the number of these claims, while others, including the Confederation of British Industry and some American companies, are concerned that DBAs will in fact increase the number of such claims. The Government believe that they have the balance right between protecting access to justice and making costs more proportionate. Our aim has been to ensure that litigation is available to stop corporate harm. It has been mentioned that we were among the champions of the Ruggie guidelines, and it is true that the Government strongly support the UN guiding principles on business and human rights that were developed by Professor Ruggie. We co-operated closely with him on his mandate and fully support the international working group that has been established to take his work forward. I was pleased that I was able to announce that support immediately after that report was published. One of the problems that have been referred to is the disproportionate difference between the amounts at issue and the legal costs involved. The Trafigura case is often cited as an example where claimants would have been denied access to justice had our reforms already been in place. However, I must stress that once our reforms are implemented, overseas victims of alleged corporate harm by UK multinational companies will still be able to bring claims in England and Wales against such a company. We are not, as some have suggested, denying access to justice; we are simply trying to restore a much-needed sense of proportion and fairness to the current CFA regime. I can only repeat the extraordinary costs that were claimed in the Trafigura case. The costs sought by the claimant’s lawyers were in excess of £100 million, while the damages amounted to £30 million. I am not questioning the merits of that case but only the costs involved, which the Court of Appeal ruled were disproportionate. That is why we are pressing ahead with these reforms. We are addressing the excessive costs that can be claimed. In addition, these amendments would not meet the objectives of our reform, which are to reduce litigation costs. Rather, the amendments would allow those costs to continue to escalate. The certification process proposed in the amendment opens up uncertainty and significant prospects of satellite litigation in individual cases around the criteria for certifying claims as being suitable for exemption. The Government believe that our proposals to control legal costs should apply across the board. We are not persuaded that the case has been made for any exemptions—