Property (Digital Assets etc) Bill [HL]

Third Reading

12:48:00

Motion

Moved by

That the Bill be now read a third time.

My Lords, I would like to provide an update on the territorial extent of the Bill. The focus of the Bill is on clarifying personal property law, which is devolved to Northern Ireland. I am pleased to confirm to the House that the Northern Ireland Assembly has granted consent for the Bill’s extension to Northern Ireland. I beg to move.

Motion agreed.

12:49:00

Motion

Moved by

That the Bill do now pass.

My Lords, it is a pleasure to speak to this Bill, which colleagues will know has undergone extensive scrutiny by the Special Public Bill Committee since its introduction in September. The Bill underscores our commitment to fostering innovation, both now and in the future. It supports our efforts to ensure that the jurisdictions of England and Wales, and of Northern Ireland, remain at the forefront of jurisdictions globally, providing a flexible legal framework for digital assets that can react to their dynamic nature and to technologies not yet imagined or created. By modernising the law of personal property, it will enable more efficient dispute resolution by removing the need for courts to discuss questions around categorisation. It will also attract international businesses to use these jurisdictions and promote economic growth. I take this opportunity to thank those who have engaged with and supported the passage of the Bill, starting with the noble Lord, Lord Anderson of Ipswich, who chaired the Special Public Bill Committee. He expertly led us through some very nuanced and technical issues, and I also thank the committee’s clerk, Matthew Burton. That leads me on to thanking the other members of the committee, the noble Lords, Lord Bassam, Lord Cryer, Lord Shamash, Lord Sandhurst and Lord Holmes, the noble Viscount, Lord Stansgate, and, last but not least, the noble Lord, Lord Clement-Jones. I am certain that each has found the process as fascinating as I have, and I enjoyed playing a part in ensuring that our law continues to be fit for purpose in an increasingly technological world. I give particular thanks to the noble Lord, Lord Holmes, who raised many interesting areas for the committee to consider and helped to ensure that the Bill passes through the House of Lords in its best possible form. I must also thank the Law Commission, which undertook two extensive consultations as part of its project on digital assets. In particular, I thank Laura Burgoyne and Chris Long, who did an excellent review that helped the Government make a fully informed decision to take the Bill forward. I also thank my private office—Melissa Leonard—and the Bill team: Bill manager Harry McNeill-Adams, Susannah Keogh, Alicia Love and Jonathan Fear. I am hugely grateful to all those who contributed to the evidence collected by the committee, both written and verbal, and ensured that the committee could fully assess the Bill and that the best possible version of it is going to the other place. The result of these efforts is a simple but elegant Bill. It will support our efforts to remain a pre-eminent jurisdiction, with English and Welsh law and Northern Irish law being the global law of choice. It will signal that the UK is a leader in innovation and technology. It is important that the Bill passes into law as quickly as possible, so we can capitalise on this. We pass this Bill on in excellent condition, and I hope that it can complete its passage and become law as swiftly as possible. I beg to move.

My Lords, as the noble Viscount, Lord Stansgate, who is not in his place but currently on the Woolsack, said on Report, the two clauses of this Bill fully reflect neither the nearly 1,000 pages of learning that the Law Commission produced on the subject of digital assets, nor the almost equal volume of written and oral evidence received by the Special Public Bill Committee, variously approving the Law Commission’s approach and characterising the Bill as pointless or even dangerous. That the Committee, which I chaired, was able to consider these issues and debate them out with a degree of thoroughness in the Moses Room prior to a further debate, largely thanks to the noble Lord, Lord Holmes, on Report, is a tribute to our clerk, Matthew Burton, and all members of the committee—including not least the Minister—whose collective expertise was remarkable. My only remaining concern is that, since the committee was entirely lacking in female members, it is entirely possible that we have succeeded in missing something obvious. The work of this House is now complete. I was delighted to hear just now that the Bill has been endorsed in Northern Ireland, and I wish it well on its onward journey.

