 LlanToday was... to the 28th meeting in 2014 of the Delegated Powers and Law Reform Committee. There are always us members to turn off their mobile phones please. Agender item one is decision on taking business in private. It is proposed that we take items 7 and 8 in private. Item 7 is consideration of the delegated powers provisions in de la insider health US of Scotland Bill at stage 1. It is also suggested that we take further stage one consideration of the bill in private. Item eight is consideration of a draft report on the podeleoooo. The welfare funds of SCOTLAIL bill y bydd y peth comisi mortar yw i'r trofnogaeth, asti ei ffordd? Gwyddo chi'n gweithio i'n gweld i'r newid gweithredu yng Nghymru gyda'r Pethau Cymhiliad Cllid yn gweld i gweithredu cymryd? Felly rydych chi'n fath o'i meddwl gyda'r Pethau Cymryd, y bydd y cwmif嚴wch a frysgau cymryd y gweld chi'n gweld i'r gwnaeth. Ie ddim hynny'r Cymru gyd, rydych chi'n gweithredu cwmifidol byd. Rwy'r rŸi gyrffordd yn ysgolwyr, a dydy, rwy'n fygledig, a wneud weithio ddiwylliannol ysgolwyr ond mor cyllidol â'r gailus iawn eu golygu, ac yn ysgolwyr, mae'r cyfrif developer yn ysgolwyr ar gyfer, yn dweud. Aeb yw Professor George Greton, roedd y Llywodraeth Feidliad Llywodraeth ym lŸi gyda'r unedig o'u ddatblygu. Dr Gillian Black, rwy'n mae'n dechrau yn ddigwyddawodol o dros ynion i unedigol fwyllwyr, a Dr Ross Anderson, That advocate an honorary research fellow at the University of Glasgow. Good morning, one and all. Thank you very much for coming along. And I will open our question, if I may, just by asking you whether you can give us any examples, as you see it, of the practical difficulties of the inability to sign contracts in counterpart at the moment? I suppose I can speak only from my experience and practice which was 10 years ago I went on for three minutes, so I spent about half-year in commercial practice. I would repeat the evidence that you have heard already, I understand from people like Paul Halley from Sheppard and Wetterburn. I would confirm that there have been occasions where contracts which have been progressing under Scott's law, had been changed at the 11th hour, to English law to enable execution and counterpart, whether their contracts are strictly necessary, legal or not, it has been something that have happened, and I have had the experience of that in practice. Mae'r effeithdedig ond gan defnyddio'r lleol iawn i'r ffordd i gwasanaethol o'r law. Felly mae'r law rhaid bwygarent yn ystafellol y gallu'r ysgoligiaethol, mae'r law rhaid bwygarent yn ystafellol ystafellol y gallu'r ffordd i Llywodraeth, a'r act ym Mawr Ysgriforth, ond mae'n gallu Llaid Oedon a Lleodogol, a'r Llywodraeth eich Llywodraeth, rhaid i'r llaw o Gwyrraeth, everything to do with the transaction is Scottish, the parties want to execute under Scott's law, but as the 11th hour approaches, as Gillian has indicated, it becomes clear that some of the parties are not going to be available to all come to one room to sign on the dotted line. The view is taken that the easiest thing to do is to simply change the governing law clause and execute under English law. There is an issue about whether all of this is actually already competent at common law in Scotland, but the law is not clear, and the view is taken that it is more certain to change the governing law clause and do so under English law. It is a very real issue. I think that we understand that giving more certainty or indeed certainty is precisely what this bill is about, and I recommend that. I wonder if I could text you at Stevenson first, please. I just wanted to pick up on what Dr Anderson said very precisely. He used the word commonly done, and I just wanted to explore whether you could give the committee any sense as to the frequency, because the word commonly we may have individual views as to what that might mean. I just want to test what is meant by commonly. It is a very good question, which is a question that is difficult to answer. That term that I have used is to some extent deliberately vague. Let me explain what I mean by that. In my daily practice as an advocate, I am not involved in any concluding transactions at all. My experience is based on such experience as I had as a solicitor. Insofar as that occurred, particularly in the corporate world, any signatory may not be present. That was a very real issue from the very beginning of a transaction that would support the choice of English law on a matter where English law is roughly identical anyway. One can put it no more than that. It always depends on the circumstance, but everyone who has been involved in those will have had occasions when that is done. It is not infrequent and common beyond that. I am afraid that it is deliberately vague in general. I do not have statistics of it. I accept that. However, you have now put into play another question because you made reference to this happening at the outset, whereas Dr Black was in her experience specifically referring to the 11th or third change, which we have, as the committee heard about. I just wondered whether that specific at the outset would be the greater part of such occurrences or the 11th or third. Indeed, while I am addressing these questions to you, Dr Anders, it may well be the experience of others that should be brought to bear. I will just answer that point very briefly, which always depends on the facts. You may know from the outset that parties are based in Vancouver, Berlin and Cape Town, all of whom maybe Scots have just happened now to be living there. It depends. That may only come to light at the 11th or third, depending on the facts. I am content. We are in the same place. Thank you. I am wondering, then, if you could also just comment on the suggestion that we heard last week, which is that parties will actually choose the legal system that they want because of the characteristics of that legal system. My perception is that Scottish law and English law are essentially the same in many commercial areas for precisely the reasons we are aware of. To what extent does the choice of law affect the way this operates, please? In commerce, people have a tendency to choose English law. To some extent, a matter of prejudice, it is so standard. Internationally, English law and New York law are constantly chosen. I sometimes think that if the law of Scotland was dictated to us by God himself so that it was the perfect legal system, to some extent, choice of English law would carry on regardless, because of tradition and prejudice indeed, and because people do what they are used to doing. I think that if this reform were made, I do not think this is going to suddenly make a huge change, but it would make some change, because there are obviously cases where this is the particular factor that makes people opt for English law. Sometimes there are other factors as well that make people opt for English law, but this can be one of them. This would be a useful step, but it is not going to absolutely transform things. Nevertheless, it seems sensible to me. Professor Gretan, you mentioned the word prejudice there, and it certainly struck me when you mentioned it. Can you explain a bit further as to the reasoning why you used that word, please? I think that people tend to assume that English law is good law, the best law, and without really examining other legal systems. The Scots law is not the only legal system that gets squeezed in this way in favour of English law and on a global scale, New York law as well. Other legal systems as well, you know, around Europe, every legal system is getting squeezed, so it is not just an issue for Scots law. There are of course in a sense transaction costs for people to find out about different legal systems. They know about English law, they know about New York law. It takes time and trouble to find out about Dutch law or Scots law or wherever, so to that extent it is rational to that extent because it does cost money to find out about other legal systems. One cannot understand it, but I think beyond that there is a certain irrationality. People tend to think English law is good law when, in my view, on the whole, Scots law is better. It is subject to qualifications but, in general, that is my view. Just if I may test that, because Scots law obviously has sitting as a layperson two parts to it, in other words, what is defined as being a law, but then there is also the process associated with it. When you make your remark, are you perhaps pointing to superior process and perhaps the quality of the practitioners in Scotland rather than what is actually on the pages law, which I think was acknowledged in earlier contributions, is essentially the same. It is the same in effect, if not in words. I would be reluctant to comment on the comparative ability of leading practitioners in Scotland or in England. All I can say is that, in a lifetime experience, I have come across so many superb practitioners in Edinburgh and Glasgow elsewhere in Scotland, no doubt as well, but Edinburgh and Glasgow in particular. People have really impressed me, and although I have come across numerous practitioners in London elsewhere, I do not think they are any better, but I am an academic, so I am not sure I can really give a full answer to that question. I think we are going to leave that discussion there, if we may, and I am going to move us hastily on to John Scott, please. Thank you very much. Could I just ask you all for a view on what the practical and economic benefits of a new system might be for businesses in Scotland? Professor Gretton suggested a moment ago, if I understood you correctly, that it was not necessarily going to be transformative in terms of the sudden rush of business to Scotland. Is that a view that you all share? In general terms, yes, where a small system business around the world is not going to flock to Scotland just because of the way one can sign a document. However, what is crucial in this discussion is that Scotland stops exporting transactions carried out by the ordinary people of Scotland, Scottish businesses and Scottish companies relating to assets in Scotland. If we cannot persuade our own citizenry to use our own law, I think that that reflects poorly on the content of our law. To some extent, as George Gretton has already touched upon, some of the practice in this area of the law is not entirely rational. In 100 years' time, sociologists may wonder what we were doing with the scanning of pages, but that is what the market is comfortable with. The empirical evidence suggests that, without this bill, many contracts, which would otherwise be governed by Scottish law, will be governed by English law, although there is no other great connection with England. I do not know that it is going to attract business to Scotland, but it will hopefully stop some contracts being governed by English law instead. The only reason for that choice is the execution and counterpart advantage. Would you like to talk about the risks that are attached to this in terms of small-town and smaller legal practices? Do you see benefits for them? Presumably, they would be confined to Scots law and would not, whether it is local businesses. Do you see benefits in that area for them? I think that the geography of Scotland suggests that the counterpart execution may be of particular relevance to so-called small-town cases for businesses in the Highlands and Islands and the Hebrides. I am trying to get people on a cold