Transport Bill

Part of the debate – in the House of Lords at 4:40 pm on 9th November 2000.

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Photo of Lord Brabazon of Tara Lord Brabazon of Tara Crossbench 4:40 pm, 9th November 2000

My Lords, now that the European Commission has referred the legality of the BAA golden share to the European Court of Justice there must be a real possibility that the rights given to the golden shareholder by the NATS articles of association will be rendered unenforceable. On this side of the House, our interest in the rights attaching to the golden share are not in retaining control of the company, but in protecting national security.

The treaty recognises the right to override the provisions as to establishment and free movement of capital in the interests of public security and it is important that the Bill includes full powers for the Government to do, in the interests of national security, what they could have done by exercise of rights attaching to the golden share. In this way, if the rights attaching to the golden share are struck down, at least there will be a comparable power in the Bill for the Government to act on grounds of national security. That should not be challengeable by the Commission as it relies on one of the permitted exceptions.

The powers contained in subsections (1) and (2) of the clause to give directions to a licence holder or holders cover some of the rights attaching to the golden share, for example, those such as issue of shares and appointment or voting rights of directors. But the major protection afforded by the golden share is the right to restrict an individual holding to 15 per cent and, judging by the Commission's press release, this is also the Commission's main target. That right is not covered by subsections (1) and (2) because, if that provision in the articles is found to be in breach of the treaty, the right to claw back any holding in excess of 15 per cent--the only way a licence holder can force a shareholder to transfer shares--will not be enforceable. A licence holder will therefore be powerless to enforce any direction the Secretary of State makes to a licence holder to claw back shares. The power the Secretary of State needs is to direct the shareholder to transfer the excess--or indeed any--shares. The amendment is designed to give the Secretary of State this power.

It would be dangerous for the Secretary of State to rely on provisions in the partnership agreement. There is nothing in the wording of the relevant treaty provisions to suggest that a partnership agreement is immune from attack by the Commission any more than articles of association. In any event, if there were a subsequent flotation--and the provisions of the articles of association are clearly geared to provide protection in that event--any safeguards in the partnership agreement will fall away.

It would be equally dangerous for the Government simply to sit back and say they will fight off the challenge by the Commission to the comparable provisions in the BAA articles. The duty of the Government is to make proper provision in the Bill to safeguard national security in the event that the European Court rules against the United Kingdom in the BAA case. At present, there is a yawning gap and this amendment is intended to fill it. I beg to move.