- Committee
- 10:31 am
- Clause 1: Objects of personal property rights
- Amendment 1
- 1: Clause 1, page 1, line 2, leave out from first “thing” to second “is” Member’s explanatory statement This probing amendment seeks to remove the parenthetical reference to “digital or electronic” things.
- My Lords, both amendments in this group are tabled in my name. Before I speak to them, as chair of the Special Public Bill Committee on this Bill I express my thanks on the Committee’s behalf to our dedicated staff, notably our hard-working clerk, Matthew Burton, and to all those who went to the trouble of submitting evidence to us. We received almost 50 written submissions from industry, legal practice and academia and we heard a dozen witnesses in oral evidence sessions, in addition to the Minister who did double duty, not only as a Committee Member but as a witness. We are grateful to all of them and in particular to Professor Sarah Green, who took this project through the Law Commission and who, although she no longer works there, gave oral evidence to us on the Law Commission’s behalf on not one but two occasions.The extensive preparatory work of the Law Commission, evident in its 529-page consultation of July 2022, its 283-page final report of June 2023 and its 70-page supplementary report of July 2024, has been translated into a Bill of just two clauses. However, short as it is, the Bill could not be described as uncontroversial. Most of the industry bodies and some of the practitioners and scholars who gave evidence to us support the Bill in its current form or with amendments. Others, for example the Commercial Bar Association and Chancery Bar Association, think it unnecessary and that it serves no useful purpose. Yet others considered it, for a variety of reasons, to be positively harmful. Some thought that crypto assets should be denied the status of property; others thought that the Bill should be confined to crypto assets; yet others suggested ways in which the wording of the Bill could be improved. Though it is not the function of a Committee such as this to report in writing, and though we are conscious of the extremely thorough consideration given to precisely these issues by the Law Commission over several years, we owe it to our witnesses to show that they have been heard.
- My Lords, it is a pleasure to follow the noble Lord, Lord Anderson of Ipswich. In doing so, I declare my technology interests as set out in the register, not least as adviser to Ecospend, Members Capital Management and another that has temporarily slipped my mind but is on the register—it will come back to me and I will mention it as I go along. I thank the noble Lord, Lord Anderson, for his expert and excellent chairmanship of the Committee. It was a pleasure to be part of the Special Public Bill Committee and to work alongside many Members who will be speaking today.As has already been set out, hundreds of pages of evidence and hundreds of pages of reports from the Law Commission—I thank Professor Sarah Green for her work on this—have been boiled down to one of the shortest Bills that will come before Parliament this Session. Ultimately, in all of those hundreds of pages we find ourselves coming back to a small number of questions and principles. To gain perspective, it is worth going international for a moment, if I may, and to seek analysis of the approach that has been taken by other jurisdictions. We have seen action in Gulf states and areas of the Asia-Pacific, but probably most relevant to our considerations today is the approach that has been taken by the European Union and its MiCA legislation on this subject.I raise this at this stage because understandably the EU in its jurisdiction takes a particularly prescriptive approach and comes up with a new definition for crypto assets, which will obviously have to form its way through all the processes and be developed through those channels. It is why I believe that these first probing amendments are particularly helpful, because they go to the point of assessing whether we want to introduce new concepts into the Bill or whether we want to have a principles-based approach to digital assets, which I think this Bill can effectively do, with potentially some amendments.
- My Lords, I will make a few brief remarks now so that I do not have to repeat them if I stand up at any other stage. I am not a lawyer, and I have found the experience of being on this Committee extremely interesting. I thank the staff—our clerk in particular—and all the people who gave evidence. It has been an eye-opening process to see the sheer amount of evidence collected in the course of the Law Commission’s initial report and the work that we have had to do as a special Committee. Indeed, when I pressed “print” on my desktop printer in the House to print out the evidence, I had to follow that by ringing up the attendants to get new toner for the printer, because it is vast. I have not brought the evidence that we have all got, but it is a huge amount. For that reason, I am particularly grateful that it has been simplified for us in the way that it has by our clerk and so on. We have also listened to a great deal of evidence, which has been very interesting.Amendment 1 has an element of a simplicity about it—removing the words in brackets—but I am somewhat agnostic on this point. On some of the other amendments, I am not so much, but I am interested to hear what the Minister has to say. After all the work that has been done on the Bill, and given the views we have heard in favour and against some of the amendments that we will discuss this morning, I am not yet convinced that this is necessary. I therefore look to the Minister to persuade me that it may be best to leave the wording as it is originally.