November evening to take ferries and trains, even to Inverness. It is not easy, and one could see in Scotland in particular, in my view, considerable benefit for small-town transactions insofar as they want to avail themselves of that. That is not obligatory, but it is mainly facilitative. The previous panels suggested that the new law could be of use beyond large commercial contracts, as it would allow businesses to set up new ways of signing electronically, hence stimulating innovation. Do you see an opportunity, as academics, for new and innovative ways being developed on the back of this legislation of signing? I am not sure I have got any particular comment on that one, I am afraid. Sorry. I do not know if my colleagues have. I think that is probably, I think you have answered all the questions I have. We have heard evidence from different groups of people about the possible increase of fraud that could happen, or error, with the introduction of the signatories. Can you tell me, are you aware of any examples of fraud or error that has occurred previously using the English system? I am not aware of that in England, no doubt that does happen. Fraud can happen with our system. For instance, a few years ago, there was a solicitor in Aberdeen who substituted the earlier unsigned pages in deeds transferring property, so as to insert his name rather than that of his client. He would then register that, and he did this more than once. One can, there is a risk in these things. I do not think that the bill would increase the risk. I do not think that it decreases it, but I do not say that it is significantly increasing the risk. Dr Black. I have read the evidence that you have heard from other witnesses, and I would certainly agree that if people are interested in committing fraud or out to do so, there is certainly potential for them to do so at the moment. I would agree that it does not increase the risk, even if it does not head it off at the pass. I do not agree, for example, with the view that there is some danger of fraud lurking in this bill. That is a danger, I think, which is inherent in our present system. As George has already mentioned, if one has a pile of paper and it is only the last page of the document that is signed, one has another 250 pages that could be swapped away at will under the present hard copy wet ink system. To some extent, documents are generated in a PDF format as the master copy. Of course, no doubt it may be possible to interfere with that copy in some way, I do not know. First of all, it is a little more difficult, actually, and it will hopefully leave some sort of digital trail for litigators like me to follow-up if there is a dispute. I do not know whether we can bring Stiolus in on that, because this might be a good place for electronic signatures? Indeed, I will just make the observation. I have software that I use for quite legitimate purposes that enables me to edit PDFs as a matter of normal practice. If there is no fee for this advice, I merely say, do not rely for security on the fact that you have stuffed something in a PDF. However, let us move something of more substance and weight. Given that the whole point about electronic signatures is that it preserves the unique single possible source of the signature, which is similar to a written signature, with all the caveats that one might attribute to either of those statements, but also ensures that the signature reflects the totality of the content of the document. Why has there been thus far substantial reluctance to adopt electronics and, for the more, the ability to sign at distance, which is part of all this? Why has there been a reluctance to adopt this? Thank you. That is an excellent question. Which means it's not an easy question to answer, and is that correct? Exactly. When a student asks me a question, which I can't answer, I always say that's a very good question, the possibility of completely electronic documents electronically signed with an advanced signature finally arrived earlier this year in, I think it was, May. That is sometimes called pure or pure electronic documents with pure electronic signatures. Your question is why has that not been adopted or not been significantly adopted? Harking back to having said that's a good question, I don't know the answer. I think one issue is about the availability of advanced electronic signatures, not sufficiently widely available. Another is that it's still a bit science fiction for many people out there, including sophisticated commercial practitioners. They're familiar with paper and wet ink, they're familiar with scanning and PDFs, but the idea of pure electronic documents is I think one which they're not very familiar with. Maybe it's going to be different in 10 years' time, and maybe this bill will look pretty old fashioned in 10 years' time, maybe things will move on, will be in a pure electronic world, and that is of course more secure, or at least so the tech is, tell me that pure electronic documents are more secure. So why is it not useful? I think there's two reasons there are questions about the wide availability of advanced electronic signatures and simply that people are not used to that idea yet, it's too advanced for them, but this is me guessing, this is me guessing, I'm an academic and this is me guessing, I don't know, I haven't been out there and said to people why aren't you doing this, it's also very new because it only came in May and these things take time, to some extent generational indeed. I just met the observation Mary Queen of Scots was born in 1542 and the process that she used of single keys that no-one shared was one she used to correspond with her lovers and it's exactly that process that we're looking at here, all we're now looking at is the key is an electronic one, so in fact the concepts involved in this are at least 450 years and in the electronic world electronic signatures have been in legally enforceable use for over 30 years so if I, this is also free advice, it's time it was right. Maybe the committee should amend in the word lovers into this bill, it would certainly have a bigger impact. I feel the convener's discomfort at where we're going with this so I will. I'm wondering if I could drag us back to Margaret. Can I ask your views on the faculty suggestion last week and its oral evidence in 30 September that risks could be reduced if the parties are required to deliver entire document and counterpart that is not just the signature pages and could you also tell me would this suggestion be commercially realistic? I think we've discussed the potential for fraud at the moment, if you've got a hard copy document it's easy enough to sub in new pages or whether the whole document or just particular ones and that would remain even if you deliver the entire document which has been signed. I also have concerns about the number of documents that would be floating about if you've got four parties to the transaction that would involve the exchange of 12 counterparts and exchanging 12 signature pages is manageable, feasible, but to exchange 12 counterparts of a 200-page contract becomes incredibly uncommercial I would have thought. When I first looked to this area of the law a number of years ago it was as a result of receiving emails as the junior lawyer of signed signature pages and questioning perhaps what it was we were doing and at that time I may say that I to some extent shared the concern about whether this was really enough. My views on that have changed and they've changed because the whole essence of counterpart execution is to avoid the delivery whether in hard copy or electronic form of the whole document. Now if the committee were minded to recommend that the whole document should be transmitted one might as well put a line through the whole first section of the bill and the example that Gillian gave I think is a good one and one can multiply it easily and I was trying to just do this myself last night if one has a fairly short form share purchase agreement which is 100 pages long to which conceivably there could be say 50 signatories if there's 50 shareholders that would be a document of 149 pages. Now one starts thinking that every party must send the whole document instead of one would be at the situation of requiring about 7,500 pages or there abouts to be exchanged for just one document. Now many of these transactions will have literally hundreds of documents so again it comes a very pertinent question I think to ask of why just the signature pages but that goes to the very heart of what counterpart execution is and if the committee is satisfied with the policy or the idea of counterpart execution as done in England and much of the world to add on that additional requirement wouldn't take us much further on from where we already are which is that one can deliver whole copies of documents. I would agree. Okay thank you very much. Okay Richard do you want to carry on from my question? My question is on pre-sign signature pages. The policy memorandum states that these may be used if the party concerned clearly authorised or mandated this in advance or subsequently ratified what had been done with full knowledge or the content of the new document. Now firstly do you think that offers sufficient protection but secondly to accident isn't an issue anyway because the law firms who gave evidence in 30 September said they don't use pre-signature pages so it would be helpful to know from you if you've got experience about actually how widely these are used anyway? I would never use them and actually one questions what is one doing here and it seems to me the authorisation that's been given by a client in that situation is essentially a power of attorney to this list or to sign the document once this list is seen in the full document on behalf of the client so this use of pre-sign signature pages I confess I find odd. I think the basic principle which is contained in the policy memorandum is probably right that if one had authorisation this might be competent. I don't think many solicitors speaking from my own point of view would be willing to risk that. So why do you think it's in the bill anyway then? I mean why do we have to have this? I mean is that because there's an expectation that they are going to be used more in the future or that there has to be this is a you know a just you know a guarantee that all bases are covered in legislation or why is it there? It's a good question it may be simply to reflect some of the practices which are going on in England and again to be facilitative for cases which may arise but again one of the difficulties with transactional practice is trying to see the future for every factual eventuality and one needs an element of flexibility. Can I just add in I would agree that if the client wished to give authority to the solicitor to sign on his behalf then the existing doctrine of agency would allow the client to do that and the solicitor to do that on their behalf so I don't know that this adds anything there's already existing provision to appoint an agent to sign on your behalf if you wish to do so. Right thank you Richard I think that takes us to Stuart McMillan. Thank you. Can you tell me your views please on the likely benefits for business of the setting of an electronic document repository maintained by the registers of Scotland? It's sort of on the bill of course because the views taken that it doesn't need legislation