Hansard

I am pleased to open the debate on the general principles of the Legal Writings (Counterparts and Delivery) (Scotland) Bill. I thank everyone who gave evidence in writing and in person, and I thank the Finance Committee and the Delegated Powers and Law Reform Committee for their detailed scrutiny of the bill at stage 1. In particular, I welcome the Delegated Powers and Law Reform Committee’s support for the bill’s general principles.

As many members are aware, this is the first bill to have been considered under the new Scottish Law Commission bill procedure. When the Parliament decided in May last year to accept recommendations for changes to its standing orders to allow certain Scottish Law Commission bills to be referred to the Delegated Powers and Law Reform Committee, it recognised the commission’s valuable role in reforming the law of Scotland.

It was intended that the new process would go some way towards increasing the implementation rate of commission reports. In my view, the process is working well. I have been impressed with the way in which the committee has taken on its new role and I hope that this will be the first of many bills to be considered in this way. I note the committee’s recommendation in its stage 1 report, that

“the Scottish Government takes steps in order to ensure appropriate research has been undertaken”

to provide statistical evidence to the committee in connection with Scottish Law Commission bills in future. The committee has my response to the stage 1 report.

A key objective of the Scottish Government is sustainable economic growth and business competitiveness. We want to ensure that Scotland is an attractive place for business. The reforms in the bill might be modest and technical but they will, in no insignificant fashion, promote business and economic growth and modernise Scots law.

The bill does two main things. First, it enables documents to be executed in counterpart, which will put beyond doubt that such execution is permissible in Scots law—a matter about which there is currently great uncertainty—and will give the legal profession and the business interests that it represents the necessary confidence to use Scots law for transactions.

Secondly, the bill makes provision for the facility to deliver—I use the word “deliver” in its legal sense—traditional documents electronically. Any document that is created on paper may become legally effective by being delivered by electronic means such as email or fax.

I was pleased to note that the Delegated Powers and Law Reform Committee supports the general principles of the bill and, in particular, those two key provisions.

The provisions have the potential to help people who are involved in complex transactions in which the parties and their legal advisers can be in different countries or even on different continents and meeting might be impossible or highly impractical. The provisions also have the potential to help anyone in Scotland who is conducting a transaction that involves a number of parties who are unable to get together, for practical reasons, for example because parties live in remote rural or island areas.

For the avoidance of doubt, let me say that the consequence of the current uncertainty in this area is that practitioners sometimes choose not to use Scots law to govern a document. There is a consistent view that that is common, happens regularly, and might happen at the outset of a transaction or just before the transaction is finalised. I am talking about not just multinational and multijurisdictional transactions but transactions that are entirely Scottish in their make-up and for which, for want of clarity about the use of execution in counterpart, the decision is made to use another law. When Scots law is not used, there is often the knock-on effect of consequential litigation not being conducted in Scotland.

The committee recognised that the current uncertainty about whether execution in counterpart is competent under Scots law appears to have led to a drift away from transactions being concluded under Scots law, with parties opting to conclude under the law of a different jurisdiction—for example, English law—where execution in counterpart is recognised.

A number of people who gave evidence to the committee described the bill as being capable of addressing that drift. A clear benefit of the bill will be that, in circumstances in which Scots law should be used but is currently not used because of doubt over the legality of executing in counterpart, parties will now have the confidence to use Scots law.

Scots law requires some documents to be delivered—again, in the legal sense—to take full legal effect. In the same way as doubt exists around whether execution in counterpart is valid under Scots law, there are conflicting authorities on whether a paper document may be legally delivered by its electronic transmission to the grantee or a third party such as a solicitor or agent for one of the parties.

That question arose from the 1990s onwards mainly in respect of purported delivery by way of fax of documents relating to land. One of the bill’s principal aims is to resolve that uncertainty, particularly but not only as it impacts on transactions completed by way of execution in counterpart. The bill does so by saying that delivery of a copy of a paper document or a copy of part of that document by electronic means constitutes delivery; beyond that, it does not attempt to alter the law on delivery.

During the stage 1 evidence sessions, the Faculty of Advocates levelled some criticisms at the bill. The Faculty’s concerns were around increased potential for fraud and, what was more likely in its view, error associated with execution in counterpart particularly if, as the bill allows, only the signature pages of documents are exchanged between parties as part of that process. We have considered those concerns very thoroughly and have concluded that the bill will do nothing to increase the prospects of fraud or error as a result of executing in counterpart and exchanging only the signature pages of the document.

That view was shared by other stage 1 witnesses, and the committee noted that the majority of those giving evidence at stage 1 expressed the general view that fraud and error would always occur to an extent and that the bill was unlikely to lead to an increase in either fraud or error. The committee was particularly thorough in its examination of this issue, and I note that it is not persuaded that the bill will lead to any increase in instances of fraud and error.

In summary, this is a small but important bill that will provide certainty in relation to execution in counterpart and electronic delivery of traditional documents in Scots law. Importantly, the approach has been to ensure that the legislation is permissive and as flexible as possible. Inherent in that flexibility is the ability of the parties to a transaction to set out how the process will work for them. The bill has been very warmly welcomed by the majority of the legal profession and there have been some very positive and encouraging articles about the bill in the press and in other publications.

I firmly believe that the bill creates a light-touch yet helpful framework for a variety of transactions. We in the Scottish Government are confident that the bill will meet a clear and pressing demand from those likely to be affected by it, and we cannot overestimate the value in bringing clarity, flexibility and certainty to the law.

I move,

That the Parliament agrees to the general principles of the Legal Writings (Counterparts and Delivery) (Scotland) Bill.