My Lords, first, I congratulate the Law Commission for its work on this Bill. The noble Lord, Lord Anderson, has mentioned the almost 1,000 pages of work from the Law Commission, its consultation paper, the final report, the supplemental report—no one accused the Law Commission of a lack of thoroughness as far as this two-clause Bill is concerned. Its purpose, as it said, was to ensure that the courts can respond sensitively to the complexity of emerging technology and apply the law to new fact patterns involving that technology. It also said: “We conclude that the flexibility of common law allows for the recognition of a distinct category of personal property that can better recognise, accommodate and protect the unique features of certain digital assets (including crypto-tokens and cryptoassets). We recommend legislation to confirm the existence of this category and remove any uncertainty”. As the noble Lord, Lord Anderson, has explained, we have thoroughly examined the resulting Bill under the Special Public Bill procedure, and it clearly fulfils that purpose, so I would like to thank our witnesses. I also thank the noble Lord, Lord Anderson, for his excellent chairing of the committee; our clerk, Matthew Burton; the Minister, of course; my fellow members for all their work on the Bill; and I agree with the Minister’s particular thanks to the noble Lord, Lord Holmes, for his stimulating and provocative input into our deliberations. But, as ever, there is more work to be done. The Law Commission recommended that the Government create a panel of industry experts who can provide guidance on technical and legal issues relating to digital assets, and I understand that the Ministry of Justice has asked the UK Jurisdiction Taskforce, an expert group chaired by the Master of the Rolls that produces non-binding guidance on areas of legal uncertainty, to take forward this work. The Law Commission also made recommendations to provide market participants with legal tools that do not yet exist in England and Wales, let alone in Northern Ireland, such as new ways to take security over crypto tokens and tokenised securities. It recommended that this work be undertaken by a multidisciplinary project team. Whether the Minister can give us an update today, I do not know, but I very much hope that he will write to members of the committee, because that is unfinished business and it would be very useful to hear from the Minister about it.

My Lords, it is a pleasure to follow my friend, the noble Lord, Lord Clement-Jones. In doing so, I declare my technology interests as set out in the register. Like other noble Lords, I have, rightfully, a long list of thanks, not least to all those witnesses who gave oral and written evidence to our Special Bill Committee; to Matthew Burton, our clerk, and all his team; to the Minister for his careful and thoughtful engagement, and all his officials; and not least to the noble Lord, Lord Anderson, for his excellent chairing of our Special Bill Committee. This is a short Bill, but one with significant impact for the UK, and indeed beyond our shores, because through our legislative process, the world is watching what we do in this space. We have a great fintech tradition in this country, a great fintech ecosystem, and whether it is financial market infrastructure, dematerialisation of our capital markets or crucially important financial inclusion, digital assets have a critical role to play. With some trillions of the UK and world economy due to be transacted by digital assets by the end of this decade, the UK needs to ensure that it is well set for this future. The Bill does this through non-prescription, but using the great good fortune of English and Welsh common law, with its agility and its adaptability, as the Minister rightly said, for new technologies not yet even imagined. It was an extraordinary pleasure to be part of this legislative process. My only question for the Minister is whether there is a schedule yet in the other place, so we can ensure that Bill becomes law as soon as possible. Not only does it send a signal to the world; it sends a signal to all those involved in digital assets in this country that with the financial centre of London and our fantastic fintech start-ups, scale-ups and larger businesses, London and the United Kingdom is an excellent place to be involved in digital assets business.

My Lords, this was indeed a fascinating Committee in which to participate. I have no doubt that this effectively one-clause Bill will make an important contribution to the development of the law in a fast-developing field and assist judges and litigants in ensuring that necessary protection is given to activities and things in the digital sphere—including those as yet unimagined—which might otherwise fail to be protected. It is important for fintech, as we have heard, and it is very important for the City of London in retaining its place in the financial world in which we live. The evidence we heard from interested parties, not just lawyers, raised a body of issues which took some digesting, and my noble friend Lord Holmes raised important questions. However, under the clear and thoughtful guidance of our distinguished chair, the noble Lord, Lord Anderson of Ipswich, we found, with little disagreement, that—apart from a small change to the Bill’s title—we should leave it well alone. The Law Commission is to be congratulated on its hard work and on reducing a vast body of material to this very crisp Bill. We found it small but perfectly formed. In all this process, we had the inestimable help of the committee clerk, Matthew Burton, to whom I am most grateful, not least for his excellent summary of the evidence and issues to help our final deliberations. It is with no hesitation that we on this side commend this Bill and hope it will be passed swiftly.

My Lords, I am glad that the Bill has the support of all noble Lords who have spoken. I note that three Whips are sitting in my presence, and I am sure they will have heard the comment from the noble Lord, Lord Anderson, on the lack of female members of the committee and will see whether we can do better next time. I will write to the noble Lord, Lord Clement-Jones, on his questions, as I am unable to answer them right now. The noble Lord, Lord Holmes, asked about the schedule. I also cannot answer that question, but I suspect it will go down very soon. If there is any update, I will provide it to him. I conclude in the spirit of agreement and endorse the point made by the noble Lord, Lord Sandhurst, that this is a small but perfectly formed Bill, but it will have one hell of an impact. We want to make sure that it makes the best possible impact. I beg to move.

Bill passed and sent to the Commons.