West Law Report

Anti-terror asset-freezing order improperly made

From The TimesMay 5, 2008

Anti-terror asset-freezing order improperly made
Queen’s Bench Division

Published May 5, 2008

A, K, M, Q and G v HM Treasury

Before Mr Justice Collins

Judgment April 24, 2008

Orders in Council, made purportedly to give effect to United Nations resolutions freezing the assets of terrorist organisations and their adherents, were to be quashed since, among other faults, they had been improperly made outside the parliamentary process and were bad as creating criminal law of insufficient certainty.

Mr Justice Collins so held in the Queen’s Bench Division in allowing applications by A, K, M and Q to have asset-freezing orders under the Terrorism (United Nations Measures) Order (SI 2006 No 2657) set aside by special process and in allowing a claim by G for judicial review of that and of a further order under the al-Qaeda and Taleban (United Nations Measures) Order (SI 2006 No 2952).

Those orders had been made under section 1 of the United Nations Act 1946. They purported to give effect to various United Nations Security Council resolutions:

  1. 1373/2001 (Threats to international peace and security caused by terrorist acts),
  2. 1452/2002 (Threats to international peace and security caused by terrorist acts),
  3. 1267/1999 (on the situation in Afghanistan),
  4. 1333/2000 (on the situation in Afghanistan),
  5. 1390/2002 (The situation in Afghanistan),
  6. 1526/2004 (Threats to international peace and security caused by terrorist acts),
  7. 1671/2005 (The situation concerning the Democratic Republic of the Congo), and
  8. 1735/2006 (Threats to international peace and security caused by terrorist acts)

which were intended to combat the financing of terrorism.

The claimants had all been designated under that antifinancing regime. As a result orders were made imposing draconian limitations on their lives by way of control of their use of finance and other economic resources.

Mr Tim Owen, QC and Mr Daniel Squires for A, K, M and Q; Mr Rabinder Singh, QC and Mr Richard Hermer for G; Mr Jonathan Crow, QC and Mr Andrew O’Connor for the Treasury.

MR JUSTICE COLLINS said that it was clear that such an order was extremely harsh on the designated person and because of the criminal liability of those, including particularly his family, who might provide him with economic resources, given the wide definition given to that expression. But harshness was not in itself a reason to interfere with it.

Counsel for the applicants submitted that the method used to apply the obligations imposed by the UN resolutions was unlawful.

Parliament had been bypassed by the use of Orders in Council. In deciding the appropriate way in which the obligations should be applied, and in particular in creating the criminal offences set out in the orders, it was necessary that parliamentary approval should be obtained. Those submissions were, in his Lordship’s judgment, entirely persuasive.

Resolution 1371/2001 required the freezing of assets of those who committed or facilitated the commission of terrorist acts. Order 2006/2657 coferred power to designate where the Treasury had reasonable grounds for suspecting a person was or might be committing such acts.

His Lordship said it was impossible to see how the test in the UK order could constitute a necessary means of applying the UN resolution.

It was accepted the court could consider whether the person affected was, on the facts, properly within the test to be applied. That meant all material had to be available to the court, whether closed or open.

In his Lordship’s experience, that included intercept material. Section 17 of the Regulation of Investigatory Powers Act 2000 excluded such evidence from any legal proceedings Fairness worked for the Crown as it did for the applicants. Thus the Treasury was unable to rely on inculpatory intercept material just as the applicant was unable to rely on exculpatory intercept material.

That could not be in the interests of justice or indeed of ensuring that the right people were made subject to such orders. Thus, in his Lordship’s view, it was impossible to say that the use of an Order in Council was expedient in such circumstances.

It was submitted that the orders were unlawful in establishing criminal offences which went far beyond what was reasonably required and offended against the principle of legal certainty.

The very wide definition of “economic resources” made it impossible for members of the family of the designated person to know whether they were committing an offence or a licence from the Treasury was needed.

One of more than fifty queries to the Treasury, illustrating resultant absurdity, was whether a licence was needed to lend a car to the designated person to go to the supermarket for the family’s groceries. The Treasury, wrongly in his Lordship’s view, decided a licence was needed.

