States Meeting Transcript - 22/10/2008

STATES OF JERSEY OFFICIAL REPORT

WEDNESDAY, 22nd OCTOBER 2008

COMMUNICATIONS BY THE PRESIDING OFFICER ......................................6

1. The Bailiff :..............................................................................6

1.1 Senator F.H. Walker (The Chief Minister):..............................................6

APPOINTMENT OF MINISTERS, COMMITTEES AND PANELS..........................6

2. The Bailiff :..............................................................................6

1. Senator F.H. Walker :....................................................................6 The Bailiff :....................................................................................6
2. Deputy A.D. Lewis (The Minister for Home Affairs):....................................6

PUBLIC BUSINESS – resumption ...............................................................6

3. Draft Employment (Amendment No. 4) (Jersey) Law 200- (P.142/2008) ...............6

1. Senator P.F. Routier (The Minister for Social Security):.................................7

1. Deputy G.P. Southern of St. Helier:......................................................8
2. Deputy R.G. Le Hérissier of St. Saviour:................................................8
3. Senator P.F. Routier (The Minister for Social Security):.................................8

The Deputy Bailiff :............................................................................9 Deputy R.G. Le Hérissier (Health, Social Security and Housing Scrutiny Panel): ..............9

2. Senator P.F. Routier: ....................................................................9 The Deputy Bailiff :............................................................................9
3. Senator P.F. Routier: ....................................................................9

1. Deputy R.G. Le Hérissier: ...............................................................9
2. Senator P.F. Routier: ....................................................................9 The Deputy Bailiff :............................................................................9

4. Draft Income Support (Special Payments) (Cold Weather Payments) (Amendment) (Jersey) Regulations 200- (P.144/2008)..................................................10

4.1 Senator P.F. Routier (The Minister for Social Security):................................10 The Deputy Bailiff :...........................................................................10 Deputy R.G. Le Hérissier (Health, Social Security and Housing Scrutiny Panel): ............10

5. Draft Foundations (Jersey) Law 200- (P.143/2008) ....................................10

1. Senator P.F.C. Ozouf (The Minister for Economic Development):......................11

1. Deputy R.G. Le Hérissier: ..............................................................12
2. Deputy R.C. Duhamel of St. Saviour:..................................................12
3. Deputy G.P. Southern :..................................................................13
4. Deputy I.J. Gorst of St. Clement:.......................................................13
5. Senator P.F.C. Ozouf :..................................................................13 Mr. T.J. Le Cocq Q.C., H.M. Solicitor General:..............................................14 Senator P.F.C. Ozouf :........................................................................14 The Deputy Bailiff :...........................................................................15 Deputy G.P. Southern (Chairman, Economic Affairs Scrutiny Panel) ........................15

2. Senator P.F.C. Ozouf :..................................................................15 The Deputy Bailiff :...........................................................................16
3. Senator P.F.C. Ozouf :..................................................................16

1. Deputy G.P. Southern :..................................................................17
2. Deputy P.V.F. Le Claire of St. Helier : ..................................................17
3. Deputy R.G. Le Hérissier: ..............................................................18
4. Deputy I.J. Gorst : ......................................................................18
5. Senator P.F.C. Ozouf :..................................................................19 The Solicitor General:........................................................................19 Senator P.F.C. Ozouf :........................................................................19 The Deputy Bailiff :...........................................................................21

4. Senator P.F.C. Ozouf :..................................................................21 The Deputy Bailiff :...........................................................................21
5. Senator P.F.C. Ozouf :..................................................................21

1. Deputy R.G. Le Hérissier: ..............................................................21
2. Senator P.F.C. Ozouf :..................................................................21 The Deputy Bailiff :...........................................................................22

6. Senator P.F.C. Ozouf :..................................................................22 The Deputy Bailiff :...........................................................................22 The Deputy Bailiff :...........................................................................23
7. Senator P.F.C. Ozouf :..................................................................23 The Deputy Bailiff :...........................................................................24
8. Senator P.F.C. Ozouf :..................................................................24

1. Deputy I.J. Gorst : ......................................................................24
2. Senator P.F.C. Ozouf :..................................................................24 The Deputy Bailiff :...........................................................................25

6. Draft States of Jersey (Powers, Privileges and Immunities) (Scrutiny Panels, P.A.C. and P.P.C.) (Amendment) (Jersey) Regulations (P.145/2008)..........................26

1. Connétable D.F. Gray ofSt. Clement (Chairman, Privileges and Procedures Committee): .........................................................................................26 The Deputy Bailiff :...........................................................................27 Deputy C.H. Egré of St. Peter (Vice-Chairman, Corporate Services Panel):..................27
2. The Connétable of St. Clement:........................................................27

1. Deputy F.J. Hill of St. Martin : ..........................................................27
2. Deputy G.P. Southern :..................................................................27
3. The Connétable of St. Clement:........................................................27 The Deputy Bailiff :...........................................................................27

7. Draft Prison (Amendment No. 6) (Jersey) Law 2007 (Appointed Day) Act 200- (P.146/2008)..............................................................................29

7.1 Deputy A.D. Lewis of St. John (The Minister for Home Affairs):......................29

1. Deputy F.J. Hill of St. Martin : ..........................................................30
2. The Connétable of St. Helier:...........................................................30
3. Senator J.L. Perchard:..................................................................30
4. Deputy C.J. Scott Warr en of St. Saviour:...............................................30
5. The Deputy of St. John:................................................................31 The Deputy Bailiff :...........................................................................32

8. Draft Boats and Surf Riding (Control) (Amendment No. 28) (Jersey) Regulations (P.148/2008)..............................................................................32

1. Deputy A.J.H. Maclean of St. Helier (Assistant Minister for Economic Development - rapporteur):.............................................................................32

1. Deputy G.C.L. Baudains of St. Clement : ...............................................33
2. Deputy R.C. Duhamel: .................................................................33
3. The Deputy of St. Martin:..............................................................33
4. Deputy R.G. Le Hérissier: ..............................................................33
5. Deputy S. Power of St. Brelade : ........................................................34
6. Senator P.F.C. Ozouf :..................................................................34

7. Deputy P.V.F. Le Claire of St. Helier : ..................................................34
8. Deputy C.J. Scott Warr en: ..............................................................35
9. Senator B.E. Shenton (The Minister for Health and Social Services):...................35
10. Deputy A.J.H. Maclean:.............................................................35 The Deputy Bailiff :...........................................................................36 The Deputy Bailiff :...........................................................................37

2. Deputy A.J.H. Maclean: ................................................................37

1. Deputy R.C. Duhamel: .................................................................37
2. Deputy S.C. Ferguson of St. Brelade : ..................................................37 The Deputy Bailiff :...........................................................................38

9. Draft Amendment (No. 33) to the Tariff of Harbour and Light Dues (P.149/2008)...38

9.1 Deputy A.J.H. Maclean (Assistant Minister for Economic Development - rapporteur):.39

1. Deputy R.C. Duhamel: .................................................................39
2. The Deputy of St. Martin:..............................................................39
3. Senator T.J. Le Main (The Minister for Housing): ......................................40
4. The Deputy of St. John:................................................................40
5. Deputy S.C. Ferguson:..................................................................41 Senator T.J. Le Main: ........................................................................41 Deputy S.C. Ferguson:........................................................................41
6. Deputy D.W. Mezbourian of St. Lawrence : ............................................41
7. The Connétable of St. Ouen:............................................................42
8. Deputy P.V.F. Le Claire: ...............................................................42
9. The Connétable of St. Helier:...........................................................43
10. Connétable D.J. Murphy of Grouville :...............................................44
11. Deputy C.J. Scott Warr en:...........................................................44
12. Deputy S.Power:....................................................................44
13. Senator P.F.C. Ozouf : ...............................................................44
14. Deputy J.B. Fox of St. Helier : .......................................................45
15. Deputy G.W.J. de Faye: .............................................................46
16. Deputy P.N. Troy ofSt.Brelade:....................................................48
17. Connétable P.F.M. Hanning of St. Saviour:..........................................48
18. Senator J.L. Perchard: ...............................................................49
19. Deputy A.J.H. Maclean:.............................................................49 The Deputy Bailiff :...........................................................................54