it seems to me a good idea I would imagine it wouldn't be too difficult to set up I think the fact that it would be run by registers of Scotland will give it a credibility that wouldn't exist if it was offered in the private sector or might not exist in the private sector I think it's a good idea and I imagine it's going to go ahead register when register of Scotland got the capacity at the moment that they're doing the transition to the new land registration act and that I imagine all hands on deck for that one but once that that comes into force I think on the 8th of December once that's settled down I imagine they will turn to this and what it's specifically your question the business benefits again I'm an academic I'm totally reluctant to comment on that but I would imagine that there is a very strong potential there yep okay thank you Dr Black or Dr Anders I think it's always difficult to to know what the future holds some mentioned was made earlier of technology in the 16th century of course paper and ink has been around for a long time and has generally proved itself to be pretty useful technology and that it's durable and at the moment we have a register called the books of counselling session that has kept documents for literally hundreds of years the original and I think the idea behind the repository which in general terms I certainly support is to have some digital archive with state backing that would ensure that electronic documents were archived in a way they would continue to be accessible one difficulty of course the software and I'm not a technical person but I just speak from experience of trying to open up all documents and they won't is that software moves on and there's a very real issue of retaining the old beta max machine to watch the beta max tapes and it may be to some extent that I can see certainly major benefits to having an archive that would keep electronic documents in a form that in 100 years time they would still be readable would that be something that you would suggest that the registers of Scotland I mean surely they would keep all their documents in accessible form rather than allow them to become redundant essentially because the technology to access them no longer existed they would have to update them as time went on I fear we're straying into an area where I just lack the technical knowledge to comment further I merely highlight the issue it may be the others have something more to say well to some extent register Scotland are already there to some extent pure electronic documents are already registerable in the land register and also in the books of council session and I believe that registers Scotland that the resident techies have addressed this issue so that this stuff can be remain accessible even as the technology moves on now how they do this I don't know I'm a cyber moron but I think they have tackled this issue and we're already there we're already there so so there are already electronic documents purely electronic documents registered and if you apply for an official copy you can get it and apparently this is going to be a stable situation but so I am told thank you thank you I'm not a cyber moron for a variety of reasons I just thought it would be useful to put on the record that an essential part of an electronic repository of information of any kind which is going to endure must also require that the full details of how the data is organised and the algorithms which are used to access it are also stored in perpetuity and are publicly available free from any commercial restrictions if those tests are met then electronic repositories that endure for the long term are sustainable so for example something like PDFs that we've made referred to are actually a commercial product which can be changed by the manufacturer over time so we do need to exercise care and I think without getting involved in the technology itself I think we should be clear that if we end up doing electronic repositories we have to also deposit the means by which in perpetuity they can be accessed not the programs because the platforms the programs run on will become obsolete quickly but the algorithms and I just think for for the record do it be useful to perhaps express that thank you I think we're in your hands Mike thank you convener I just wonder if if there are any other comments on the bill and possibly the most difficult question of the lot is there anything missing from the bill that you know something that perhaps ought to be in there that isn't one or two comments I'd agree with Ross that it's unclear in scots law as to whether the bill is needed or not and my personal view is that it's not required it would be open to the parties to execute documents in this way if they wish and I do I accept that there is a lot of commercial concern about that so I think that the certainty provides is very welcome but because I think that it's not strictly speaking essential that the parties could execute documents in this way then I think it's important that this is like touch and I have two queries about the bill it's drafted at the moment and the first is what is the position where a contract does not need to be executed in this way at all and most commercial contracts would not need to be executed formally in writing at all let alone executed in counterpart but if the parties choose to do so but then fail to comply with the provisions of the act so they've opted to use the scheme available in the act but then fail to do so for some reason does that mean that their contract is not properly concluded and not enforceable even though there's no need for them to opt in but if they choose to opt in what is the position if they then fail to comply and some clarity on that would be welcome I think my other concern is with clause one sub clause three which states that on such execution the counterparts are to be treated as a single document and I think my interpretation of that would be that it creates a legal fiction that two documents or more documents become one three become one the holy trinity of contract law perhaps and I would prefer that instead of saying that three become one or two become one it would be also adequate and create less of a fiction simply say that regardless of how many parts a document is executed in it is still a valid contract so that instead of deeming several parts to be one we simply accept that it does not invalidate a contract to be executed in multiple parts so those are my two observations on the bill I have one or two and I should probably put these in in writing just for clarity at some stage but it's not on the counterpart side it's on the delivery of traditional documents by electronic means so we're talking about section four here and the provisions are drafted with contracts in mind and that makes sense but the wording covers documents other than contractual documents and I'll try to be brief I'll start with one point which is subsection six of section four although delivery by electronic means that's of a traditional document constitutes effective delivery in relation traditional document what's received by that means is not to be treated being traditional document itself which is no not perhaps immediately obvious what it means it wasn't immediately obvious to me what it means and I look back to the Scottish Law Commission report and one thing it's supposed to mean is that document as electronic limit with PDF is not itself to be registrable in for example the land register books council session and as a drafting point I thought perhaps that section could be amended to make that point quite clear because it wasn't clear to me reading this code and I think I'm a pretty good reader of statutes and I have a pretty good knowledge of the law's background but it didn't come home to me so that would be good if section six could be amended to make it not registerable and I have another point which is is this if we turn away from contractual documents to say a conveyance of land and I have a conveyance of land here and this refers to the we have a conveyance of land here and it's on two pages there's page one and there's page two and just go to page two and there are signatures there now this says that a document can be delivered section four by just parts of the if this page was faxed that will constitute delivery of the disposition but that's going to be no use to a buyer because most of the deed isn't there and secondly even if by the way they did get the whole deed they still couldn't register it because of subsection six so this project's been driven by contracts and I fully understand that and as I say I'm supportive of the bill um but I I think possibly a certain amendment would be appropriate uh to cover the point I've made but I could put this in in writing in writing of some sort yes yes I think it would be extremely helpful I will fax a PDF to you it indeed not not least of course because it would be helpful to for the law commission to be able to respond to that to us because they probably thought about that at some stage though I don't remember everything they wrote down of course thank you for those interesting observations does Dr Anderson want to just add a couple and my observations are really linked to both of the prior observations which is just to try and keep in view some of the different subjects which this bill will deal with George has given the example of a unilateral deed which may have to be registered and therefore has to be delivered in order to be effectual in terms of section four section one of the bill is directed as has been discussed in evidence you've already heard with regard to mainly commercial contracts and that takes us to the issue which Gillian has raised with regard to what if there's a mistake made and it's not executed in accordance with the bill and I think there's a couple of observations to be made about that and the first one is of course most commercial contracts don't have to be in writing at all it would be perfectly competent for the parties just to meet over a cup of tea or a strong drink to work out what it is they want to agree and for money to change hands on that basis of course if the parties have gone to the trouble of spending money on their lawyers to negotiate detailed terms for many months they want to ensure that they don't have issues about those terms actually forming part of their contract and that is why they then seek to execute the document in such a ways to benefit from the presumptions which the requirements of writing Scotland act will confer upon them namely that if it's been signed at the end of the last page it is presumed to have been signed by the grantor and then that all the terms are so incorporated if a contract does not require to be in writing however a mere failure in this procedure or any other procedure under the 1995 act doesn't necessarily invalidate the contract it just means that one is going to have greater difficulties in proving either whether the contract was concluded at all and if so what are the terms of that contract and I think that might is a very simple point to make but certainly when I listened to some of the other evidence I wasn't sure that point always always came out this bill must always be looked at in the context of the requirements of writing Scotland act 1995 and the document that George referred to for example it is a document that must be in writing that's normally unilateral and