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England and Wales High Court (Administrative Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Mellat v HM Treasury [2017] EWHC 2931 (Admin) (20 November 2017) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2017/2931.html Cite as: [2017] EWHC 2931 (Admin) |
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QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
BANK MELLAT |
Claimant |
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- and - |
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HER MAJESTY'S TREASURY |
Defendant |
____________________
(instructed by Government Legal Department) for the Defendant
Mr Ashley Underwood QC (instructed by Special Advocates' Support Office)
as Special Advocate
Hearing date: 18th July 2017
____________________
Crown Copyright ©
Mr Justice Holroyde :
The background to this application:
"to minimise the threat to the UK's national interests posed by Iran's proliferation-sensitive activities and reduce the risk of the UK financial sector being unwittingly used to facilitate Iran's proliferation-sensitive activities."
When the 2011 Order expired, it was replaced by the 2012 Order which had a similar objective. At the time the 2012 Order was made it was known that EU-wide measures with a similar effect would soon be introduced. The 2012 Order was therefore intended the bridge the gap before that happened. When Council Regulation EU 1263/2012 came into force (in December 2012), the 2012 Order was revoked with effect from 31st January 2013 by the Financial Restrictions (Iran)(Revocation) Order 2013.
The statutory framework:
"1. Conditions for giving a direction
(1) The Treasury may give a direction under this Schedule if one or more of the following conditions is met in relation to a country.
(2) The first condition is that the Financial Action Task Force has advised that measures should be taken in relation to the country because of the risk of terrorist financing or money laundering being carried on –
a. in the country,
b. by the government of the country, or
c. by persons resident or incorporated in the country.
(3) The second condition is that the Treasury reasonably believe that there is a risk that terrorist financing or money laundering activities are being carried on –
a. in the country,
b. by the government of the country, or
c. by persons resident or incorporated in the country,
and that this poses a significant risk to the national interests of the United Kingdom.
(4) The third condition is that the Treasury reasonably believe that –
a. the development or production of nuclear, radiological, biological or chemical weapons in the country, or
b. the doing in the country of anything that facilitates the development or production of any such weapons,
poses a significant risk to the national interests of the United Kingdom.
(5) The power to give a direction is not exercisable in relation to an EEA state."
"3. Persons to whom a direction may be given
(1) A direction under this Schedule may be given to –
a. a particular person operating in the financial sector,
b. any description of persons operating in that sector, or
c. all persons operating in that sector.
(2) In this Schedule, "relevant person", in relation to a direction, means any of the persons to whom the direction is given.
(3) A direction may make different provision in relation to different description of relevant person."
"9. Requirements that may be imposed by a direction
(1) A direction under this Schedule may impose requirements in relation to transactions or business relationships with –
a. a person carrying on business in the country;
b. the government of the country;
c. a person resident or incorporated in the country;
d. a company that is a subsidiary of a company within paragraph (a) or (c).
(2) The direction may impose requirements in relation to –
a. a particular person within sub-paragraph (1),
b. any description of persons within that sub-paragraph, or
c. all persons within that sub-paragraph.
(3) In this Schedule "designated person", in relation to a direction, means any of the persons in relation to whom the direction is given.
(4) The kinds of requirement that may be imposed by a direction under this Schedule are specified in –
a. paragraph 10 (customer due diligence);
b. paragraph 11 (ongoing monitoring);
c. paragraph 12 (systematic reporting);
d. paragraph 13 (limiting or ceasing business).
(5) A direction may make different provision –
a. in relation to different descriptions of designated person, and
b. in relation to different descriptions of transaction or business relationship.
…
(6) The requirements imposed by a direction must be proportionate having regard to the advice mentioned in paragraph 1(2) or, as the case may be, the risk mentioned in paragraph 1(3) or (4) to the national interests of the United Kingdom.
…"
"13. Limiting or ceasing business
A direction may require a relevant person not to enter into or continue to participate in –
(a) a specified transaction or business relationship with a designated person,
(b) a specified description of transactions or business relationships with a designated person, or
(c) any transaction or business relationship with a designated person."
"Direction to cease business.
4. The Treasury direct that a relevant person must not –
(a) enter into, or
(b) continue to participate in,
any transaction or business relationship with a designated person."
"Application to set aside financial restrictions decision
(1) This section applies to any decision of the Treasury in connection with the exercise of any of their functions under
…
c) Schedule 7 to this Act …
(2) Any person affected by the decision may apply to the High Court … to set aside the decision.
(3) In determining whether the decision should be set aside the court shall apply the principles applicable on an application for judicial review.
(4) If the court decides that a decision should be set aside it may make any such order, or give any such relief, as may be made or given in proceeding for judicial review.
(5) Without prejudice to the generality of subsection (4), if the court sets aside a decision of the Treasury –
…
c) to give a direction or make an order under Schedule 7 to this Act,
the court must quash the relevant direction or order.