LUNCHEON ADJOURNMENT PROPOSED..................................................55 The Deputy Bailiff :...........................................................................55

LUNCHEON ADJOURNMENT................................................................55

PUBLIC BUSINESS (continued)................................................................55

10. Plémont Holiday Village Site: Negotiations for Purchase (P.152/2008)................55

10.1 The Connétable of St. Ouen:............................................................55

1. Deputy K.C. Lewis : .................................................................56
2. Deputy J.A.N. Le Fondré of St. Lawrence:..........................................56
3. Deputy C.J. Scott Warr en:...........................................................56
4. Deputy A.E. Pryke of Trinity : .......................................................56
5. Deputy J.B. Fox:....................................................................56
6. Connétable G.F. Butcher of St. John : ................................................57
7. Senator P.F. Routier:................................................................57
8. Deputy J.A. Martin of St. Helier:....................................................57
9. Connétable S.A. Yates of St. Martin:................................................58
10. Senator P.F.C. Ozouf :..............................................................58
11. Deputy J.J. Huet of St. Helier : .....................................................58
12. Senator J.L. Perchard:..............................................................59
13. Deputy R.C. Duhamel:.............................................................59
14. Deputy A.J.H. Maclean:............................................................60
15. Deputy G.W.J. de Faye (The Minister for Transport and Technical Services): .....61
16. Connétable T.J. du Feu of St. Peter:................................................63
17. Deputy G.C.L. Baudains:..........................................................63
18. The Deputy of St. John:............................................................63
19. Senator F.H. Walker :..............................................................64
20. Deputy P.V.F. Le Claire: ..........................................................65
21. Senator F.E. Cohen (The Minister for Planning and Environment):................65
22. Senator S. Syvret:..................................................................65
23. Deputy S.C. Ferguson:.............................................................66
24. The Connétable of St. Ouen:.......................................................66

The Deputy Bailiff :...........................................................................67

11. Waterfront Enterprise Board: Appointment of Director (P.153/2008)................69

11.1 Senator F.H. Walker (The Chief Minister):.............................................69

12. Jersey Community Relations Trust: Appointment of Chairman (P.154/2008)........69

12.1 The Deputy of St. John (The Minister for Home Affairs):..............................69

1. Deputy S.C.Ferguson:..............................................................70
2. The Deputy of St. John:..............................................................70 The Deputy Bailiff :...........................................................................70

13. States Members' Remuneration Review Body: Appointment of Members (P.155/2008) ...........................................................................................70

Senator S. Syvret:............................................................................70 13.1 The Connétable of St. Clement (Chairman, Privileges and Procedures Committee):....70

1. Deputy R.G. Le Hérissier:...........................................................71
2. The Deputy of St. John:..............................................................71
3. The Deputy of St. Martin : ...........................................................72
4. Deputy J.G. Reed of St. Ouen : ......................................................72
5. Deputy C.J. Scott Warr en:...........................................................72
6. Senator M.E. Vibert (The Minister for Education, Sport and Culture): ..............72
7. Deputy P.N. Troy :...................................................................72
8. Deputy J.J. Huet:....................................................................73
9. Deputy G.W.J. de Faye: .............................................................73
10. Deputy G.P. Southern :.............................................................73
11. Senator S. Syvret:..................................................................73
12. Deputy G.C.L. Baudains:..........................................................74

13. Senator P.F.C. Ozouf :..............................................................75
14. Deputy J. Gallichan of St. Mary:...................................................75
15. Senator P.F. Routier:...............................................................75
16. The Connétable of St. Clement:....................................................75 The Deputy Bailiff :...........................................................................76

14. Jersey Heritage Trust: Appointment of Chairman (P.156/2008)......................77

14.1 Deputy C.F. Labey of Grouville (Assistant Minister for Education, Sport and Culture - rapporteur):.............................................................................77

1. Senator M.E. Vibert :................................................................78
2. Deputy S.Power:....................................................................78
3. Deputy G.W.J. de Faye: .............................................................78
4. Deputy P.V.F. Le Claire:............................................................78
5. Deputy G.C.L. Baudains: ............................................................79
6. The Deputy of Grouville : ............................................................79 The Deputy Bailiff :...........................................................................79

15. Jersey Financial Services Commission: Appointment of Commissioner (P.151/2008)79 Senator B.E. Shenton:........................................................................80

Senator F.H. Walker :.........................................................................80 [Debate proceeded in camera] ................................................................80

ARRANGEMENT OF PUBLIC BUSINESS FOR FUTURE MEETINGS ....................80

16. The Connétable of St. Clement (Chairman, Privileges and Procedures Committee):....80

1. Deputy P.V.F. Le Claire: ...............................................................80
2. Senator P.F. Routier: ...................................................................80 The Deputy of St. John:......................................................................81 The Deputy Bailiff :...........................................................................81

ADJOURNMENT................................................................................81

The Roll was called and the Greffier of the States led the Assembly in Prayer.

COMMUNICATIONS BY THE PRESIDING OFFICER

1. The Bailiff :

A press release is going out this morning but I should like Members to be amongst the first to know that the Queen has approved my request to be permitted to retire from the office of Bailiff and that I shall be retiring at the end of June next year. By that time I shall have been in office for nearly 15 years and I have decided that the time is right to make way for my successor. This is not the time for fond farewells, not least because I shall be here for another 9 months [Laughter] but I should like to say that presiding over the States has always been stimulating [Laughter] and mostly very enjoyable too.

1.1 Senator F.H. Walker (The Chief Minister):

Could I just very briefly respond to your own statement. As you have said, this is not a time, thankfully yet, for fond farewells but I think I should say that it has mainly been a pleasure to have you presiding. [Laughter] [Approbation] The time will come for others to make more official goodbye speeches at the right time but I am sure I speak for every Member when I thank you for informing us in advance of informing anyone else, and thank you for the unfailing courtesy and dedication you have shown to us, the States Members, throughout your time in the chair. Many more fitting tributes will be made at a later date but there is a warm sense of gratitude to you, and a great appreciation for everything you have done for the States and, of course, for Jersey. [Approbation]

APPOINTMENT OF MINISTERS, COMMITTEES AND PANELS

2. The Bailiff :

I thank Members and the Chief Minister for that. Chief Minister, now that your man is here do you wish to make a nomination?

1. Senator F.H. Walker :

Yes Sir. It gives me great pleasure to propose the Deputy of St. John as the Minister for Home Affairs to undertake the final weeks of office of this current Council of Ministers.

The Bailiff :

Is the proposition seconded? [seconded] Are there any other nominations for the office of Minister for Home Affairs? Well then I declare the Deputy of St. John to have been duly elected as Minister for Home Affairs [approbation].

2. Deputy A.D. Lewis (The Minister for Home Affairs):

If I could just have the leave of the House, I understand from Standing Orders that I may be expected to make a speech today and I am more than happy to say a few words if Members require me to do so, but as we have a lot of business to get through today I'd imagine that we'd like to get straight down to business. If I could thank Members for the confidence they have bestowed upon me I will certainly endeavour to do my every possible best to fulfil the next 6 weeks of my duties.

PUBLIC BUSINESS – resumption

3. Draft Employment (Amendment No. 4) (Jersey) Law 200- (P.142/2008)

The Bailiff :

The next matter of Public Business is the Draft Employment (Amendment No. 4) (Jersey) Law in the name of the Minister for Social Security. I ask the Greffier to read the citation of the draft.

The Greffier of the States:

The Draft Employment (Amendment No. 4) (Jersey) Law 200-: a law to amend further the Employment (Jersey) Law 2003. The States subject to the sanction of Her Most Excellent Majesty in Council have adopted the following law.