therefore requires delivery but that's a slightly different issue than the commercial contracts situation which is why for the contracts that don't need to be in writing delivery just of the signature pages is normally sufficient because there's a master copy of the document somewhere else and it's not going to be registered anywhere so that there are different issues relating to different documents which I'm not sure have always been kept fully clear thank you and that kind of takes me on to my next question which is do you agree with the general approach of the bill being facilitative rather than prescriptive it's very succinct answer it's very useful thank you okay I think that brings us all of a sudden it seems to the end of our questions is there anything that a witness would like to add at this stage clearly has previously indicated any any further thoughts in writing will be appreciated and I recognise where people sometimes want to put them in writing so they've they've got their thinking clear on a complicated subject so can I thank you very much indeed for your evidence to us and we'll briefly suspend while we change over the panel thank you can I reopen the meeting and welcome Stephen Hart who's legal counsel from the brave half investment group plc and Catherine Cawher's principal solicitor from Scottish Enterprise thank you very much for coming and I think we're essentially going to run through the same script as it were because the questions are relatively obvious and we'd just like to get some consistency in what we hear so I'm wondering whether I can start and ask you whether you feel there are practical difficulties in the current slate of scots law answers on a postcard please yeah discuss absolutely I think I think yeah I agree I think there are probably a number of practical difficulties and I see a number of legal difficulties or situational difficulties that arise as well on the practical side I think you've heard a weight of evidence that suggests that transaction sometimes outrun the lawyers that are managing them and that consideration of the location and availability of signatories can change as the transaction progresses for some deals this means that people are considering at the outset what the law needs to be applied for others it's a very much a last minute thing about availability the number of parties can present a great difficulty Dr Anderson referred to share purchase agreements which are primarily something that I have a great experience with in terms of corporate and investment agreements where we have many many parties some of whom are only subsidiary if at all actors just being shareholders of the company and and I think that those create delays and uncertainty in the transaction process I think there are some legal difficulties or situational conflicts that arise and the first is that people become a little bit wary about being bound to a contract before they want to and so that if all parties are signing a round robin document perhaps rather than a completion meeting theoretically that document becomes binding when the last person has signed it and actually the parties may not intend that to be the case that may be because there are interconditional that document is interconditional with other documents and interconditionality raises a number of issues in larger corporate transactions which having documents seemingly becoming effective at different times on different signatures can raise issues and I think I have seen situations where people are using prohibitive signatures under the requirements writing act but bizarrely leaving them undated because of this concern that having actually signed it on the 7th of October they were reluctant to put 7th of October against their signature because actually they know it's got to go round and we're not going to do the deal until the 10th so I think there are both practical and a number of uncertainties on the legal front that arise yes I suspect most of us have been in a position of signing but not dating I suspect it's the average way of buying a house actually Does Gathun Carras co-have anything to add to that? Have you any practical examples of with Scottish Enterprises knowledge of big deals as it were where this has actually had an impact on them what the current law as it stands? Well I think just to sort of echo the contributions that you've heard already that the lack of clarity around counterpart execution does pose a practical difficulty for Scots lawyers in terms of large commercial firms and large commercial contracts but also for the smaller firms so an example would be a fairly recent one that came across my desk in terms of the work that Scottish Enterprise does it was a license agreement with a US company the US is one of our biggest export markets and you know clearly we do a lot of business with the US in terms of across Scotland and is not only Scottish Enterprise but Scottish businesses and indeed we want to encourage that and in this particular example we had to to make the kind of usual apology if you like for Scots law to the US company and say I'm really sorry you have to print out the document there we can't sign it and counterpart and take the deal as done you'll need to courier that back from the US to Glasgow and we'll need to have that signed now that's the kind of practical example that is happening every day in Scotland and I'm sure Stephen has had experience of similar conversations and yeah that you know I think that this bill aims to address that in a in a positive way but just ask whether you've any comments on the on the previous evidence we've heard about the choice of law having something to do with the nature of that law and the content of that law or would you go with the previous comment that maybe people are just more familiar with English law they know what it means and you go with what you used to I would say primarily from my private practice experience choice of law can be a very early consideration in terms of the document and we do look at choice of law as a positive way there might be a number of things that affect that decision location of the counterparty or counterparties is an obvious one to be perfectly honest if they are English or if you are talking about multi-counter parties then yes there is a draw towards English law as a common standard so to speak I think commercial practice dictate or can dictate that a number of types of contract are more prone to English law whether or not it's international shipping contracts or those sorts of things that tend to be governed by that and that reflects the international standing of of English law I think there are other choices that are made which where Scott's law is the natural forum and those other situations where the convenience of execution actually does play a part in making a choice of law and that could be something that you're determining at the outset or it could be something that is a late call I do think there are complications with making a certainly a late switch from a Scott's law document to an English law document which apart from the absurdity of having Scott's parties in relation to Scott's assets executing a document under English law so that they can not meet up you introduce I think Scottish lawyers are relatively adept at using English law particularly company company lawyers I think that it was pointed out in earlier evidence that it is easier and more pragmatic for a Scott's lawyer to draft up an English law document than it is to ask an English company to instruct Scott's listeners but you do increase risks of error obviously there are differences in terminology joint and several liability or several liability might be one of those and sometimes we have oddities where you are changing the choice of law but you are keeping the jurisdiction of the courts the same so you have Scottish courts opining on English law messy in general Okay Ask Catherine from Scottish Enterprise I mean obviously it's such a multinational company I mean it's a big company Scottish Enterprise and you do deal with organisations nationwide and also all throughout the world is English law the first option for Scottish Enterprise to choose because of the ease of getting signatures on the final document Well just to clarify a couple of things in Scottish Enterprise does enter into a lot of contracts but doesn't transact in the same way as a commercial business would transact so we're not trading as such and we would always use Scottish law because we are a non-departmental public body and we have great pride in the Scottish legal system and therefore we would always look to promote the use of scots law in the business that we would do I think to sort of answer your question and also kind of touch on Mr Dawn's question just around do people look at the substantive content of the law and does that dictate their decision or is it just sort of habit and I would say to an extent from my experience it's just habit and perception that English law is more universally recognised it's a bit more practical and it's kind of a historic legacy that it's tended to become the law of commerce and I don't think that this change in this bill will necessarily make people who were not otherwise sort of connected to Scotland in some way suddenly flopped to Scotland to use scots law but it will certainly make the the messaging around scots law and the utilisation of scots law for commerce easier I think because at the moment we're in a situation where for example there's a workstream within Scottish Enterprise that's seeking to promote the scots legal profession abroad and because one of our key strengths in the UK is professional services and at UK level and at scots government level you know there's an appetite to promote professional services and legal services now in promotion of that it's it's a good message to be able to say that it's practical it's workable for business and it makes Scotland a good jurisdiction to do business in and so that brings us comfortably to to where John Scott was going to go yes indeed and the risk of asking to say the same thing twice but I mean opinion seemed to vary as to what the benefits are going to be for Scottish legal practitioners we heard from corporate lawyers last week who say this is great bring it on we also heard from others saying most recently today it would not be transformative in terms of the business and that this would bring to Scotland um what are your views on the likely economic benefits shall we say of this piece of legislation it's difficult to crystal ball gaze in any you know with any certainty but what I would say is that I think this will stop the drift of business in terms of of contractual business from Scotland I think that that that it's a fairly common event that parties either at the outset of a transaction or at the 11th hour will look to utilise the practicalities of English law around execution and and that's kind of what we're focusing on I guess at the moment is is looking at the purely it's the execution practicalities in terms of this bill and and I think that that is a very real kind of occurrence and therefore if we can stop that drift that's going to have benefits for the profession in terms of the the work that is done in Scotland and in terms of scots businesses having having the ability to to have a level playing field if you like with businesses from England and worldwide and they can they can put a a better message