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Clause 2 - Arbitration

Groceries Code Adjudicator Bill [Lords] – in a Public Bill Committee at 10:30 am on 11th December 2012.

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Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills) 10:30 am, 11th December 2012

I beg to move amendment 22, in clause 2, page 1, line 11, at end add—

‘(3) Where the adjudicator is appointing an arbitrator the following must be taken into account—

(a) the location of the arbitration considering the convenience of the supplier;

(b) the qualifications of the arbitrator;

(c) the experience of the arbitrator; and

(d) the awareness which the arbitrator has of

(i) the laws applying in—

(a) England and Wales;

(b) Scotland; and

(c) Northern Ireland; and

(ii) the market and economic conditions applying in—

(a) England and Wales;

(b) Scotland; and

(c) Northern Ireland.’.

We move on to clause 2 and arbitration. Our amendment would augment the clause. We do not disagree with specifications in the Bill which, however, does not set out the criteria for the appointment of an arbitrator.  The amendment would require the adjudicator to take into account certain factors when appointing someone to arbitrate under the clause. They would include location, qualifications and experience, and any legal and economic awareness that the arbitrator would require. It is important to make the process as easy as possible for both the complainant and the defendant. Indeed, many of the investigations under the groceries code may be complex and regionalised. Given that the policy and the Bill have a UK-wide application, there will be nuances in the legalities of a particular investigation with respect to where it takes place.

We tabled the amendment because the Bill does not specify matters concerning the location of adjudication or the convenience to the supplier. Small suppliers might want to bring an investigative case to the adjudicator’s office, which is why location is important. We must also consider the issue of staffing and the adjudicator’s pre-appointment hearing. There must be guidance about the necessary experience and qualifications of someone who can arbitrate in a case that has been brought forward by the supplier.

As I have said, there must be awareness of the laws that apply to England and Wales, Scotland and Northern Ireland where there are slight differences in the law. Clause 3 refers to requirements in civil proceedings and mentions the different legal systems and the different Acts that apply in different jurisdictions. It is important that that is taken into account when the adjudicator appoints someone to arbitrate on their behalf.

We can envisage circumstances in which suppliers from the highlands and islands, for example, bring forward specific issues relating to that particular market. Given the information that we have received from some suppliers, specialised suppliers will have particular issues in mind about the breaking of the code, which they want to bring to the attention of the adjudicator. We are delighted that the Government and the other place accept that third parties can bring forward such matters, but it is important to ensure that if the adjudicator or deputy adjudicator does not have the required skills to deal with a specialist investigation, whoever is appointed to perform that arbitration role has the necessary experience.

There must be a minimum threshold of skills. People must have confidence in the system to be able to bring forward a case for investigation. The amendment is fairly straightforward, and I hope that either the Minister will accept that it makes important provision on arbitration or, after the wave of reassurance we have had, can provide us with even more reassurance that such specifications will be taken into account when appointing the arbitrator.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I thank the Opposition for tabling the amendment. There is a great deal of agreement between us. We both recognise that arbitration is an important part of the Bill, and that it will be an important part of the adjudicator’s role through arbitration to enable suppliers to resolve specific disputes with retailers so that they receive the necessary redress. Such measures will enable the adjudicator to add real value to the process. The other place had a lengthy debate on arbitration, as well as on the issues referred to under the amendment.

Amendment 22 sets out a detailed list of the issues that an adjudicator must consider when appointing an arbitrator. Such matters are important and will be expected to be taken into account but, without wishing to disagree with the hon. Member for Edinburgh South, it is not necessary to be so prescriptive and add such provisions to the Bill. I hope that I have convinced him of that. As a public authority, the adjudicator will be bound to act reasonably and carefully when selecting an arbitrator, if the adjudicator were not carrying out the arbitration. Naturally, the qualifications and experience of the proposed arbitrator will be taken into account, but that does not need to be stated expressly in the Bill.

Photo of Andy Sawford Andy Sawford Labour, Corby

Will the Minister indulge a new Member and help me understand her approach in accepting all aspects of the amendment tabled by my hon. Friend the Member for Edinburgh South, yet saying it is not helpful to include that in the Bill? It seems to me, as a new Member of the House, that in the interests of the public and all those concerned that the adjudicator should work effectively with those involved in arbitration, it would be incredibly helpful to have it in the Bill. I do not understand the Minister’s reluctance.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I am more than happy to indulge a new Member. It is a debate I am sure he will hear many times; the desire to put more and more information and detail in legislation. That often comes from the Opposition, though not exclusively. Government often prefer to have legislation at a higher level. The clarity of legislation is important, and we should put on record the fact that we are discussing a plain English Bill. That might not be immediately obvious to members of the public who decide to read it, but it is better than many Bills in how understandable it is for those of us who have not studied law in detail.

The purpose and aim of legislation should be as straightforward and understandable as possible for anyone who chooses to read it. The more detail that is put into any piece of legislation, especially where it is unnecessary because protections already exist, the more complicated it becomes. That is where there is a role for reassurances from Ministers and the explanatory notes that set out the intention of legislation.