1. Senator P.F. Routier (The Minister for Social Security):

This proposition amends the Employment (Jersey) Law 2003 to extend the Jersey Employment Tribunal's powers in relation to unfair dismissal awards. During last year I received representations from various interested parties about the award making powers of the Employment Tribunal. Having based the employment law on an early recommendation of the employment forum, which was presented in 2001, I requested that awards relating to unfair dismissal should be considered in more detail by the forum. The forum recommended that the legislation should include 2 additional powers and provided additional details regarding the circumstances in which these powers should be available to the Tribunal. The first gives the Tribunal the power to reduce an unfair dismissal award where an employee is found to have contributed to their own dismissal. Where the tribunal finds that a dismissal was unfair, the tribunal currently must award a fixed sum to an employee which is calculated by reference to the employee's length of service and their weekly pay. In the interests of natural justice, this amendment has been made for circumstances in which that award may be reduced by the tribunal. The amendment provides that the tribunal may take into account circumstances in which it considers it would be just and equitable to reduce an award, including the employee's own conduct, any other amounts paid by the employer to the employee by way of settlement, and whether the employee has refused an offer of reinstatement from the employer. Unlike an earlier draft of this amendment, it provides the tribunal may also consider any other circumstances in which it would be just and equitable to reduce the award. The second part of the amendment is the discretion of the tribunal to consider whether it would be appropriate to award that an unfairly dismissed employee must be re-employed by their employer, and the power to award additional compensation if the employer does not comply. Having carefully considered the issue of reemployment in its 2001 recommendation on unfair dismissal the forum was then of the opinion that nothing would be gained by having such a provision present in the Jersey legislation. This was considered to be a sensible approach at that time. The forum did not intend to restrict the powers of the tribunal and made the recommendation in the interest of avoiding unnecessary complexity in the law. However, following further consideration, the forum has noted that Jersey is a more restrictive employment market than the UK, making the option of an award for reemployment more relevant and necessary. This amendment makes provision for the tribunal to consider 2 different options for reemployment as an alternative to financial compensation for dismissal. Firstly, reinstatement which means that the employee must be treated in all aspects other than arrears of pay as though the dismissal had not occurred. Secondly, the more flexible option of re-engagement, which means that an employee is to be reemployed on terms that are as favourable as if the employee had been reinstated, but not necessarily in the same job or on the same terms and conditions of employment. In deciding whether or not to make an order for reemployment, the tribunal must take into account the employee's wishes, also the practicality of the employee returning to work for the employer and in cases where the employee was partly to blame for the dismissal, whether it would be just to make such an order and on what

terms. Orders for reemployment are an alternative to a financial award for unfair dismissal. Unlike the earlier draft of this amendment, the tribunal may not award the employee compensation for any loss of pay during the period between dismissal or reemployment, other than in regards to contributory benefits such as pension contributions, that is in order to restore the employee's pension rights. If an employer totally fails to comply with an order for reemployment in addition to unfair dismissal award, which is calculated in accordance with the existing scales, the tribunal would have the discretion to award compensation up to a maximum of 26 weeks, unless the employer can satisfy the tribunal that it was not reasonably practicable to comply with the order. There would be some minor changes made to the Employment (Awards) (Jersey) Order to reflect the new powers within this, and if the States approve this amendment I would be making that order as soon as this is approved. These recommendations have come forward after tremendous consultation through the employment forum and I propose the amendment.

The Bailiff :

The principles of the law are proposed. Are they seconded? [Seconded] Does any Member wish to speak on the principles of the bill?

1. Deputy G.P. Southern of St. Helier :

The extension of the powers of the Employment Tribunal is, in general terms, to be welcomed. However, I have 2 questions to ask of the Minister. It seems to me that one is the matter of any pay lost during the intervening period between dismissal and reinstatement. It seems to me, I do not understand why the employee should suffer a loss in those terms, and that the powers are only about reinstatement or repayment of pension rights, et cetera. Secondly, I note that, I think 2 or 3 times, the Minister said the reinstatement and the consideration of reinstatement is an alternative to any compensation. It seems to me that to rule out any compensation because of reinstatement is not the full shilling, as it were, and that these powers are unnecessarily, still, limited. I would appreciate it if the Minister could address those 2 issues. But on the whole, obviously, I believe this has been, in principle, a power that has been sadly lacking from the tribunal in the past and is generally to be welcomed.

2. Deputy R.G. Le Hérissier of St. Saviour :

Just one point: on page 6 in the descriptive portion it states that if an employer can satisfy a tribunal that it is not reasonably practicable to comply with the order then presumably they need not do so. Now there is no doubt when you are dealing with a small employer and if the falling out, for example, has been about some kind of personality clash, it can often be very difficult to reintegrate people into a smaller organisation where there has been a falling out. Does that mean therefore that in practical terms small employers will be able to argue that and, if so, does that not nullify some of the intent of this?

The Bailiff :

I call upon the Minister to reply.

3. Senator P.F. Routier (The Minister for Social Security):

Firstly, I would like to thank Deputy Southern for his general recognition that this is a positive move. The issue as regards to loss of pay between the dismissal and any possible reinstatement is something which has been consulted on very widely by the employment forum and they have come to the conclusion that in many, many cases, while the hearing is going on, that a lot of people will have found new work, and that is the experience that has happened in the past, because Jersey's employment market is very open and people are able to find additional work, practically what actually happens is people find additional work. But in the rare occasion that there is a situation where people are going to be looking for reinstatement, the tribunal will have the power to make awards if they do not get to reinstate. This legislation is quite flexible for the tribunal. It does give many options for them; before it was very prescriptive and it now, I believe, is an appropriate mechanism for them to be able to make a just resolution for any issues which do come forward. Deputy Le Hérissier's comments with regard to small employers; I believe the same sort of circumstances applies with the same comments I just made. The tribunal will be able to look at all the circumstances, and particularly with regard to small employers, as to what is appropriate for that circumstance. Obviously, if relationships are broken down so much within a small employer it would not be practical for that person to return to that position. This provision really is aimed at, sort of, very large employers who would be able to perhaps find employment in perhaps another area of their business, and that is really what it is aimed at, for the reinstatement. I maintain the proposition.

The Deputy Bailiff :

All those in favour of adopting the principles kindly show. Those against. The principles are adopted. This is a matter for the Health, Social Security and Housing Scrutiny Panel; chairman, Deputy Breckon, vice-chairman, Deputy Martin, neither whom are here. Is there any other member of the panel ..

Deputy R.G. Le Hérissier (Health, Social Security and Housing Scrutiny Panel): No, thank you, Sir.

The Deputy Bailiff :

Thank you, Deputy . Then, Minister, do you wish to take the articles en bloc?

2. Senator P.F. Routier:

Yes, I think Members will have had an opportunity to read them, I am prepared to propose them en bloc and answer any questions.

The Deputy Bailiff :

Are they seconded?  [Seconded]  Does any Member wish to speak on any of the individual articles? Very well, all those in favour of adopting all the articles kindly show. Those against. The articles are adopted. Do you propose the bill in Third Reading, Minister?

3. Senator P.F. Routier: Yes, sir.

The Bailiff :

Seconded? [Seconded] Does any Member wish to speak on Third Reading?

1. Deputy R.G. Le Hérissier:

There is no doubt, one of the issues, and I do congratulate the Minister on moving this and indeed the people involved with the Employment Tribunal, but as we know some of their findings are controversial and, as I have indicated in my point, small businesses can be impacted upon quite disproportionately in some respects because they obviously have not got personnel departments and so forth. What methods are available other than reports in the J.E.P. (Jersey Evening Post) to ensure that small businesses, and others, are fully aware of the impact of the judgments that are emanating from the Employment Tribunal?

The Deputy Bailiff :

I call upon the Minister to reply.

2. Senator P.F. Routier:

The judgments are published widely, other than the J.E.P., and they are available on the website so that they can be seen. I do recognise that employers need to keep up to speed with the way that employment legislation is progressing. I wholeheartedly agree that we need to ensure that small businesses in particular do need advice. The Jersey Advisory and Conciliation Service do provide an excellent service and I do suggest to all employers, small or large, that they do perhaps keep a close connection with J.A.C.S. because they are very, very helpful, and if they have any issue with regard to employment legislation or any changes of circumstances of their employees, check with J.A.C.S. first before they do progress with any further changes within their contracts or terms of employment because they are very good about doing that.

The Deputy Bailiff :

All those in favour of adopting the bill in Third Reading kindly show. Those against. The bill is adopted in Third Reading.