across to their customers that actually we can operate in a in a practical way we can accommodate your needs um so I would hesitate to say it will suddenly bring a lot of business to Scotland because I you know I'm not sure that it actually will um but I think it will certainly stop the the kind of movement of business from Scotland in terms of legal commercial contracts thank you so um in maybe dealing with that um attraction of business and the economic benefits first perhaps before maybe turning to some of the um the more generic benefits of the bill um I will let go no this is not going to make scots law the choice for international parties to transact under um it clearly stops the exporting which I think is a refrain that you've heard from many of your witnesses um and will allow the most appropriate forum to apply to contracts um the there are I guess possibilities looking ahead as we start to look at more novel ways of entering into agreements or purchasing goods as we move much more to internet internet based transactions um and the conclusion of whether or not it's clicked through agreements or um giving consent through electronic media um I will be honest I have not read and never tend to do those usual agreements that you always have to agree to before you buy something online um but of course it would actually be quite interesting to see or I would like to then hope that if scots companies who are online and selling businesses online can use scots law for their online transactions because again it would be a bit daft if we get all the way to the bottom that's um online agreement and they say and we're doing it under English law just because we're not sure um so bringing things home is fundamentally the question um I for me the benefit of the bill will be certainty because I am going to tell you that people are doing this anyway um I think that people have been working ways of getting around the strict requirements of scots law um and that we are currently undertaking transactions in counterpart with electronic delivery notwithstanding what the law currently says and I think commercial practice is already there and and this is catching up right so you would say that this is actually just the law catching up with what's already happening that's a very interesting observation and you touched a moment ago um on the suggestion that there might be opportunities for innovative use of this legislation um it was suggested last week that you know beyond large commercial contracts it would allow business to set up new ways of signing electronically which possibly you're saying we're already doing but um I didn't I I'm not necessarily advocating that it will allow scots companies to become a world leader in a new way of transacting documents um it is just that um whereas much of our content so far has been about moving from wedding to a pdf copy of that wedding document to electronic signatures um the more you the more our agreements become done online um having a law that allows those contracts to be concluded online with certainty um so it's not necessarily technological technological innovation as such. From Scottish Enterprise do you see any opportunities for innovation with this piece of legislation? I don't feel that I'm particularly qualified to to comment on that I think you inevitably businesses will as as something like this would bed in businesses would work out the things would move on things would evolve and I think we're seeing that in terms of the the approach to as Stephen referred to there even signatures and the fact that you could have an entirely electronic document that is ensigned electronically and actually exists in that in that virtual space you know these kind of innovations are happening all of the time and I think that the businesses would develop innovative solutions um but I I can't presume to predict those at this moment in time. I think um finally I think I may have already asked you this question but you don't think that the bill is is likely to attract business to Scotland which doesn't otherwise have a connection with it um you don't see that happening I mean this was this was a view put forward last week and um and we would just really like to know if you actually think it would attract business to Scotland because obviously we would be happier if it did but if the real world is that it won't we'd prefer to know. As I said I don't think it necessarily will attract businesses to Scotland that wouldn't otherwise have an interest in doing business in Scotland wouldn't otherwise have a connection with Scotland in some way um I think it will stop the drift of business from Scotland um and it will certainly I think um make parties who have that connection or desire to otherwise do business in Scotland already I think it will make them feel more comfortable about the idea of scots law because certainly what I've come across in my former life as a private practice lawyer and also since moving in house to Scottish Enterprise is that there's a general perception that there's something a bit different about scots law and it's a bit archaic and it's a bit kind of cumbersome and we don't really know the detail of it but somehow it puts us off and that kind of pervading attitude is certainly something that I've come across before and I think being able to say well actually uh you know the companies act as UK wide in the commercial sphere there's very little difference and one of the more practical differences that exist in terms of lack of counterpart execution certainty has now been removed or you know if this bill comes into effect would be removed I think that's a very positive message making people feel more comfortable around scots law but I don't think it necessarily will suddenly make Scotland as a jurisdiction you know a key jurisdiction over any other place thank you you're happy with that response thank you Margaret Just on that point I'm just sort of sitting thinking are you aware of any other countries that may use the current English law just now because of its ease of the signatories part of it? For pure choice of counterpart execution no I think different jurisdictions will choose or different parties in different jurisdictions will choose English law for a number of the reasons that we've already touched upon um counterpart is not necessarily one of them um I think it is most acute between Scotland and England because the law which applies to the rest of the transaction is actually the same thank you just really for a point of clarification after what I've heard certainly from yourselves this morning but also the previous panel just it sounds to me as if there's a there's a reputational issue that this bill seeking to address on the one hand it will stop the drift of business using English law um but that then provides an opportunity further down the line to to actually enhance and promote the scots law for these types of transactions and to me it sounds if there's a there can be a a positive outcome maybe in about five years time ten years time or whenever to actually promote the use of scots law and also the the reputation of scots law I mean we would argue at the moment that the reputation of scots law is is superb and and that we should be doing more to promote it as it exists at the moment because it has many strengths and indeed our lawyers have exposure to many areas and transactions where they develop expertise that that expertise is exportable for example our oil and gas industry in Aberdeen and the lawyers there are getting experiences that many lawyers across the world are not getting in terms of it being on their doorstep the renewables projects that are springing up all over Scotland again that's giving rise to our lawyers sometimes being among the first to encounter certain issues with various projects and to overcome those so those types of skills and experiences and knowledge already exist within the profession and and you know we have to do more to enhance those but certainly practical steps like this bill would would see happen can only enhance that that messaging and and promotion if you forgive me though that it was yourself only a few moments ago that who used the word archaic in terms of scots law yes so that that's why i was posing the questions regarding reputation absolutely and i think that that you know what i've just said there in that answer is about changing those perceptions and i think that we should and can be changing those perceptions now but i think if this sort of bill came in as well then that would help in that in that process because i think there is a misconceived idea that that somehow scots law is you know it's a separate system and people don't quite follow how you know if it's a separate system is it really different and then you have to explain commercial terms it's not actually that different across the UK and you know that's a sort of dialogue that that scots laws are having probably you know every day at some point in Scotland with international clients and i think steps such as this bill are are sort of practical steps that can help in that discussion i think there are a variety of factors which contribute to the perception of a legal system as strong or positive or weak or archaic the institutions that surround it the effectiveness of the judges and the courts the rule of law all have great contributing factors to people relying upon scots law for example as a forum in which they can get decisions that are not necessarily correct but that the decision making process is a solid foundation on which they can conduct their commercial activities there are other things which contribute to a feeling that scots law may be a bit behind the times execution and counterpart maybe one small part of that if we look at maybe the way that we plead our litigation hearings use of latin the way that some of the property transactions have been done historically seem quite tethered to i mean it is not too long ago since property lawyers abandoned traveling drafts with colored ink and i'm sure you will probably still find those around in various places so this is one small part of how you present your legal system okay i'm just wondering if we could move on to a moment please on the issue of fraud and error yeah i mean obviously as you're saying previously being using this system with other clients how do they feel initially when you ask people to sign the signature sheet and basically trust the lawyers to make sure that all the other pages it could be like we've said a hundred hundred fifty pages are all accurate and correct how do i know i've been asking about yourselves about the sort of the fraud aspect of it but i'm sort of thinking how do the business people actually feel about quite happily signing this sheet of paper and feeling confident that what they're actually signing is what they're actually going to get um i would hope that on one level um you have a question about trusting lawyers and trusting your own lawyers um trusting that you know the paperwork is there we're talking about maybe human error as well from the point of view um error and human error exist and will continue exist to exist um with a paper document it is still possible and in fact still probable that you will find manuscript amendments throughout the document with little initials by them so we are producing paper documents that have typographical errors or address changes already in them um i would