Hansard

I genuinely welcome the opportunity to speak on behalf of the Delegated Powers and Law Reform Committee on the Legal Writings (Counterparts and Delivery) (Scotland) Bill, which is, of course, of particular significance as it is the first to be known as a Scottish Law Commission bill following changes to standing orders last year that provided that certain SLC bills might be referred to the Delegated Powers and Law Reform Committee.

The Scottish Law Commission plays a vital role in recommending reforms and in updating and improving Scots law. However, until recently the implementation rate of the commission’s proposed bills has been low. The new process, which we are undertaking for the first time, will allow such bills to be given the consideration that they deserve and will allow important reforms to be implemented.

I pay tribute and give my thanks to the parliamentary staff who, a couple of years ago, did the background work that considered whether we should change our standing orders. I also pay tribute to Christine Grahame, who of course is the convener of the Justice Committee, and Bruce Crawford, who was the Government minister responsible at the time, for providing the political impetus that enabled us to change the standing orders to ensure that SLC bills go forward.

We must do what we can to ensure that Scottish law is up to date and competitive. During the passage of the bill, it has been interesting to see what other jurisdictions have been making of this process. I believe that some of them might even be envious of the process that we now have in the Scottish Parliament.

I thank all those who provided written and oral evidence on the bill. In addition to receiving written submissions, we heard from legal, business and academic representatives over five oral sessions. The detailed evidence that was received was greatly appreciated by the committee.

As the minister says, the bill has two key provisions: that execution in counterpart should be clarified as being a valid process in Scots law; and that paper legal documents should be deliverable, in the legal sense of the word, by electronic means. Execution in counterpart is the process by which documents can be given legal effect by each party signing separate but identical copies of a document rather than the same single physical document. The bill seeks to remove the current uncertainty as to whether that is a valid way of creating legally effective documents in Scots law. In providing for the delivery of paper legal documents by electronic means, the bill aims to resolve any doubt as to whether a document is legally effective if it has been faxed or emailed rather than delivered by traditional means.

Evidence to the committee suggested that there is widespread support for the provisions among the legal, business and academic sectors. The current system for signing contracts under Scots law is generally considered to be inefficient and burdensome, with parties having to go to great lengths to ensure that a single document is signed by them all. To achieve that, they must organise signing ceremonies whereby all parties are required to gather at an agreed place at an agreed time in order to sign a single document. Alternatively, the document is sent to each party sequentially for each signature to be attached one by one.

By making it clear that documents may be executed in counterpart under Scots law, and by allowing for traditional documents to be delivered electronically, the need for such procedures is completely removed. It therefore follows that the process for agreeing a contract may be much more efficient and straightforward, as each party can simply sign their own copy before delivering it to the others.

In the committee’s view, one of the main benefits of the bill is its potential to increase the number of contracts that are made under Scots law. The committee heard that a perceived inability to execute documents in counterpart often leads parties who would otherwise have drawn up their contracts under Scots law to state within a document that it will be governed by another legal system, such as the English legal system, allowing them to avoid processes such as the aforementioned signing ceremony.

Many witnesses argued that, by providing for execution in counterpart, the bill could lead to an increase in the number of contracts that are contracted under Scots law. However, we should not get carried away about that. The bill is unlikely to bring an influx of contracts to Scotland from those who would otherwise have no reason to use Scots law. Parties choose which law will govern their contract for a variety of reasons, and the committee also heard that English and New York law are dominant internationally and will, in all likelihood, continue to be so.

For some, however, the inability to execute a document in counterpart is the determining factor in their choice of law. The committee heard examples of contracts that were switched to English law at the 11th hour when it became apparent that all parties would be unable to gather together to sign a single document. It could be argued that, by allowing for execution in counterpart, the bill will encourage such parties to use Scots law rather than switch to another form of law. The committee therefore considers that the bill has the potential to stop the drift away from Scots law of contracts that would otherwise have been made under our law.

In addition to assessing the potential benefits of the bill, the committee considered its potential challenges. In its evidence to the committee, the Faculty of Advocates suggested that the bill’s provisions could lead to an increase in the incidence of fraud or error. The faculty was particularly concerned that the bill allows parties to exchange signature pages as opposed to whole documents. It considered that that would increase the likelihood that the content of the document could be altered.

The faculty’s view was not, however, shared by other witnesses. Having considered all the evidence, the committee was not persuaded that the bill will lead to an increase in the incidence of either fraud or error. In reaching that conclusion, the committee took account of the lack of evidence of instances of fraud or error in other countries in which execution in counterpart and electronic delivery of documents are already commonly practised. Further to that, the committee noted the existing safeguards that are in place in our law to both prevent and deal with fraud and error. At the same time, the committee encourages the Scottish Government to continue to ensure that the potential for fraud and error is accounted for and to consider how such risks could be reduced further.

The committee therefore recommends that the general principles of the Legal Writings (Counterparts and Delivery) (Scotland) Bill be agreed to.

Thus far, the new system for implementing Scottish Law Commission bills appears to be working well. I agree with the minister on that and am grateful for his comments. I look forward to the continued progress of the bill and to scrutinising further bills under this welcome process.