4. Draft Income Support (Special Payments) (Cold Weather Payments) (Amendment) (Jersey) Regulations 200- (P.144/2008)

The Deputy Bailiff :

I think the States agreed to take as the next matter the Draft Income Support (Special Payments) (Cold Weather Payments) (Amendment) (Jersey) Regulations, projet 144, also lodged by the Minister for Society Security, and I will ask the Greffier to read the citation.

The Greffier of the States:

Draft Income Support (Special Payments) (Cold Weather Payments) (Amendment) (Jersey) Regulations 200-: the States in pursuance of Articles 8 and 18 of the Income Support (Jersey) Law 2007 have made the following regulations.

4.1 Senator P.F. Routier (The Minister for Social Security):

I am grateful for the Minister for Economic Development letting me go before him as I have a hospital appointment, in an hour or so. Hopefully this will not take an hour. The most recent R.P.I. (Retail Price Index) increase on fuel published in June showed that there had been a 26 per cent increase in fuel prices. The Council of Ministers considered that and agreed that I should bring forward the proposition which has already been approved in the recent Business Plan, which the States have approved. So, this proposition increases the winter fuel payments by a further 20 per cent above the 6.8 per cent which has already been put into place, making a total of the combination, the compounded increase from last year of 28 per cent on last year's amounts. I make the proposition and I hope the House will support it wholeheartedly.

The Deputy Bailiff :

Seconded? [Seconded] Does any Member wish to speak on the principles of the regulations? All those in favour of adopting the principles kindly show. Those against. The principles are adopted. Deputy Le Hérissier, does your panel wish this matter to be referred to the panel?

Deputy R.G. Le Hérissier (Health, Social Security and Housing Scrutiny Panel): No, Sir.

The Deputy Bailiff :

Do you wish to propose regulations 1 and 2 together, Minister?

Senator P.F. Routier: En bloc, Sir.

The Deputy Bailiff :

Does any Member wish to speak on either regulations 1 or 2? All those in favour of adopting regulations 1 and 2 kindly show. Those against. The regulations are adopted. Do you propose in Third Reading, Minister?

Senator P.F. Routier: Yes, Sir.

The Deputy Bailiff :

Seconded? [Seconded] Does any Member wish to speak in Third Reading? All those in favour of adopting the regulations in Third Reading kindly show. Those against. The regulations are adopted in Third Reading.

5. Draft Foundations (Jersey) Law 200- (P.143/2008) The Deputy Bailiff :

We come next to the Draft Foundations (Jersey) Law, projet 143, lodged by the Minister for Economic Development. I will ask the Greffier to read the citation.

The Greffier of the States:

Draft Foundations (Jersey) Law 200-: a law to provide for the incorporation of foundations and for related purposes. The States, subject to the sanction of Her Most Excellent Majesty in Council, have adopted the following law.

The Deputy Bailiff :

There is an amendment here but we will come to that when the time comes.

1. Senator P.F.C. Ozouf (The Minister for Economic Development):

When it comes I will propose them as amended, Sir. This draft law for the creation of a new Jersey legal entity, a foundation, is hoped that it will be a significant driver of new business to the Island and open up business opportunities with clients from parts of the world where the concept of a trust is unknown or poorly understood. A foundation will incorporate some of the best features of companies and trusts. It will be a body corporate with easily recognisable liabilities and accountabilities and its existence will be openly recorded on a public register in the same way as a company, but it will not have shareholders. It will hold assets in its own name for the purposes set out in its constituent documents in accordance with the wishes of the founder. The foundation will be managed by a foundation council, a unique feature of the Jersey foundation is that the council will be required to have at least one member who is a Jersey financial professional regulated by the Jersey Financial Services Commission. This will take advantage of the high quality of Jersey's finance professionals to ensure that investors can be confident in the quality of this product and also to ensure that it is not abused for the purposes of international crime. Another unique feature of foundations in Jersey is that there will be mandatory requirements for a guardian. The guardian will hold the foundation council to account and represent the interests of the beneficiaries of the foundation. Foundations have a long history in Continental Europe where they have been used for charitable and religious purposes since the Middle Ages. They have been used for estate planning and wealth management and they started life in more recent times in Liechtenstein in the early part of the 20th century. In 1995 Panama introduced a flexible private foundation which allowed international asset planning and certain commercial transactions. More recently, the Netherlands Antilles and St. Kitts in Bahamas have introduced legislation establishing foundations along similar lines. The challenge for Jersey is that clients from jurisdictions such as the Middle East and the Far East are often more familiar with the concept of foundations than with trusts which are alien to their legal systems and, at best, can require a great deal of explanation. Although these clients often have the highest regard for Jersey as a jurisdiction with a proven reputation for stability, excellence and, of course, our expertise, there often remains a preference for a foundation as the vehicle of choice. Some Jersey trust companies already advise and, in fact, incorporate foundations normally sometimes in Liechtenstein or in Panama, for clients who do insist and simply are not persuaded by the viable alternative of a trust. Foundations are, therefore, well established in other jurisdictions and there is an existing and growing market for this kind of service and product, and Jersey is seeking to access this market via this new law. A Jersey foundation will be a body corporate. It will be registered with the Registry of Companies, and will be governed by the law and its

constituent documents, namely a charter and regulations. Foundations will be endowed with assets. They will invest and either distribute to beneficiaries or for some purpose which can be either charitable or non-charitable. All foundations will have a charter. The charter is a public document which must include certain specified details. The detailed provisions applicable to the foundation can be included in the public charter or in the regulations which will be a private document. It is expected that the majority of foundations will both have a publicly registered charter and a set of private regulations. A foundation will be required to have a council equivalent, broadly speaking, to a company board of directors. They will be the body responsible for fulfilling the aims of the foundation in accordance with the law charter and its regulation. The council must have at least one qualified member which must be a Jersey-based financial services professional regulated by the J.F.S.C. (Jersey Financial Services Commission) under the Jersey Financial Services Law 1998, and the Codes of Practice published and run by the Commission under that law. The qualified member under the supervision of the Commission will ensure that the foundation is not abused for money laundering or terrorist financing purposes. Of course, Jersey distinguishes itself in being one of the few jurisdictions in the world to regulate trusts, and foundations will be done in exactly the same way. The high quality of Jersey's regulatory community will ensure that Jersey foundations are effectively and, most importantly, responsibly run. They will ensure that investors can be confident in relying on Jersey foundations and also that the Island complies with its international obligations in respect of preventing fiscal crime. A foundation must have a guardian who will oversee the work of the council and to whom the council will be accountable; combined with the presence of the qualified person on the council, this will mean the foundations have sufficient checks and balances to ensure that the endowment is used for the purpose intended by the founder. In the event of a dispute, it is possible to refer the matter to the Royal Court for ruling and, of course, it must be said that our court in Jersey has an incredibly high regard in the international community in terms of the judgments that it makes in terms of trust law. We imagine that that is going to be replicated in the field of foundations, and that is an incredibly important selling point for Jersey as a jurisdiction for trusts and, I hope in future, for foundations. Over the last decade the nature of financial services, capital markets and institutional business has changed and developed. The finance industry in Jersey has proved time and time again its ability to develop new products and services to meet both international demands, but also international standards. Our trust law is, quite rightly, regarded as one of the engines of the financial services industry which we have today. It is, in fact, a trust law which was first incorporated in Jersey and should be the source of all Members, past and present, of this Assembly, it has been copied in other jurisdictions. We have made a lot of updates to the trust law in recent times, but we must do more as some international jurisdictions are catching up. Jurisdictions which have traditionally not practised in the trust field, such as Switzerland, have now incorporated a trust law along Jersey's lines. In turbulent times it is even more important that we continue to be forward looking and take an active approach to the development of our financial services industry. Foundations are a key example of where we can take Jersey's financial services industry forward and Jersey will provide as a result of this law an innovative well-regulated and appealing wealth management vehicle which will serve to further strengthen Jersey's position as one of the world's leading international

financial centres. I propose the preamble to the law.

The Deputy Bailiff :

Are the principles seconded? [Seconded] Does any Member wish to speak on the principles?