Andy Sawford rose—

Photo of Andy Sawford Andy Sawford Labour, Corby

The Minister says that it is important that the Bill is in plain English. I welcome the way in which my hon. Friends have used this brief opportunity in seeking to put that in the Bill and specify that the arbitrator would have an awareness of laws applying in the different jurisdictions. While it may be in plain English, to apply that so that it is clear to people in Scotland and Wales that the arbitrator would understand the laws of those countries would be incredibly helpful. I understand the Minister’s point about not being too prescriptive or detailed in the Bill. However, there is beauty in the simplicity of the amendment and the key issues it addresses on jurisdictions.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I thank the hon. Gentleman for his further intervention. It is quite appropriate for us to describe amendments as beautiful or otherwise. However, beautiful or otherwise, the amendment is still unnecessary.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

As a veteran of arbitration under the jurisdiction of the Royal Institution of Chartered Surveyors in a previous career, I can assure the Minister and the hon. Member for Corby that all the concerns in the proposed amendment are dealt with as a matter of course in the appointment of an arbitrator. The system works perfectly well in a range of other professions. There is no need to clog up the Bill or impinge on the adjudicator’s work as far as the amendment is concerned.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I thank my hon. Friend for his well-informed intervention. There are many reasons for reassurance that the appropriate factors will be taken into account without being specifically included in the Bill. The order in article 11 gives the steer that the rules of the Chartered Institute of Arbitrators will be used. It is reasonable that the arbitrator will have the ultimate choice. There are well-established criteria that are taken into account. I see no reason, in my hon. Friend’s words, to “clog up” the Bill with superfluous words. We will resist the amendment while understanding the helpful spirit in which it is offered.

On the subject of location, it is appropriate for a Scottish Member to point out the challenges in geography that sometimes exist. However, the Groceries (Supply Chain Practices) Market Investigation Order 2009, article 11(6) provides that

“the seat or legal place of arbitration will be London…or such other city within the United Kingdom as the Supplier nominates”.

The supplier already has a right to say where that will be. I appreciate that if someone is in the highlands and islands that might mean a bit of a trek, but it does mean that they do not have to go all the way to London.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills) 10:45 am, 11th December 2012

The Minister is being generous in dealing with some of our queries. Can she give some reassurance that if a supplier asked for an adjudication to take place in Inverness or Aberdeen, or indeed in Wales or Devon, it would not be unreasonably turned down?

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

To provide that reassurance, I will re-emphasise what have I said. Inverness and Aberdeen certainly count as cities, and the Groceries (Supply Chain Practices) Market Investigation Order 2009, on which all these provisions are based, provides that

“the seat or legal place of arbitration will be London, England or such other city within the United Kingdom as the Supplier nominates.”

The supplier is in the driving seat, and I think we would accept that that is absolutely appropriate. I hope that I have given the Committee some reassurance on the matter and that the hon. Gentleman will therefore withdraw the amendment.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

The beauty and simplicity of the amendment was there purely to ensure that issues regarding qualifications, location and experience were taken into account. I am reassured by the explanatory note, which states that the rules of the Chartered Institute of Arbitrators will govern those issues. Such bodies are well respected.

I am also reassured that the supplier will be able to nominate where the arbitration takes place, and that no reasonable request will be turned down. To provide a bit of balance though, the retailer itself is allowed to request some arbitration, and would therefore also be covered by our amendment. I understand, however, why the Minister would not want to put it in the Bill, and I beg to ask leave to withdraw the amendment—even though it is a rather beautiful and simplistic one.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I do not intend to detain the Committee for long, but a bit of explanation of the clause will, I think, help. The 2009 order establishes that if there is a dispute between a direct supplier and a retailer on a matter that is contained in the groceries code and the matter is not resolved to the supplier’s satisfaction within 21 days, the supplier may refer it to arbitration during the following four months. A large retailer must submit to the arbitration, and one of the functions of the adjudicator is to arbitrate such disputes. Subsection (1) requires the adjudicator to either arbitrate or appoint another person to do so if the supplier refers a dispute to arbitration in such a matter. We expect that in most cases the adjudicator him or herself will be able to arbitrate, but in specific cases that might not be possible and another arbitrator can be appointed. We have been able to have a bit of a discussion about how such a decision would be made.

The 2009 order has already established a dispute resolution scheme for disputes arising between a retailer and a direct supplier under the groceries code, and the order anticipates that the adjudicator—referred to in that legislation as the ombudsman—will arbitrate such disputes. That will ensure that disputes are arbitrated by an individual with a high level of expertise in the sector, and will allow the adjudicator to gain a greater understanding of how the code is operating, which will help them in carrying out their other functions, such as preparing the annual report or providing advice.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

I do not need to detain the Committee at all. We welcome clause 2, particularly as it also gives the right to the large retailer to refer a dispute. It is a particularly good clause to have in the Bill.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.