like to think that um employers should or should be able to take confidence in their own uh in-house counsel to put the bits of paper on the on the table that reflect um that institutions um will and what about the sort of the fraud aspect of it i mean have you came across any examples of where this has actually happened or have you heard of any examples of where it's happened i think that the um i would echo the evidence that's already been given to the committee that you know the potential for fraud and for error exists at the moment i don't think this bill is going to eliminate that or indeed open the door to a to a greater extent um you know if people wish to be fraudulent they will find ways to be fraudulent um i think those that that the English system has operated on this basis for a number of years and i'm not aware of any particular problems on that front i think that there is the issue of the trust between clients and lawyers indeed regulated by a host of professional duties um that that a solicitor is subject to and engagement letters etc and therefore when a client would be asked to sign a signature page they just think of the convenience of that and they're usually quite happy with that because they trust that that you know that the proper document will be executed in that way and i mean finally asked a question as well about risks possibly being reduced if the parties are required to deliver the entire document and counterpart not just the signature page uh what's your views on that from a sort of practical commercial point of view as kathryn said there are a number of things which can mitigate risk um your professional advisors ethics codes good practice which the law society may promote uh technology can all reduce in terms of faculty of advocates um suggestion that principal copies of documents should be transmitted from or delivered from one part to the other um i think that it is no longer that common to find a bound engrossment in the same way that we did a number of years ago because the first thing that you do is take off the binding put it through the scanning machine so documents are primarily circulated unbound in any event um as evidence earlier indicated um if we have dozens of parties to a transaction who are each sending um 100 120 pages to each other at which point the in our bills suggestion the nominee um can collate all the signature pages and put you know 99 pages back into the shredder i would say that that seems a bit of an environmental waste and a practical inconvenience yeah that's fine thank you i would echo that i think that if we are looking to enhance the practical application of the law in terms of the conclusion of contracts and the ease with which that's done it it would not make sense to then say well someone has to actually then send back an entire document um what i am aware of in england is that the law society following the mercury case um suggests that there is an option um and it's not it's not obligatory but there's an option where a solicitor could send a pdf of the final document along with a separate pdf attachment of a signature page to a recipient the recipient would only have to print off the signature page sign that but when they return the signature page they just essentially ping back by way of email that the pdf of the final document that that was attached to the email that sent the signature page to them and that's one of the options that the law society of england and wales suggests following that mercury case as a way of of sort of matching up the signature page with the final document but again you know i don't think that that's particularly convenient for clients um and i think that that perhaps strays away from what we're trying to do with this bill which is to enhance the practical uh the speed with which and the ease with which contracts can be concluded i would say that actually um i alluded earlier that parties were already using English law mechanisms to transact under scott's law um and the mercury format of replying to the email including the execution form of the document here is the signature page to which uh here is the my signature page and the document to which it relates um has become more complex thank you thank you very good anything to it let's say excellent thank you anything to it yes just on the issue of uh pre-sign signature pages there's um provision in the bill for those those seem not to be very widely used at all for what we can gather i mean do you have any views on their use and whether the provision in the bill is there for appropriate um Mr Hardin if you've got a particular perhaps might be best directed to you i um i think what you have commonly heard which is that it is best avoided um is i think probably the default scenario i do not want to be obtaining pre-signed um signature pages um way in advance of transaction having said that um commercial organisations can be affected by the availability of signatories or indeed the timing of the transaction um it may be that having negotiated and broadly agreed um the terms of a document that the engrossment version is not quite ready yet we are still arguing about a point we are waiting to hear back from a third party um time is progressing um my board is unavailable or will shortly become unavailable um there is an implicit trust um that the document that i approve for signature will be the document which we as an organisation may wish to enter into um there are times in which i may take the opportunity to benefit from that provision of the bill by obtaining a pre-signed signature page pardon me i think it's just worth making the point i don't think the bill actually specifically allows of that but nonetheless it is effectively allowed in law if it becomes practice so i think that's why we were discussing the issue um does does Catherine want to i would just say that i i don't think that they are widely used that practice is widely used in scotland and indeed i i don't it's certainly something i don't particularly feel comfortable with as a as a practice um and um you know yeah i think i think that's probably prevalent across the profession that it's just somewhere that we don't go and because of it it's probably seen as one step too far in terms of flexibility okay i think we've probably covered that in which case i think i'm on to stupid minute please thank you um what are your views on the likely benefits for a business of the setting up of an electronic document repository maintained by the registers of Scotland um i think that i can i can see the attractiveness of that as a suggestion because um i think having a central repository uh for these documents would give a sense of security to to the parties where perhaps charging one solicitor or the other um in a particular transaction to retain those documents might not give that same level of security to the other party um there's also the questions of practicalities for individual solicitors firms in terms of size of storage required and length of time for which in terms of which those documents would have to be retained and so i think i can see the merit in the in the suggestion of of a central repository i think even the sort of questions that would need to be answered would be around independence of that repository funding of that repository staffing who would be responsible for it um i've seen suggestions in some of the commentary around um the registers of Scotland taking that on um i think that that that you know that's something that could be explored um the registers of scotland are primarily a land register and primarily sort of linked to scotland and so i think that if we were utilising or looking to um create a repository for international contracts for example we would need to work out i guess how that fits with registers of scotland's role and we met as a scottish registry for property transactions and you know perhaps how that would send morph into something that was perhaps wider than that if they were to take responsibility for it so these are the kind of questions that i think would need to be answered but as a concept i can see the the merit in it um i i see a superficial attraction i think that it is a potentially expensive technological solution to a problem that does not really exist in terms of the current practice have there been any um at the many kind of major examples or any um examples on a regular basis whereby um a legal firm has maybe um misused um the legal documentation that they were actually saving and storing um so in order for me also this particular suggestion to have a an independent organisation as a repository i mean you said it was a superficial attraction but has there been any examples of misappropriation or misuse under the current system? I think that again i noticed in some of the evidence that's been given previously to the committee that the point was made that within the draft bill it refers to the parties instructing um a nominated person to retain the relevant documentation so i think that's a key point that actually even if party A instructed party solicitor to destroy a document or to to face a document or to do something with that document that solicitor could not do that because he's been charged by both parties to retain it for the for their benefit and on their behalf so and i think the bill anticipates that sort of and seeks to head it off that sort of issue but i think in reality it's certainly something that i've never come across that's the heart no no i'm not aware of any situation okay thank you a little legal firm goes out of business how do you access this yeah what these things happen you know what actually would happen then if that firm actually held all these documents electronically somehow what would happen how could people then access those documents again at a later date i mean you get hard copies in the answer is i don't know um i would um have to defer to the law society of so do you think then maybe the idea of having a sort of central point where these electronic documents would be stored independently could be an option i can see the merit in it as a suggestion i think there's quite a lot that would have to be worked through in terms of you know funding for that staffing for that responsibility for that body updating of documents you know if if you register a document in 2010 or whenever um well i guess if we look forward in 2018 you know and then the parties change that how is that process managed whereby that copy would be updated that it's quite labor intensive etc so there'd be all these questions to be worked through but certainly i can see the merit for the reasons that that you've touched on there that can i just thank Margaret for introducing that idea i think we as a committee perhaps ought to take the advice of the law society as to how that particular situation is handled can i bring in student women it falls on from that as well just if there was a small firm um that that was tasked to actually maintain or to store these these records um and the and not so much the business went uh i went into receivership but the people decided to just stop trading they wanted to retire what would actually happen with those documents because that's not i mean i think i'm going to stop you there i think i think we're going to take some specific advice on that okay i don't don't think that's fair for for this panel to be honest unless they have any particular comment which i don't