1. Deputy R.G. Le Hérissier:

When the discussion occurred on non-profit organisations and the need for tighter regulation, there emerged this animal which I never quite understood of the charitable trust and I see this sort of animal has appeared in the foundation guise, and I wonder if the Minister could explain what a charitable foundation is, and is it a charitable body in the sense we understand bodies like the animal shelter and family nursing, for example, because it seemed in regard to trusts it may have been charity to each other rather than charity in terms of an altruistic body. So I wonder if he could define that. Secondly, in terms of the checks and balances built into the law, it talks on page 4 about a Jersey-based finance professional. What are the qualifications required of such persons and what are the qualifications required of a guardian? In other words, would a guardian necessarily be a lawyer, for example, or could a guardian be some other kind of qualified person. But much has been made of these checks and balances and it is important that the right people are in place.

2. Deputy R.C. Duhamel of St. Saviour :

Just briefly, in a similar vein to the last speaker; would the Minister in his summing up indicate to the House and outline the differences between a trust body and, indeed, a foundation.

3. Deputy G.P. Southern :

In the light of the reservations I expressed yesterday on this particular law, I am particularly concerned with the activities of foundations, in particular in Liechtenstein which are drawing the attention of the authorities, including the O.E. C.D . (Organisation for Economic Co-operation and Development) and the German authorities as well. The attention is on the use of such foundations in, as it says in the report at the bottom of page 3: "As well as being used for wealth management and estate planning, foundations may have applications in more specialised areas such as long term charitable aims or securitisations", and it is that word "securitisation" which draws my attention to the fact that we are expanding our activities into an area in which the O.E. C.D . is particularly concerned at present because they are examining, as we speak I believe, the extent of the use of securitisations and trusts or foundations and they have played a role, perhaps a significant role, in the current credit crisis that we are undergoing. So I am concerned that the reputation of the Island is preserved and does not draw unwanted, and perhaps unwarranted, attention from O.E. C.D . in terms of the use of these sort of foundations for securitisation purposes which have been at the root, in many cases, of the problems we have today. I seek the assurance of the Minister that this is a safe route to go down rather than a risky route.

4. Deputy I.J. Gorst of St. Clement :

Just briefly, Members will be aware that I am employed out of this place by an Island finance group, however that conflict is neither direct nor financial so I will say a few words and will be voting. I would just like to welcome this piece of legislation and congratulate the Economic Development Department for bringing it forward in a timely manner. Unlike the last speaker I believe that at these critical times it is important that we do maintain our competitiveness; we will see that our competitors are only too eager to take business from our shore and it is important that we not only diversify our economy as a whole, which is extremely important and I am aware that the Economic Development Department is working towards that in other areas, but also that we continue to diversify our main industry as it stands now, which is the financial services industry. Members are aware that it is diversified, certain sections of that industry will come under continued pressure during a recession, particularly the banking sector. It will probably change; we will see it change from how it is today. But other areas of our industry, I believe remain strong and this will be an added tool towards that diversification of the financial services industry, so I would like to welcome this and I ask that Members do give it their full support today, and I welcome also the speed in which it has been brought forward.

The Deputy Bailiff :

I call upon the Minister to reply.

5. Senator P.F.C. Ozouf :

Some excellent questions. First of all, in relation to Deputy Le Hérissier and the question about a charitable organisation: a charitable foundation is a foundation set out for charitable purposes and so effectively it is envisaged that a number of charitable purposes could be .. or the vehicle of a foundation could be used for such charitable purposes. A trust could be similarly used as well. I am not sure that there is an easy link between these questions in regard to the definition of a non- profit organisation and a charity, there is work to be done and the Chief Minister's Department is working on the whole issue of bringing into regulation the whole charitable sector which will cover all sorts of corporate entities in terms of their different corporate structure whether they be a trust or whether they be a foundation. Deputy Le Hérissier looks as though he wishes to intervene and I am happy to let him.

Deputy R.G. Le Hérissier:

If the Minister could be so kind, and perhaps the Solicitor General could be of assistance. Is a charity .. because this was the problem we were finding in analysing the N.P.O. (Non-Profit Organizations) Law, it sometimes appeared as even as if a charity was somebody's family, which I must admit was a bit perplexing. Could he say that a charity, once this work has been done, is indeed a properly constituted body in Jersey whose job it is to provide a service in what will be defined as a charitable sense? I know these all sound tautologies but could he talk on that?

Senator P.F.C. Ozouf :

I am sure the Solicitor General will be applying his better legal brain to mine, but I will have an initial go. I think the Deputy may be needing some assistance in explaining what a body corporate is. You can be a charity; we do not have a charities law which does not document and list and identify charities. At the moment you apply for charitable status by way of application to the Comptroller of Income Tax, which gives certain tax advantages, and other advantages. Now, the entity itself can be either potentially any number of body corporates. It could be an association of individuals of which there is liability. It could potentially be a trust, I guess. It could be, in future, a foundation. That is a separate set of arguments in terms of the issue of what we have before us, which is the setting up in statute of a separate type of legal entity which we will go on to discuss. I do not know whether the Solicitor General wishes to add anything on this particular point before I deal with the other issues.

Mr. T.J. Le Cocq Q.C., H.M. Solicitor General:

I am not entirely certain that there is a great deal that I could add to this. If a foundation is incorporated for a charitable purpose, it is that purpose that it must fulfil. Its charitable status will be entirely apparent in most circumstances, if not all, from its charter which is a public document, and the charitable actions that it has to undertake as a result of that stated purpose in the charter will be the responsibility firstly of its council to make sure it does, and if they do not do it then of the guardian. To that extent, if it is a charitable foundation it must behave for charitable purposes. There are legal definitions as to what amounts to a charitable purpose based on a 16th century statute of Elizabeth, but I will not try and remember all of the different public benefit purposes that will fall within the definition of a charity. I am not sure I can help further.

Senator P.F.C. Ozouf :

I am grateful for the Solicitor General. In relation to Deputy Le Hérissier's second question about checks and balances, I will deal with this in more detail when we deal with the individual articles. Suffice it to say that the professional requirements are under the Financial Services Law and the Codes of Practice in terms of what the standard of qualification must be for a regulated person. Of course, you have to be a regulated person in order to fulfil certain positions on the foundation. I will deal with those in more detail when we deal with the regulations themselves. Turning to Deputy Duhamel's question in relation to an explanation of the difference between a trust and a foundation. First of all, who are the likely users of a Jersey foundation? It is envisaged that a Jersey foundation will be primarily used for private and family wealth management purposes. The users will therefore be normally wealthy individuals, probably from civil law jurisdictions. Effectively the difference of a foundation over a trust; a foundation, like a trust, is a separate legal entity able to hold property and act in its own name so all liabilities remain corporate liabilities of the foundation and do not attach to the council members personally as opposed to a company. The difference between a trust and a foundation is that the founder has the option of maintaining effectively, and this is pretty well the crucial difference, of maintaining a greater control other than is possible with the operation of a trust. Family members, for example, could sit on the Council and be involved in the management of the family assets that are endowed in the foundation. The similarities are that they are going to be identically regulated in Jersey. The key question, which is turning to Deputy Southern 's questions, are .. and I realise that yesterday he was concerned about the linkage with Liechtenstein, and indeed in my opening remarks I explained that Liechtenstein does, in their Stiftung legislation, have a foundation. The difficulty that Liechtenstein has is that it has secrecy laws. It does not regulate its financial services industry in the same way that we do. First of all, it has banking secrecy. Secondly, it does not regulate its activities in the same way that we do. What we are seeking to do is we are seeking to maintain the same standard of international compliance that we have in Jersey, unlike jurisdictions such as Liechtenstein, but give the users or the potential users of Jersey as a jurisdiction for the management of wealth, the alternative corporate entity outside of the trust. So there are some crucial and important differences in terms of the foundation that has been discussed in the Assembly today with those foundations that are in Liechtenstein. I fully appreciate the concern that Members may have but I can, I hope, deal with their concern in saying that we do not have any of those negative connotations that have attracted such negative publicity that Liechtenstein does. We do see an opportunity in building some business from users that do want a regulated jurisdiction that does not have secrecy. I hope that deals with the Deputy 's questions. He did raise the issue of securitisations, and indeed securitisations are perfectly legal, they have been a standard practice of raising capital and the difficulties of the credit market in the last few weeks is not entirely due, and the Deputy would be incorrect to simply suggest, as some commentators may, that it is due to securitisation that the credit crunch problems have happened. Indeed it is not Jersey that regulates ultimately banks. It is, as I am sure many Members will have heard, the Bank of England Governor speaking in a speech last night in relation to the new world of boring finance. That is a matter for jurisdictions and for central banks across the developed world. If they wish to change their rules in terms of liquidity arrangements, in terms of the ability of their banks and their regulated banks to engage in some off- balance sheet financing activities, then that is a matter for them. Jersey has represented itself extremely well and indeed the Scrutiny Panel of the House of Commons that we gave evidence to when they visited Jersey, and then the Isle of Man, were perfectly persuaded that Jersey, as an offshore financial centre, has not inappropriately or in any way negatively contributed to the credit crunch difficulties. There will be some commentators that will accuse offshore financial centres, such as Jersey, as being the source of the credit crunch and the illiquidity in financial markets. We would represent very strongly that that is not the case, and that is simply the fact that those are decisions for central banks and for regulators in other areas. Obviously there is going to have to be a completely new world of regulation in the world of international finance. But, coming back to the point, Deputy Southern raised the issue: was there gong to be any risks associated with setting up a foundation law in Jersey in relation to securitisation? I would say no. I would say to him, and remind him, of the gold standard regulation that we have in trust, in terms of our regulated financial services industry, and this will be the gold standard of foundations that clients across the world seeking jurisdictions of quality will wish to use. I think that that dealt with all of the questions,

