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Banking Bill

Clause 39: Foreign property Amendment 73 73: Clause 39, page 18, line 31, at end insert— ““( ) If it proves impossible or impractical to make the transfer effective as a matter of foreign law, other than by reason of the actions or omissions of the transferee, the Bank of England shall ensure that the transferee suffers no disadvantage thereby.”” Amendment 73 adds a new subsection to Clause 39, dealing with foreign property, which is the subject of a property transfer instrument. In practice, I am sure that foreign property transfers will throw up many practical problems, and I recognise that Clause 39 tries to deal with them comprehensively. In particular, both the transferor and the transferee are required to do whatever is necessary to complete the transfers by virtue of subsection (2). The costs of completing transfers are for the transferee’s account under subsection (5). But the question posed by my amendment concerns what will happen if, despite the best efforts of all the parties, particularly the transferee, it is not possible to transfer the foreign property. Perhaps the property has been confiscated or transferred under draconian powers existing in a foreign country similar to the powers contained in the Bill. In any event, if the property cannot be transferred to the intended transferee, what will happen then? My amendment says that the transferee should suffer no disadvantage and that the Bank of England should ensure this. The disadvantage could involve incurring legal and other costs in trying to achieve the transfer, or challenging whatever obstacles have been placed in the way of the transfer in the foreign country. The inability to transfer some property might also involve more extensive problems. For example, the non-transfer of intellectual property might render a foreign business non-viable and it would not then be right for staff or any related assets or rights to be transferred to the transferee. I know that the Minister will not like the suggestion that the Bank should shoulder the responsibility to see the transferee right. I have suggested this because the transferor may be long gone, completely dismembered by the Bank under the bridge bank provisions, and the residue dealt with by insolvency law. There will be no one to turn to unless the Bank had held back some of the proceeds of the transfer against future problems. In a commercial transaction where there is doubt about the ability to give legal effect to some aspects, it would be normal to take a range of warranties and indemnities, often backed by money held in escrow or by other forms of security or guarantee. If the Bank will not stand behind this—my amendment suggests that it should stand behind such measures—I invite the Minister to say how the Government see transfers which involve uncertainty working out in practice. Will the property transfer instruments contain provisions that match warranties and indemnities in commercial deals or will this be dealt with in some other way and, if so, what other way? It seems to me that it cannot be right that the risk of non-completion of a transfer is left wholly on the transferee. I beg to move.