think they have right i'm wondering though in the context though whether i could just pursue something about which i really have no idea how long does the average commercial transaction really need to be held on to and let me just put that in context i mean clearly if somebody buys some land they hold it forever until it changes and one can see that as being open-ended the average commercial contract or even the long commercial contract extends beyond 50 years ever 20 25 perhaps or building building under i mean so i'm just wondering whether there's a real need for something to be around for a very long time and i think mr stevenson might well well i'm asking the witnesses first okay sorry i mean you're um clearly it will depend on type for example um a drug patent licence um will exist for the duration of the patent um a an investment agreement um the principle terms of the investment will actually be concluded um straight away the nature on which the shareholders arrangements are governed will continue until those shareholders change them um so they're new in contracts which other than the purchase of land which really could be seen as going on for a very very long time and therefore holding on to the original document might actually be fair in some cases where you don't want to change it correct because now what one of the issues that i don't know is whether or not your electronic repository um and the digitisation of that document allows for the destruction of the original so that you because otherwise you're doing two things you're holding an original in a safe for 25 years and you have the electronic version so duplication there is also a panel from bridges scotland to to come so some of this is to fast you do you still want to come in i know i was just going to make the rather obvious one because it's topical in light of what we'll be debating this afternoon that if the documents related to the insurance of various properties in relation to claims that are now being made for misothelioma were not available in perpetuity they'd be difficult positioning the many commercial operations in particular the railways depend on legislation and contracts that are some in the oldest cases approaching 200 years old et cetera so i think it's beyond per adventure you need to keep them forever makes the point um we now perhaps get to electronic signatures to is there anything you want to say on that in the context please uh yeah i'll just make the observation i pay mr google one pound 68 a month for my 100 gigabytes of cloud and all my documents live there and the electronic keys are available to people after them did so it can be done for 1.68 a month 68 a month we'll see what we get to put electronic signatures i just wondered whether this bill that's before us and the form it's likely to have at the end of our deliberations helps or hinders the adoption of electronic signatures instead of paper and ink my view is that the initial impact of the bill will be reflective of current practice and the wetting signature of a paper document which is then scanned and used to conclude the nature of the transaction um um like mr stevenson i have experimented with digital certificates on pdf's um i would say that the greatest barrier currently is common adoption or the fact that you can lead as much as you want but if nobody else is using a key then it becomes relatively pointless um so and the other thing about maybe electronic signatures is whether or not we're talking about the conducting practitioner who is overseeing the transaction or whether or not it is each individual's signature of a document so in company law terms whether or not each director uh the company secretary um are all using their different keys or i would just push on this since the the whole business a key of course there's a key pair a public key which anyone can use to verify the signature and the private key only available to the person who signed and i just wondered in that context whether it would be useful if the public key which is available to everyone to verify were to be part of what's held in an electronic repository such as might be provided by the registers of scott so that at least while the while the ability to sign a new might be lost if the private key is mislead there's an enduring availability of the public key to verify the electronic signatures that's protected probably gone as far as we're going there and i think we've probably got some mic please thank you convener um i just wondered if either of you have any other comments on the bill or whether you feel there's been anything that's been missed out of the scope of the bill that could be useful included don't think so at this stage i think that the aims of the bill are are use of admirable in the sense of they're trying to address a specific problem and achieve a specific outcome and and to do that within a relatively short period of time which i think is an admirable ambition and i think that there may be other areas in in due course in terms of scots law that that might be looked at i think some of that was referred to in earlier evidence given to the committee um around perhaps electronic signatures around delivery around these sorts of concepts but i don't think that the i think that there's nothing missing from this bill i think this bill achieves or seeks to achieve a a practical and very useful outcome and and you know i think to to bring in contemplation of anything else that would would over complicate at this stage thank you um i think i have maybe three points to make in relation to um the bill and possible absences um the first um the the bill allows for counterpart documents to be held under delivered until the parties agree that it is delivered and i think it would be helpful that traditional documents signed by all the parties could be held under delivered until it is agreed by the parties to deliver it and it would seem a little bit odd of that and if katheryn and i have signed account parts of documents that we can agree to postpone delivery but if we sign the same document that it is being delivered at that time um my second point would be that um while i applaud the use of the nominee structure um that the more implicit that is um the better i think if parties adopt formal appointment of a nominee letters then it is just another piece of paper that and another formality which is perhaps unwelcome now whether or not law firms would introduce them into standard terms and conditions is a separate question but um when agreeing to that nominee a relatively informal appointment should suffice or indeed the fact that lawyers acting on behalf of parties might be deemed to be that nominee um and my third point would relate to what i would say a completed counterpart um having executed a counterpart and exchanged them and indeed the transaction having concluded um there is sometimes a a natural abhorrence of empty spaces on the on the page um and under English law and practice it might not be uncommon for the recipient to actually complete that counterpart and they might do that for a couple of reasons one would be so that they had one whole copy of the document um it might be so that if they needed to induce it in evidence in court they had at least a copy that signified there that they were bound to the document um with the use of probative signatures um what we might have a counterpart by definition in the bill uh is not executed by all the parties so the process would presumably assume that the counterparties sign and they may sign uh in a probative manner i i've signed this on the 7th of October uh we intend it to be delivered on the 10th of October we exchange Catherine may arrange for se to put their signature on things so that they have their own version and that might be done on the 17th of October um the transaction date is actually already passed but um i suppose i would find it important to assume that the counterpart at the time that it was delivered was effective and that putting a signature on it um by the or the recipient putting a signature to it didn't somehow not make it a counterpart yeah thank you for the detailed observations which i'm sure others will address mike do you yeah and just one final question convener um do you agree that i mean the general approach of the bill is to be facilitative rather than prescriptive do you agree with that general approach i agree yeah thank you thank you very much indeed right we have had some interesting suggestions this morning it's a very detailed ones which we'll have to get other people to look at i'm looking at my colleagues who seem to be finished so can i thank you very much both of you john sorry father suggest that's i'm sure nagel meant to and not suggesting that you should have but um if you any observations you want to put in writing or if you want to outline your proposals there most recently expressed in in writing then that would be helpful should you yeah thank you can i thank you very much for your evidence to us and we'll suspend briefly again just to let the witnesses change over thank you convening thank you very much now my pleasure to welcome christopher kerr who's the head of legislation and legal policy and christopher sorry and kenny crawford who's the commercial services director at the registers of scotland thank you very much for waiting gentlemen and thank you very much for the fact that you will have heard much of the previous evidence which is probably going to help the process that follows and i think our questions are started by mike mckinsey thank you convener and it's probably addressed to mr crawford um i wonder if you could just for the benefit of the committee outline the um how the books of consultation operate and practice and what benefit it offers to commercial parties and what type of documents are commonly registered in it yes i'm probably better handing initially straight over to chris who's a legal legal expert here no problem yeah the books of counseling session at the moment is a paper-based register you can record in it all sorts of deeds really minutes of agreement which most normally refer to family law matters i would say leases quite often are recorded in their securities standard securities are often as well as being recorded in the property registers are recorded in the books of counseling session and all manner of other deeds as well um the reason or the reasons are twofold i think for recording in the books of counseling session the first is preservation of the deed and that's simply a safe repository and you can achieve from it an extract which has the evidential status of the original and the second is execution which where the deed includes some sort of obligation typically a monetary obligation an extract from the books of counseling session has the effect of a court decree and it allows you to do summary diligence based on the deed without having to go to court um my next question then following on from that is section 13 of the bill allows counterparts to be treated as a single document signed in probative form and if necessary that that document can then be registered in the books of counseling session as a collated version of one counterpart plus the various signature pages in a written evidence the keeper suggested that dealing with these new collated documents would only involve a minimal amount of retraining on the part of some staff but you know as the could you confirm that that