unless there is anybody that wishes to raise a further question, and I move the preamble.

The Deputy Bailiff :

All those in favour of adopting the principles kindly show. Those against. The principles are adopted. I think I know the answer to this question, Deputy Southern , [laughter] but do you wish this matter to be referred to your Scrutiny Panel?

Deputy G.P. Southern (Chairman, Economic Affairs Scrutiny Panel) Somewhat reluctantly, we do not.

The Deputy Bailiff :

Very well. Minister, how do you wish to take matters; in part?

2. Senator P.F.C. Ozouf :

I think this is an important law so I do propose to take it in its constituent parts. I will simply start with part 1 which covers the preliminary matters setting out the certain means of the terms in the law and I move Article 1.

The Deputy Bailiff :

Seconded? [Seconded] Does any Member wish to speak on Article 1? All those in favour of adopting Article 1 kindly show. Those against. Article 1 is adopted.

3. Senator P.F.C. Ozouf :

Part 2 is Articles 2 to 33, I will take them as a part. Part 2 relates to the incorporation of foundations. Article 2 sets out how a qualified person may apply for the incorporation of a foundation on behalf of any person. The application must be accompanied by a copy of the proposed charter of the foundation, the published fee and a certificate signed by the qualified member making the application. Articles 3 to 6 provides that a foundation must have a charter specifying its name and objectives; the name of the foundation cannot be misleading or otherwise undesirable and must end in the word "foundation" or word that is the same in a foreign language. The objectives of foundation may be charitable or non-charitable and may be specified for purpose or to benefit of a person or group of persons. The charter may also contain the names and addresses of the first members of the council. Article 7 provides that a foundation need not be endowed when it is incorporated. If it does have an endowment on incorporation then this must be set out in the charter. Similarly if the foundation may be endowed after incorporation, this must be stated in the charter. Article 8 requires the charter of the foundation to provide what will happen to any remaining asset should the foundation be wound up and dissolved. Articles 9 and 10 sets out certain things that must be specified in the foundation's charter. For example, if the foundation is incorporated for a specific term or until the happening of an event or it may be wound up by a person, this must be stated in the charter. The charter may provide for additional matters, for example, it may provide for how the charter itself and the foundation's regulations may be amended in the future. Articles 11 and 12 require a foundation to have regulations to establish a council to administer the foundation's assets and to carry out its objectives. The regulations must provide for the running of the council, must set out how decisions of the council are to be made. Articles 13 and 14 require a foundation to have a guardian appointed pursuant to its regulations whose function is to ensure that the council of the foundation carries out its functions; only the founder and the qualified member may simultaneously perform the functions both of a member of the council and a guardian. The guardian may require the council to account for the way in which it has acted or handled the foundation's assets and may have the power to approve or disapprove certain actions of the council if accorded this power by its regulations. Articles 15 and 16 allows for the reimbursement of the expenses of persons appointed under the regulations and for the appointment of other persons to carry out functions for the foundation, for example, auditors or accountants, et cetera. Article 17, a foundation need not supply a copy of its regulations to any person except to a person appointed under the regulations. Article 18 allows the founder of a foundation to retain such rights in respect of the foundation and its assets that are set out in the

charter or regulations unless the charter or regulations of the foundation provide otherwise. Pursuant to Article 19, a person other than its founder does not become a founder merely by endowing the foundation. Article 20 requires a foundation to have a council to administer its assets and to carry out its objectives. Article 21, the council may consist of one or more members but must include a qualified person appointed pursuant to Article 23. All council members must be at least 18 years old and disqualified members and directors of companies are excluded. The qualified member of the council must be a qualified person as defined by Article 1, namely of the Jersey Financial Services Commission under the Financial Services (Jersey) Law 1998, to carry out certain trust company business. Therefore, any registered Jersey trust company will automatically be qualified for the purposes of involving themselves in foundations. Article 22 requires the members of the council to act in good faith with a view to the best interest of the foundation and to exercise reasonable care and skill in doing so. Articles 24 to 26 pertain to the personal liabilities of members of the council, the rights and beneficiaries and the foundation's obligation to provide information about itself. Of particular note is Article 25 which provides that a beneficiary under a foundation has no interest in the foundation's assets and is not owed a fiduciary duty by the

council, however a beneficiary who is denied a benefit in contravention of the charter or regulations of a foundation may seek an order of the Royal Court. Article 27 sets out the grounds upon which the registrar may refuse to accept an application for incorporation of a foundation. Articles 28 and 29 pertain to the details that must be registered on incorporation. Articles 30 and 31 set out the corporate status and legal competence of a foundation. Article 32 provides that Jersey law is to prevail in respect of Jersey foundations and Article 33 provides that the rule donner et retenir ne vaut is not to apply in respect of Jersey foundations. I move Articles 2 to 33.

The Deputy Bailiff : Seconded? [Seconded]

1. Deputy G.P. Southern :

Some questions in particular concerning what amounts, I believe, to privacy rules or some might call them secrecy rules. I note that in Articles 40 and onwards the powers of the Royal Court and the - I am just testing the context of the questions on these particular articles - and also in 40 that the register will be kept and made available to public inspection, that is the register. However, in Article 17 we find that supply of copies of the regulations of the foundation: "Unless the regulations of a foundation provide otherwise a foundation need not supply of its regulations to a person other than a person appointed under the regulations of the foundation." This is a fairly wide-ranging degree of privacy applied to a foundation which is then repeated in Article 26: "(1) Except as specifically required by or under this law or by the charter or regulations to the foundation, a foundation is not required to provide any person (whether or not a beneficiary) with any information about the foundation. (2) The information mentioned in paragraph (1) includes, in particular, information about (a) the administration of the foundation; (b) the manner in which its assets are being administered; (c) its assets, and (d) the way in which it is carrying out its objects." It seems to me this is a high degree of secrecy or privacy that is surrounding a foundation, and again, and I particularly have to worry about this use or the potential use of this to either launder money or to keep assets away in a non-legitimate way from another tax authority. So I would like that particular question around privacy and its potential use to be explained and why we should be putting an article that says: "Foundations are not obliged to provide information to anybody." Then, a second question, on Article 31, in particular, the legal competence of foundations: "(1) The doctrine of ultra vires does not apply in respect of a foundation. (2) Accordingly the capacity of a foundation is not limited by (a) anything in its charter or regulations; or (b) any act by a person appointed under the regulations of the foundation." That particular rule seems to say that a foundation may do what it jolly well likes and in or outside of its charter and its regulations, now the charter is published and regulated presumably, but notwithstanding that, this goal standard appears to say the foundation could do what it jolly well likes, which does not appear to make a very strong sort of regulation. Then in 33, just because I am an ignorant layman, I would like an

explanation of donner et retenir ne vaut. Thank you.