… "
"(4) Rules of court may make provision –
a. enabling the proceedings to take place without full particulars of the reasons for the decisions to which the proceedings relate being given to a party to the proceedings (or to any legal representative of that party);
b. enabling the court to conduct proceedings in the absence of any person, including a party to the proceedings (or any legal representative of that party);
c. about the functions of a person appointed as a special advocate;
d. enabling the court to give to a party to the proceedings a summary of evidence taken in the party's absence."
"67. Rules of court about disclosure
(1) The following provisions apply to rules of court relating to –
a. financial restrictions proceedings, or
b. proceedings on an appeal relating to financial restrictions proceedings.
(2) Rules of court must secure that the Treasury are required to disclose –
a. material on which they rely,
b. material which adversely affects their case, and
c. material which supports the case of a party to the proceedings.
This is subject to the following provisions of this section.
(3) Rules of court must secure –
a. that the Treasury have the opportunity to make an application to the court for permission not to disclose material otherwise than to –
i. the court,
ii. any person appointed as a special advocate;
b. that such an application is always considered in the absence of every party to the proceedings (and every party's legal representative);
c. that the court is required to give permission for material not to be disclosed if it considers that the disclosure of the material would be contrary to the public interest;
d. that, if permission is given by the court not to disclose material, it must consider requiring the Treasury to provide a summary of the material to every party to the proceedings (and to every party's legal representative);
e. that the court is required to ensure that such a summary does not contain material the disclosure of which would be contrary to the public interest.
(4) Rules of court must secure that in cases where the Treasury –
a. do not receive the court's permission to withhold material, but elect not to disclose it, or
b. are required to provide a party to the proceeding with a summary of material that is withheld, but elect not to provide the summary,
provision to the following effect applies.
(5) The court must be authorised –
a. if it considers that the material or anything that is required to be summarised might adversely affect the Treasury's case or support the case of a party to the proceedings, to direct that the Treasury shall not rely on such points in their case, or shall make such concessions or take such other steps, as the court may specify, or
b. in any other case, to ensure that the Treasury do not rely on the material or (as the case may be) on that which is required to be summarised.
(6) Nothing in this section, or in rules of court made under it, is to be read as requiring the court to act in a manner inconsistent with Article 6 of the Human Rights Convention.
(7) In this section –
a. references to a party to the proceedings do not include the Treasury;
b. references to a party's legal representative do not include a person appointed as a special advocate; and
c. "the Human Rights Convention" means the Convention with the meaning of theHuman Rights Act 1998 (see section 21(1) of that Act)."
"79.2(1) Where this Part applies, the overriding objective in Part 1, and so far as relevant any other rule, must be read and given effect in a way which is compatible with the duty set out in paragraph (2).
(2) The court will ensure that information is not disclosed contrary to the public interest.
(3) Without prejudice to paragraph (2), the court will satisfy itself that the material available to it enables it properly to determine the proceedings."
"(a) the Treasury are not required to serve that material or summary, but
(b) if they do not do so, at a hearing on notice, the court may –
(i) where it considers that the material or anything that is required to be summarised might adversely affect the Treasury's case or supports the case of the specially represented party, direct that the Treasury must not rely on such material in their case, or must make such concessions or take such other steps, as the court may specify; or
(ii) in any other case, direct that the Treasury do not rely on the material or (as the case may be) on that which is required to be summarised."
The principles to be applied:
"… the controlee must be given sufficient information about the allegations against him to enable him to give effective instructions in relation to those allegations. Provided that this requirement is satisfied there can be a fair trial notwithstanding that the controlee is not provided with the detail or the sources of the evidence forming the basis of the allegations. Where, however, the open material consists purely of general assertion and the case against the controlee is based solely or to a decisive degree on closed materials the requirements of a fair trial will not be satisfied, however cogent the case based on the closed materials may be"
Lord Scott at paragraph 96 made a point on which Mr Underwood particularly relied in his submissions:
"An essential requirement of a fair trial is that a party against whom relevant allegations are made is given the opportunity to rebut the allegations. That opportunity is absent if the party does not know what the allegations are. The degree of detail necessary to be given must, in my opinion, be sufficient to enable the opportunity to be a real one."
"sufficient to enable the bank to give sufficient instructions not merely to deny, but actually to refute (insofar as that was possible) 'the essential allegations' relied on by the Treasury to justify the making and continuance of the direction."
Richards LJ went on, at paragraph 35, to accept submissions that –
"if the Treasury relied on specific allegations in support of the directions, Bank Mellat was entitled to sufficient information about them even if they related to an Iranian bank other than Bank Mellat. It would be no answer to say that Bank Mellat was unlikely to be able to answer allegations relating to other Iranian banks. Disclosure cannot be avoided by arguing that it would make no difference to the outcome".
My approach: