Seòmar agus comataidhean

Thank you very much, convener, and good morning, committee. It is nice to join you this morning.

Thank you for the opportunity to discuss the LCM on the Electronic Trade Documents Bill. As you will be aware, the Government is committed to ensuring that Scotland is a successful trading nation, and we want to create the best possible conditions for our businesses to operate within.

One way of doing that is by harnessing advances in technology, so we are committed to taking advantage of technology-based improvements and to modernising trade processes and practices for Scottish enterprises and, in doing so, delivering benefits for the people of Scotland. It is therefore vital that the Scottish legal system is tailored to helping us to realise those ambitions, to providing a competitive platform on which our businesses can operate and to supporting the businesses of tomorrow that we want to create and ensuring that they are adapted to the modern world.

The Electronic Trade Documents Bill is designed to do just that. It brings trading processes into the 21st century by giving electronic documents used for trade purposes the same legal standing as paper documents. That simple and commonsense measure will immediately remove burdens for businesses that choose to operate in a more digital way and will create a more streamlined and modern trading system—something that Scottish businesses should be able to take advantage of in the future.

The bill has been brought forward by the Law Commission of England and Wales in recognition of the fact that this area of law is in need of reform. Not only has there been significant engagement with Scottish legal and academic stakeholders, but the bill has gone through an expedited process at Westminster, given its highly technical and uncontroversial nature. We, as a Government, therefore support and welcome the bill’s policy intentions, which align squarely with our ambitions for the future of the trading landscape in Scotland.

I should say that, unfortunately, despite our views on the bill’s policy intentions, the Scottish Government could not support it as introduced, due to the drafting of the delegated powers. As drafted, the bill conferred powers on UK ministers to make secondary legislation in areas of devolved competence and gave them the ability to, for example, unilaterally disapply parts of the bill’s regime in Scotland in devolved areas, so that paper documents would once again be needed. UK ministers would be required to consult Scottish ministers, who might express concern or disapproval but could not prevent the UK Government from legislating in devolved areas. Therefore, the Scottish Government has spent considerable time defending the interests of the Scottish devolved institutions and negotiating with the UK Government to secure amendments to the bill.

The process has been constructive, although it has also been a lengthy one, which led to a delay in lodging the LCM. I apologise to the committee for that delay. I stress that my officials and I recognise the important role that the committee plays in the LCM process. With the benefit of hindsight, had we known that it would take so long to conclude the discussions with the UK Government, we would have lodged an LCM much earlier.

I am pleased to report that amendments to the bill have now been tabled by the UK Government and we anticipate that they will be voted through in the coming days without any concerns being raised. Yesterday, therefore, the Scottish Government was able to lodge a supplementary legislative consent memorandum with the Scottish Parliament, recommending consent to the bill on the basis of those amendments. I am hopeful that those developments will enable us to secure the benefits of the bill: modernising our trade processes and delivering benefits to Scottish traders, those who trade with us and the economy overall.

Once again, I thank the committee for its time. We will do our best to answer any questions.

Yes, and the bill has been amended to give delegated powers to Scottish ministers to intervene and act in devolved areas if they think that they have a reason to do so.

Thank you.

That is what we anticipate and what we have been assured of by the UK Government. I will, of course, undertake to keep the committee informed should anything arise in relation to that.

The main sticking point was the lack of recognition of the ability to give Scottish ministers delegated powers in devolved areas. That was, in essence, ignored so that UK ministers could override and intervene in devolved areas. Members will all be aware of examples where, for many other pieces of legislation, that has occurred much more controversially and with much more political argument. In this situation, we are dealing with law reform, and the reason why the bill has been expedited in the House of Commons is that Law Commission of England and Wales recommendations in relation to law reform are uncontroversial and technical. That is the background.

In the bill, there is a list of documents that are affected. I am just working through my papers to find the list—I thank David Barnes for handing it to me. In clause 1(2), there is a list of examples, which include

“a bill of exchange ... a bill of lading ... a ship’s delivery order ... a warehouse receipt ... a mate’s receipt ... a marine insurance policy ... a cargo insurance certificate”

and so on. Perhaps, from a legal perspective, Chris Nicholson would like to comment on how wide the list will go.

Private transactions are devolved but, clearly, a lot of this interacts with reserved areas. It is a very complex area because it has been built up over hundreds of years of commercial trading. One of the key points in supporting the LCM is that, if we were to get into an argument over what is devolved and what is reserved, we could be here for years. It would mean untangling hundreds of years of commercial trading to ascertain exactly what is reserved and what is devolved. That is why the bill recognises customs that have built up over time—custom and practice. As I said, Chris might want to talk about the technical detail.

We support the policy aim of moving towards electronic trading, and the bill sets the course for that to be legally possible. That is why we support it.

The bill will give Scottish traders the right to use digital when they want to—it will give them the choice. At the moment, the law says that, generally, the documents have to be on paper.

All legislation has to be looked at on its merits, and—as I said in my opening remarks—this is a technical and uncontroversial issue, because no one thinks that it is a bad idea, in this day and age, to move to electronic trading from paper, given all the benefits of that. However, we clearly know that there are disputes in other areas, so each bit of legislation has to be treated on its merits. In this case, we are pragmatic and open to compromise. The amendments from the UK Government are not perfect, but they are good enough, and for that reason we were content to lodge the LCM.

That is a good question, and I cannot give it a clear answer because we do not know how the negotiations would have gone if we had lodged the LCM at the time. What we are trying to convey is that it has been an extraordinary length of time. We could perhaps have envisaged a successful outcome to allow us to have lodged an LCM to give the committee the opportunity and an appropriate timescale to do its work. However, with the way that things have transpired, we are content to support the bill and lodge the LCM.

In answer to your first question, yes, we will do our best to learn lessons. The background is that we are dealing with a technical, uncontroversial bill, but there are issues of concern within it. There were constructive negotiations in order to sort that out, but that took some time to achieve. Clearly, we need to strike a balance between the fact that the bill is uncontroversial and technical and the concerns that we have. However, given that the bill was generally uncontroversial and not about the most highly political issue in the world, perhaps we could have just launched the LCM earlier in anticipation of negotiations being successful.

I am interested to hear that the Conveners Group has been discussing a kind of interim LCM. That could provide a potential solution in such a scenario.