2. Deputy P.V.F. Le Claire of St. Helier :

Yesterday when I rose to speak about the wisdom or otherwise of Deputy Southern 's proposal to pull this for scrutiny, I did fear that his own position as chairman of the Scrutiny Panel would be jeopardised had he progressed his last-minute plea to have it scrutinised and I am very pleased that he did reconsider, as I understood things, yesterday. What had happened was that Her Majesty's Attorney General had spoken with the Deputy and had allayed fears that he had in this regard. Although he did say this morning that he did not want to review it somewhat reluctantly, he has progressed now this morning into this article with questions specifically around the nature of privacy, which he has described as secrecy - which could be described as secrecy - and his concerns in particular in respect of money laundering, et cetera. I find it a little strange that during a global credit crisis, while Jersey is trying its best to maintain jobs for local people and retain its standing in the eyes of the world, during a critical time when Jersey is being inspected by international bodies,

that Deputy Southern has not managed to allay his fears in private with Her Majesty's Attorney General and chooses now to raise these issues as he has done. If there are issues about the nature of regulation checks and balances that the Deputy has concerns of, then surely he would have been wise to have spoken yesterday with Her Majesty's Attorney General and the Minister about these. I personally have spoken over the last one and half month's with numerous residents of Jersey who have shown concern about the global situation, as I am certain all other Members have as well. I have also been informed by somebody who works in the finance industry that at one stage one client moved their account to Switzerland because they were fearful. Thankfully, that fear has subsided and the panic has not set in. The nub of the matter is that there are other jurisdictions that do have far stricter controls about who looks into the privacy of individuals' matters. Unless we wish to see those migrate from Jersey then I think we need to conduct our scrutiny of these issues robustly, in open session, in open scrutiny, where members of the public can attend, and where also members of the Law Officers' Department, Her Majesty's Attorney General and the Minister are able to set aside and allay their fears. I am disappointed the Deputy chooses to ask these questions and raise these issues. No doubt the Minister will set our minds at rest. The point I would like to make is if we do not have the money there are plenty of other people that will take it. We are not going to have much of a social service if we do not have a finance industry.

The Deputy Bailiff :

Does any other Member wish to speak on any of these particular articles? Deputy Le Hérissier?

3. Deputy R.G. Le Hérissier:

I think the answer to Deputy Le Claire's point is at the moment we do not have legislative scrutiny and I am rapidly coming to the conclusion we do need it fairly quickly. The points I would raise, the point I raised with the Minister under 14, the guardian; the guardian, it seems, can be the founder of a foundation and the qualified member of its council. I thought the guardian was a totally separate person whose job was to exercise oversight at arm's length. I would be obliged if we could look at that. On Article 24, in terms of insurance coverage, why is it put in Article 24(3)(a): "Any liability the person may incur to the foundation is not covered by the insurance"? That seems rather strange. I wonder if he could explain that? I support, under Article 31, Deputy Southern 's point about ultra vires. It may be the Solicitor General will be able to clarify that because it does look incredibly wide-ranging and excusing of all sorts of issues, perhaps. Thank you, Sir.

4. Deputy I.J. Gorst :

I am sure the Minister does not need me to rise but I will just briefly say it does seem that my colleague sitting in front of me seems to be somewhat confused by the difference between secrecy and privacy. Some jurisdictions do have secrecy laws; we are not one of those jurisdictions. What we do find is that wealthy individuals from perhaps the Middle East or the Far East are most concerned for their privacy. A lot of that revolves perhaps around their family and personal situations and we must be aware of that and ensure that our projets allow for what we might consider to be reasonable privacy. The other points that the Deputy makes, he seems to forget - or perhaps he just does not understand, but I hope that is not the case - of the qualities of a qualified person and the regulation within which they work, say. The doomsday scenarios which he purported to suspect that this product the outcome could be are just not possible. That is the whole point of the qualified person and the legislation and the quality of the legislation that we have in this jurisdiction that surrounds the qualified person. I am disappointed with that, but I am sure that the Minister will be able to deal with the other issues of language which are beyond me. Thank you, Sir.

The Deputy Bailiff :

Does any other Member wish to speak on any of these particular Articles? Very well, I call upon the Minister to reply.

5. Senator P.F.C. Ozouf :

I give notice to the Solicitor General that I will seek his assistance in explaining to the Assembly a couple of legal terms; Article 33, if the Solicitor General could assist me in that particular respect. I will deal with the issue of ultra vires. This is the same, I need to say to Deputy Southern , as Company Law and it is perfectly standard. I do not know whether the Solicitor General wishes to add anything else in relation to this, but my understanding is that this is a standard definition within Company Law. Can I ask the Solicitor General to deal with those 2 issues?

The Solicitor General:

Yes, I do not think I can say any more at this point other than to say that the doctrine of ultra vires is a doctrine within the Law of Companies and it obviously relates to the ability or otherwise for a company to do anything which is expressly outside of its memorandum and articles of association, the purposes for which it is created. The essential doctrine - and I have not been able in the short time available to look at its continued applicability - is that a company cannot do anything validly which is completely outside the terms of its memorandum and articles of association. There is an area of its activities which can be ratified by shareholders and an area which is so far outside its purposes that it cannot. That is a doctrine which certainly has given rise to a great deal of case law in the area of company disputes and a lot of decisions of the courts, including decisions of the House of Lords, as to what kind of activities fall within the vires of a company and implied within the vires of a company, and those which do not. The principal purpose of the ultra vires doctrine historically, as I understand it, was to protect investors and shareholders in a company and not third parties. It effectively meant that if you invested in a company as a private investor on the understanding that a company could only do A, B and C, you were entitled to rely on the fact that it would only do A, B and C. Whether that doctrine should be applicable of course to foundations is not a matter of straight legal advice, but it seems to me that a foundation is a very different kind of animal where you do not have private investors who might lose their money because it has been invested for a different purpose, but rather you have people who endow on a foundation in the understanding and in the knowledge that the ultra vires doctrine does not apply to that endowment. I think the doctrine, as I say, was originally intended to protect investors and shareholders in the company and a foundation is a rather different animal than that. That is all I can say about ultra vires. I wonder if it is useful now to deal with the donner et retenir ne vaut point? Donner et retenir ne vaut again has been the subject of cases before the court, notably the case of Rahman, which took a great many years of the court's time and the principal argument was to whether or not that maxim applied in the context of a trust. Effectively it is a fundamental maxim of Jersey Law which says that you cannot both give something and retain the power over it and the context of that within a trust, of course, was that if a settlor, for example, purportedly gave an asset on to trust but thereafter sought to exercise control as if the trust simply did not really exist, then he would have been in breach of the maxim donner et retenir ne vaut and his gift into trust would effectively have been invalid. The reason, of course, that it needs to be removed expressly from the foundations law, as I understand it from my reading of it yesterday, was that it is inconsistent arguably with the purpose of the foundations law, which is to enable the founder and people in right of the founder to retain rights, including in some cases dispositive rights over the assets. That should be entirely clear from the constitutional documents from the foundation. In other words, this in effect prevents a problem which has plagued trust law, and my understanding is that the amendments to the trust law have effectively removed the maxim of donner et retenir ne vaut in connection with trusts and

this simply mirrors those provisions. Senator P.F.C. Ozouf :