- My Lords, I also thank our staff, particularly our clerk Matthew Burton, and all the evidence givers, particularly Professor Sarah Green, as the Chair indicated. I also thank the Chair himself, who has helped us through what has been an extremely interesting experience. The last Law Commission Bill that I sat on was pretty uncontroversial—there was not a great deal of evidence—but this one is wholly different, and we have had to weigh the evidence. Certainly, in considering these groups, I think that many of us have had to think quite carefully about the balance of argument between the different parties who have given evidence. I also thank the Chair for how he has tabled these probing amendments at this stage, because they tease out the key issues that we need to consider.Broadly, we need to consider whether the whole Bill is fit for purpose. I was very grateful to the noble Lord, Lord Holmes, for his introduction. I add only that it is quite important that we look at the US situation and Article 12 of the Uniform Commercial Code in terms of controllable electronic products. This attempts to do the same for classifying digital assets, and we need to consider whether the Bill fits not only the European and other jurisdictions but the US and the various states now adopting the Uniform Commercial Code.I am with the noble Viscount, Lord Stansgate, on this set of amendments. There are considerable arguments for it and some against it, but I probably favour the status quo. Unintended consequences are an argument that some use, saying that, in the phrase “digital or electronic”, “digital” refers to the information while “electronic” refers to the device, which may cause confusion. Bills are often about signposting, and I feel that both the Title and Clause 1 are useful for that. The whole purpose of the Bill is to start giving clarity to digital assets, so I believe that they are not misleading but useful signals.
- 10:45 am
- My Lords, I also thank Matthew Burton and the clerks who have been involved in this behind the scenes. I am not in favour of this amendment. The way the Bill is drafted is very simple: by reading it, you understand exactly what it is about. Taking these words out widens it and makes you think, “What other kinds of property are there?”. We are talking about electronic and digital assets, which are the very essence of what the Bill is about, and removing that seems to me the wrong route. With respect, I certainly would not support this amendment.
- Like I others, I am grateful to our Chair, the noble Lord, Lord Anderson of Ipswich, and to our admirable clerk, Matthew Burton, who has made what would have been an impenetrable task not straightforward but much less difficult.On these amendments, I am of the same view as the noble Lord, Lord Shamash. The Title and the “digital assets” description open the door to make it clear that we are now including things that might not otherwise have been covered. That is important. They might have been covered but there might have been doubt, and this makes it clear that they are covered where they do not fit comfortably, or indeed at all, into the two traditional descriptions of a thing—a chose—in action or in possession. But it does not close it down; it simply says that it includes that. These things are already being dealt with in practice, in banks, financial institutions and the like. So I would leave the description—that will apply when we come to that—and Clause 1 exactly as they are.As we look at this, we all have to remember that, while not infallible, the Law Commission produced a very long report, having spent three years looking at this and taking its own evidence. Although it is not infallible, it understands the law. It understands the common law, and we would be bold—I will say no more than that—to second guess it.
- My Lords, I, too, thank Matthew Burton and other people who have facilitated the passage of the Bill through Parliament so far. I also thank our Chairman. We have been lucky to have such an effective Chairman, who has guided us through this whole process. As we have just heard, a huge amount of evidence has been submitted to the Committee and, although the Bill is small, it raises issues of principle and practice. It is also very future-looking, which is an important part of it and one reason the Government are keen that it should be passed in its current form. I also thank the people who have given evidence to the Committee. I know that Committee Members have found their contributions insightful and thought-provoking, and they have greatly enhanced the Committee’s understanding of the issues at hand and the quality of the debates that we have had and will have today.These amendments look to remove references to specific classes of things that the Bill seeks to apply to—“electronic” and “digital”. These changes were suggested by the City of London Law Society, which suggested that this wording be removed to reflect that the Bill is about personal property rights and not digital assets specifically. The noble Lord, Lord Anderson, is quite right to draw attention to the fact that this Bill is not restricted to electronic or digital things. However, the current wording of the Bill already makes it clear that it is not prescribing what things would fall under the Bill. These amendments would not change that in practice.Furthermore, the current drafting of the Bill includes the terms “electronic”, “digital” and “digital assets” to reflect the fact that digital things are likely to be the main type of asset that this Bill is concerned with at present. While there is nothing in the Bill to restrict it to these specific types of things, the Law Commission considered that, on balance, it would be helpful to include these terms to give context to the Bill. This is because these are the types of assets most likely to engage the Bill in the short term. The Government agree with this assessment.
- I thank all noble Lords who have taken part in this short debate. Many warm words were exchanged, but I think that it is fair to say that not many of them were reserved for this amendment. It is absolutely right that the amendment should have been tested in the marketplace of opinion and the conclusion reached by the Law Commission, certainly on the balance of this debate, is that there is no great appetite for overturning this.The noble Lord, Lord Clement-Jones, made an interesting point about signposts. It put me in mind of a comment on the Bill from DECaDE, the Centre for the Decentralised Digital Economy. It said:“While as a restatement of the law its function is mainly symbolic, it sends important signals: to the judiciary that extensive rather than restrictive interpretations are encouraged, and to the technology sector that innovation and experimentation, within reason, is rewarded.”Perhaps we are looking here at a signal or a signpost, which is not entirely out of place. In any event, I beg leave to withdraw Amendment 1.
- Amendment 1 withdrawn.
- Amendment 2
- 2: Clause 1, page 1, line 2, at end insert “and has never been” Member’s explanatory statement This probing amendment seeks to give the Bill retrospective effect.