that that that would be the only requirement on r.s. I think so yes i think that's right um the the books of counseling session is it is a fairly straightforward register to run um it's not like the property register or the land register in particular where the keeper has to take some sort of view on the effect of the documents um all that the keeper would typically check or the keeper staff on our behalf would be that the document required um is executed in an appropriate manner um so there would be some retraining in order to ensure that staff understood the new rules of execution um or that this was a valid way of now executing a probative writ um and then they would record it in the usual manner okay thank you very much good morning gentlemen um in the written submission from the keeper um setting a response to the call for evidence uh the keeper states that uh i understand that the scottish government intend to turn to this aspect of the scottish law commission report uh in due course and i'll be happy to come back to the committee with further detail on what the register of scotland may provide once we have looked at the detail of any system and sought further views from colleagues in the scottish government and our customers this was regarding the electronic document repository and so i'm keen to ask certainly whether that there actually has been any further detail on this comment on whether it can be it can be expanded in the current state of players regards to the electronic document repository the um the focus has very much been on getting our systems ready for the implementation of the land registration scotland act with designated date coming up on the 8th of december so that's where we've spent most of our time in terms of it development the next phase of that beyond that date we'll be looking at our digital strategy including replacing new systems and introducing new systems that will improve the conveyance and process um i think the intention there is that we beyond designated look at the systems we have and what we might introduce and certainly this recommendation would be one of those systems that we reconsider Mr Kerr, do you have anything to add to that? Not really, other than that we haven't had any more detailed discussions with colleagues in scottish government as i think perhaps your last panel demonstrated there isn't either we think a clear view amongst the profession about whether this would be useful and if so whether a register of scotland would be the appropriate body to run it so at the moment we've not really got any clarity from on that Do you think that there aren't any benefits of setting up an electronic repository for legal documents as opposed to the current paper based system? I think that the only real evidence we have of that is obviously the system automated registration of title to land that we use currently which is an electronic system that allows for simple transactions to be done online using a digital signature and while the uptake of that hasn't been as we anticipated it has dealt with over 90 000 transactions securely so we can see evidence that there is a desire to move in that direction there's also conversations going on with the law society in terms of what they do in the future and convincing with their smart cards and so yeah you can you can see benefits of having a repository that people can use where if it's raws then it's independent it's held by the keeper so it's trusted and there's obviously the resilience of r.o.s we're not likely to go out of business we've been doing this for almost 400 years so we've got a track record okay certainly in terms of the some of the evidence that we've received up to now that's been the issue of the scope of any type of repository and also in the slc report and that suggests that that other repository could be used for both negotiation and legal documents and the registration either for the preservation or the preservation and execution and it's also suggested that the system could potentially be used by non-scotish parties potentially globally and so do you have any thoughts on what the likely scope of a repository actually could be or should be? I think for a repository to be used or for an electronic repository to be used for execution as well as simply preservation would require legislative amendment to the underpinning legislation for the books of council in session so I think what you'd be talking about there essentially would be creating an electronic aspect of the books of council in session rather than a simply a standalone electronic repository whereas if it was purely for preservation then I think potentially you could have a repository without underpinning legislation whether it is only for Scottish parties or could be more international I don't think we would really have a view on that other than to say that you know we would happily quote it and register it if the market and if customers wanted it Mr Crawford, do you have anything to add? No no no Another area that's been considered has been the issue of specifications over a repository and we also heard from previous panels this morning regarding some of those issues but also in the SLC report indicated that any repository must be completely confidential secure and designed in such a way that all documents relating to the to the transaction are clearly linked and marked and also durable for the long term i.e. future proofs of the software included in that of course and do you have any thoughts on on any of these points or do you have any we'd like to comment on on any of them again it's not something we've explored yet the registers the 17 registers obviously that the keeper holds currently are open registers so that would be a departure from where we are at the moment and something that we would have to do a lot of research to understand what what people were looking for and what's required to put that together but as I say it's not it's not something we've investigated so far I mean certainly I'm I'm not a technical boffin by any manner of means but in terms of the issue that was raised earlier regarding software I mean but with the work that the software that's already out there I'm I'm quite sure that that particular area could well be looked at and will be sorted out and future proofed so that any documents can be looked at and 50 years time 60 years time mean certainly we are aware that there are exchange repositories available at the moment which are confidential so I agree with you I think it is something that technology can already provide I just wondered if registers of scotland were aware of and perhaps working with the national library of scotland to her by the sounds of it a little bit ahead of you in terms of electronic storage and long-term preservation of documents because it superficially would seem to me there might be overlap at technical and practical levels albeit the job being done would be quite different and I just wondered if that collaboration is there not that I'm aware of we we do work with the national records office and as I said earlier we are exploring the the digitisation of the convincing process end-to-end convincing process so that's something that again we we would like to look at in the future okay thank you very much so just one other point that has been raised certainly in evidence but also by the slc wasn't the issue of over repository and and a fees and charging structure certainly the slc had indicated that that any repository if it were to be set up would not be set up to make a profit and that the charging structure should only cover the costs of the setting up and the running of the facility and they also suggest that the charges should be based on a on a fixed fee per document and not for example on the value of all the documents and so just wondering if you have any thoughts on on what the slc have suggested and also on any of the evidence that you've heard and also read her to now and as I said earlier you know we've not explored that but ross is a trading fund so it's funded through the fees that we charge for the various services that we provide so we would have to look at the various business models and we do provide statutory and semi statutory products which obviously recover the cost of what we do so you know it's something that we look at to come up with with a pricing model okay okay thank you thank you very much indeed I think that deals with that aspect relatively swiftly but grateful again for your attendance and for the evidence you have been able to provide to us because this is something in the future and as we're all aware not immediately in the bill and I think that's fine so may I thank you again briefly again to spend the meeting just to allow our witnesses to to leave in an orderly fashion and then we'll deal with the rest of the agenda thank you thank you thank you all that brings us to agenda item 3 which is instrument subject to affirmative procedure no points have been raised by our legal advisors on the road traffic act 1988 prescribed limits scotland regulations 2014 draft is the committee contempt with this instrument please agenda item 4 is instrument subject to negative procedure the south aran marine conservation order 2014 ssi 2014 to six zero there has been a failure to observe the requirements of section 28 two of the interpretation of legislative reform scotland act 2010 the instrument was commenced the day after it was laid meaning the requirement to leave a minimum of 28 days between laying and coming into force has not been complied with committee may however wish to find the Scottish Government's explanation for this breach to be acceptable does the committee agree to draw the instrument to the Parliament's attention on reporting ground j as there has been a failure to observe the requirements of section 28 two of the interpretation legislative reform scotland act 2010 does the committee agree however to report that it finds the Scottish Government's explanation for this breach to be acceptable thank you no points have been raised by our legal advisors on the town and country planning control of advertisements scotland amendment number two regulations 2014 ssi 2014 249 nor on the legal aid and assistance by way of representation fees for time at court and traveling scotland regulations 2014 ssi 2014 257 is the committee content with these instruments please thank you gender item five is instruments not subject to any parliamentary procedure no points have been raised by our legal advisors on the children and young people scotland act 2014 commencement number three order 2014 ssi 2014 251 is the committee content with this instrument please yep gender item six the courts reform scotland bill the item of businesses consideration of the delegated powers provisions in this bill after stage two members will have noted that the Scottish government has provided a supplementary delegated powers memorandum and will have seen the briefing paper stage three consideration of the bill is due to take place this afternoon the conclusion the committee must therefore agree its conclusions today does the committee agree to report that it is content with provisions in the bill which have been amended at stage two to insert or substantially altered provisions conveying powers to make subordinate legislation or other delegated powers thank you we are that completing agenda item six i now move the meeting into private thank you