I am grateful for the Solicitor General's explanations. At this point I would say to Deputy Le Hérissier that I agree with the need for legislative scrutiny and it is I do not want to in any sense rub salt into wounds, but we have asked for legislative scrutiny of the financial services programme of legislation. I do think it is something that the new Assembly and Scrutiny do need to deal with. That is why I asked repeatedly the Scrutiny Panel, which concentrates exclusively on economic development, I highlighted the importance of this legislation and wanted it to be scrutinised. It would have been far better if we would have been able to have a public, open scrutiny session that we could have dealt with a number of these important questions which have been raised in public sessions which would have then benefited the Assembly when we are taking the law. I really do think there is an issue there. Knowing that the Scrutiny Panel has not carried out that scrutiny, what I can say to the Assembly is that there has been an enormous amount of work done by industry professionals, and by Jersey Finance, and with the extremely helpful engagement of the Law Officers, in relation to every single last word, every single last comma in this law. It has been through extensive review, extensive drafting and extensive consultation, which I hope gives the Assembly some comfort. Of course, it would be ideal that one could explain that in the context of legislative scrutiny. Certainly, what the Assembly has before it is the product of a considerable amount of work. Deputy Southern raises issues - and Deputy Gorst , I am grateful of his intervention - dealing with the issue of privacy versus confidentiality. Nobody can see my bank account details and equally you cannot see the details of a trust deed. He links the issue of privacy and confidentiality and confuses it straight away in the issue of and raises the spectre that there is somehow some risk of money laundering. This Assembly has passed numerous pieces of legislation dealing with money laundering, and a regulated person, and indeed many other businesses in Jersey, have the obligation to notify the Joint Financial Crimes Unit of suspicious transactions. There is no slackening, no reduction in the standards, no loosening of our standards of anti-money laundering legislation and the use of Jersey vehicles for inappropriate activities than anything else in our trust company and other businesses. That is why I say that Jersey, with its regulated trust business, with the standard of regulation that we have within the financial services industry, with the expertise that exists within the industry, and the response that the industry gets from the Joint Financial Crime Unit, and with the Law Officers and our enforcement agencies, means that our foundations will not it would be unwise for anybody to attempt to use a Jersey foundation for such activities. The issues of, I think, the transferring of information, they deal with the personal matters of individuals and the Assembly is well aware, and indeed will be invited, to sign up on a personal level to other exchange of information agreements and, indeed, I but that is nothing to do with foundations and trusts; that is the personal aspects of individuals' financial transactions. I had notice yesterday of a very interesting meeting in Paris from the O.E. C.D . in which Jersey was indeed praised among the international community for its proactive stance in terms of signing tax information exchange agreements, of which this Assembly will consider. The Chief Minister will of course be in the Nordic, in Helsinki, to sign 5 countries, and we have an ongoing programme. What Jersey requires is a level playing field. We will adapt it, we will of

course always argue for the level playing field, but we will comply with international standards. These foundation arrangements comply with international standards. Deputy Le Hérissier raised the issue of a guardian. The guardian is the individual. The idea of the guardian is that it is effectively going to be a trusted friend or perhaps a lawyer and there is no qualification for the role of guardian; it could be a regulated person, it probably will be. In many cases it will be a lawyer or an accountant or a trusted friend of the individuals involved in the family wealth or for the purposes of the activity of the foundation. That is separate from the regulated entity. I think it has been an incredibly novel concept to include the requirements of a regulated individual on the foundations and the guardian which protects. This is checks and balances at its best in terms of that. The regulated person of course  is a professional person that is regulated by the financial services industry, and that is going to be and it is a combination of both the guardian and the regulated person, which will be able to enable the checks and balance and the foundation council to be held to account for standards, but also the responsibilities of the people endowing the foundation with

assets; the guardian, as I say, in an evolution on our foundation law. I think that the Solicitor General kindly dealt with the questions. Ultra vires doctrine removed; yes, I think we have dealt with that. I think that we have also dealt with the issue of donner et retenir. I move Articles 2 to 33, unless there are other questions.

Deputy R.G. Le Hérissier:

If I may, a point of clarification. My point about the guardian was that the guardian would be the defender of propriety, so to speak, on the foundation. Yet we have this notion that the guardian can in fact be a member of the council or can, in fact, be the regulated person. I thought the 2 individuals played separate roles or should be playing separate roles.

Senator P.F.C. Ozouf :

They are 2 separate roles and will not be the same individual, the guardian. What I did say is that a guardian could be a regulated person, so you could end up effectively with the members of the council having more than one regulated person. The legislation sets out the requirement for at least one regulated person in order to have the standards of the financial regulation that applies to Jersey. I do not think I answered the question that Deputy Le Hérissier had in relation to Article 24(3)(a). This means that no protection for liabilities of guardian or regulated person if there is no protection for liability if the regulated person steps outside the purposes of the foundation. That is the reason for that. I move Articles 2 to 33.

The Deputy Bailiff :

All those in favour of adopting Articles 2 to 33 kindly show? Those against? Articles 2 to 33 are adopted. Do you propose the next part then, Minister, which is part 3?

4. Senator P.F.C. Ozouf :

Part 3 deals relates to the administration of foundations. Article 34 sets out how documents may be served on a foundation. Articles 35 and 36 require a foundation to include its name and its business address in Jersey in written communications and to keep documents there. Article 37 requires a foundation to pay certain fees and charges. Article 38 sets out how a charter of a foundation may be amended. I move part 3.

The Deputy Bailiff :

Seconded?  [Seconded] Does any Member wish to speak on any of Articles 34 to 38? All those in favour of adopting those Articles kindly show? Those against? Those articles are adopted. Part 4, Minister?

5. Senator P.F.C. Ozouf :

Part 4 of the law comprises 39 to 42, which provide for the keeping and availability of a register for the purposes of this law. I move Articles 39 to 42.

The Deputy Bailiff :

Seconded? [Seconded] Does any Member wish to speak on any of those articles?

1. Deputy R.G. Le Hérissier:

Just a minor point, why is it so important that a change of number by the Registrar be built into the law and there be a notification?

The Deputy Bailiff :

Does any other Member wish to speak? Then I call upon the Minister to reply.

2. Senator P.F.C. Ozouf :

The registration number is something that is going to obviously be important because it is the number that you can deal with that you can identify what the foundation is. Clearly, if it changes, for whatever reason, it seems quite clear that for whatever reason the Registry, which is a well functioning the registration number changes then it seems perfectly clear that there should be a legislative provision, or statutory provision, for the Registrar to inform the foundation that the number has changed because it may be included in documentation, in letterheads, et cetera, of the foundation.

The Deputy Bailiff :

All those in favour of adopting Articles 39 to 42 kindly show? Those against? They are adopted. Part 5, Minister?

6. Senator P.F.C. Ozouf :

Articles 43 to 51 set out the power of the Royal Court with regard to ordering persons to comply with obligations, ordering amendments to its charter or regulations, giving directions in appointing and dismissing the qualified member, and sets out time limits as to when certain actions may be brought. I would just say that the standard of, which as I said in my opening remarks, judgments in the Jersey Royal Court is something that is a key aspect to the offer for trust business in Jersey. I have no doubt that the Royal Court in its determinations and its decision making will be a key part of the quality gold standard of the future foundations in Jersey. I move Articles 43 to 51.

The Deputy Bailiff :

Seconded? [Seconded] Does any Member wish to speak on any of Articles 43 to 51?

Deputy R.C. Duhamel:

Can we have an appel, please?

The Deputy Bailiff :

Very well, the appel is called for in relation to Articles 43 to 51.

POUR: 32 CONTRE: 0 ABSTAIN: 0 Senator M.E. Vibert

Senator P.F.C. Ozouf Senator T.J. Le Main Connétable of St. Ouen Connétable of St. Mary Connétable of St. Clement Connétable of St. Helier Connétable of Trinity Connétable of St. Lawrence Connétable of Grouville Connétable of St. Brelade Connétable of St. Martin

Connétable of St. Saviour Deputy R.C. Duhamel (S) Deputy J.J. Huet (H)

Deputy of St. Martin

Deputy G.C.L. Baudains (C) Deputy P.N. Troy (B) Deputy C.J. Scott Warr en (S) Deputy R.G. Le Hérissier (S) Deputy J.B. Fox (H)

Deputy S.C. Ferguson (B) Deputy of St. Ouen

Deputy of Grouville

Deputy of St. Peter

Deputy J.A. Hilton (H) Deputy P.V.F. Le Claire (H) Deputy S.S.P.A. Power (B) Deputy A.J.D. Maclean (H) Deputy K.C. Lewis (S) Deputy of St. John

Deputy I.J. Gorst (C)

The Deputy Bailiff :