The principle of legal certainty in the context of criminal offences had been discussed by the House of Lords in Norris v USA ( The TimesMarch 14, 2008; [2008] 2 WLR 673), R v Rimmington (The Times October 28, 2005; [2006] 1 AC 459) and R v Jones (Margaret) (The Times March 30, 2006; [2007] 1 AC 136).

The purpose of asset-freezing was to ensure that funds were not made available for terrorist purposes. Thus any criminal liability which could fall on those who made any assets available to a designated person should depend on whether it was or ought to have been known to the supplier that the asset in question could result in funds being available for terrorist purposes.

That at the very least seemed to his Lordship to be an appropriate limitation on criminal liability.

How the requirements should be put into law was a matter for parliamentary consideration. Neither Order in Council represented a necessary or expedient means of giving effect to the obligations imposed.

The result would be that both the orders had to be quashed. That was not to say that freezing orders could not be made to comply with UN resolutions.

Solicitors: Birnberg Peirce & Partners and Public Law Solicitors, Birmingham; Tuckers, Marylebone; Treasury Solicitor.

R (M) v HM TREASURY & OTHERS

Last updated: 7:18 PM BST 07/05/2008
House of Lords

Lord Bingham of Cornhill, Lord Hoffmann, Lord Walker of Gestingthorpe, Baroness Hale of Richmond, Lord Brown of Eaton-under-Heywood

April 30, 2008

Benefits – Licences – Possession for terrorist purposes – Regulations – Spouses – Statutory interpretation – Terrorists – Benefits payments to spouses of listed persons Meaning of “for the benefit of” in Art. 2.2 Regulation 881/2002 – Art. 2a(1)(a) Regulation 881/2002 – Art. 2.2 Regulation 881/2002 – Art. 2.3 Regulation 881/2002

FACTS

The court was required to consider the proper interpretation of Regulation 881/2002 art. 2.2. The issue had arisen in connection with the payment of social security benefits to the spouses of persons and groups within the Taliban and al-Qa’ida network who were named in a list drawn up by the Sanctions Committee of the United Nations Security Council. It was not in dispute that a listed person would require a licence from HM Treasury for payment of funds to him, and that a family member of a listed person, such as a wife for example, would not be entitled without such a licence to make funds available to her husband. The question was whether a licence was necessary to enable social security benefits to be paid to the wife herself. The Treasury submitted that a licence was necessary because money spent by the wife on the running of the family household would be “for the benefit” of the husband within the meaning of art. 2.2 of the Regulation and that it had a duty to ensure that none of the benefit money paid to a wife was spent for purposes that might benefit the husband outside of the scope of art. 2a(1)(a) of the Regulation. It maintained that in order to police that restriction, the wife should have her benefits paid into a bank account, from which she could only draw up to £10 in cash for each member of the household and that she must send a monthly account to the Treasury detailing her expenditure and enclosing receipts.

ISSUE

The proper interpretation of Regulation 881/2002 art. 2.2.

HELD (Question referred to ECJ)

(1) The intrusive regime described by the Treasury was not required by art. 2.2 of the Regulation. It produced a disproportionate and oppressive result. The licence conditions were “to provide safeguards against the risk of these funds being diverted to terrorism” and it was hard to see how the expenditure of money on domestic expenses, such as food, from which a listed person derived a benefit in kind, could create any risk that the listed person may divert the funds to terrorism. Also, the broad construction given by the Treasury to the words “for the benefit of” produced an anomalous discrepancy with art. 2.3, and there was accordingly no limit to the non-financial economic resources that a wife may provide to a husband provided that they did not enable him to obtain funds, goods or services. It was likely that the words “made available…. for the benefit of” in art. 2.2 of the Regulation were intended to mean a benefit made available to the listed person that he could use for terrorist purposes. In the case of a family living on state benefits, which were carefully calibrated to provide them with no more than they needed to live on, it was wholly unrealistic to assume that anyone living with a listed person was likely to make any funds she received available to the listed person for the purposes of terrorism.

(2) A question was referred to the ECJ, namely whether payments of money to persons other than the listed person were required to be licensed on the ground that some of their expenditure of that money would be for the benefit of the listed person. That question involved interpreting the words “for the benefit of” in art. 2.2 to determine whether they had a wide meaning that covered any application of money from which a listed person derived some benefit, or whether they applied only to cases in which funds, financial assets or economic resources were “made available” for his benefit, so that he was in a position to choose how to use them.

Rabinder Singh QC and Simon Cox (instructed by Birnberg Pierce & Partners) for the appellants. Jonathan Swift and Cecilia Ivimy (instructed by Treasury Solicitors) for the respondents.

Freezing assets of terror suspects ruled unlawful by High Court

Posted in Anti-terrorism law (UK), Possession for terrorist purposes by mrkooenglish on May 4, 2008

The Times (“Freezing assets of terror suspects ruled unlawful by High Court“, April 25, 2008) reports:

Asset-freezing orders imposed by the Treasury on terror suspects have been ruled unlawful

Anti-terrorism legislation was condemned as poorly thought-out by a senior High Court judge yesterday as he declared that the Treasury’s powers to freeze suspects’ bank accounts were unlawful.

Mr Justice Collins said that terrorist financial orders — introduced by Gordon Brown when he was Chancellor — were absurd,unfair and a breach of fundamental rights.

The judge, who has lengthy experience of dealing with terrorism cases, said: “It was, frankly, another example of an immediate reaction without it being thought through properly — which is rather the pattern with the anti-terrorism measures.”

The Times revealed this week that the judge was preparing to criticise the asset-freezing regime in the latest of a series of rulings that have exacerbated tensions between the judiciary and the Government.

There are now 59 people living in Britain on the Treasury sanctions list, including the radical clerics Abu Hamza al-Masri and Abu Qatada, who are both in jail. The Bank of England has frozen 274 accounts, containing £656,000.

Abu Qatada had £180,000 cash in his home when it was raided in 2001 and, despite the sanctions, Abu Hamza made £120,000 on a property transaction while in prison.

Ruling on an appeal brought by five terrorist suspects — referred to in court as A, K, M, Q and G — the judge said that the sanctions had had “the most drastic effect” on them and their families.

People on the terrorist list have to apply to the Treasury for a licence to spend money on groceries and anyone who provides them with “an economic resource” is liable to a criminal conviction and a jail sentence.

The judge said the situation was “an absurdity” and recommended that two measures — the Terrorism Order and the al-Qaeda and Taleban Order — should be quashed. They will, however, remain in place pending an appeal that the ministers said the Government would pursue urgently.

The measures were adopted to give effect in British law to two United Nations Security Council resolutions imposing sanctions on people alleged to be funding terrorism.

The judge was critical that they were introduced as Orders in Council rather than through an Act of Parliament and were therefore not subject to debate by MPs and peers. He also criticised the absence of a procedure for suspects who wanted to challenge their listing as terrorists.

The Government, he added, should consider introducing measures in the Counter-terrorism Bill to provide for a tribunal at which people on the Treasury’s list could challenge the financial sanctions. The judge told government lawyers: “You are going to have to legislate at some stage, otherwise the State will not be able to put before the court the incriminating or allegedly incriminating material.”

He said he had “real concerns” that the orders had introduced a criminal offence, of assisting a listed person, without consulting Parliament.

David Davis, the Shadow Home Secretary, said that the High Court had left Mr Brown’s asset-freezing regime “in tatters”. He added: “When you make laws in a hurry that are unfocused and arbitrary, the result is neither firm nor fair — just fragile.”

Jacqui Smith, the Home Secretary, said that she was “very disappointed” with the ruling.

Jane Kennedy, the Financial Secretary to the Treasury, said: “The Government continues to be fully committed to defending and maintaining our asset-freezing regime which makes an important contribution to our national security by helping to prevent funds being used for terrorist purposes and is central to our obligations under successive UN Security Council Resolutions to combat global terrorism.”

But Jules Carey, solicitor for G, said that the importance of the judgment could not be overstated. He said: “It is the sovereignty of Parliament that is at stake here, the foundation block of the British constitution. If Government can, without consulting Parliament, give itself powers to create criminal offences and take away fundamental rights then we are watching the sun set on democracy.”