DISCLOSURE IN UK SANCTIONS CASES: BANK MELLAT

A judgment of the UK High Court in Bank Mellat v HM Treasury [2014] EWHC 3631 (Admin) (judgment here) has just held that the essence of allegations against a person or entity justifying their inclusion in UK terrorist / proliferation sanctions must be disclosed, even where national security concerns prevent full disclosure.

The context is Bank Mellat’s ongoing application to set aside Financial Restrictions (Iran) Orders made against it under the Counter-Terrorism Act 2008, which permits the British Government to impose financial restrictions on people and organisations said to be connected with terrorism or nuclear proliferation (these Orders were imposed on the bank before the EU’s sanctions against Iran took over from the UK proliferation sanctions).  We reported that in June 2013 the Supreme Court of the UK held that the 2009 Order was unlawful (judgment here: [2013] UKSC 39).  The bank is now applying to set aside the 2011 and 2012 Orders, which have frozen 183 million Euros of its assets, under the UK Counter-Terrorism Act which permits closed hearings to be held and security-cleared Special Advocates to be appointed on the listed entity’s behalf.

A dispute arose about what level of disclosure the Government had to make to the bank (as oppose to the bank’s Special Advocates) to enable it to challenge the reasons given for its designation.  The Government argued that the principles set down in Secretary of State v AF (No 3) [2010] 2 AC 269 in the UK and A v UK (2009) 49 EHRR 29 in the European Court of Human Rights, to the effect that sufficient allegations must always be disclosed to enable the person / entity to refute them and mount a defence, do not apply to asset-freezing cases (as opposed to detention cases), based on a UK Supreme Court case Tariq v Home Office [2012] 1 AC 452.  The Court rejected that argument, holding that because EU law applies to the Orders (and therefore the principles in Case C-300/11 ZZ v Secretary of State for the Home Department), and given the “utterly damaging effect on [the bank’s] ability to function”, the essence of allegations must be disclosed.

The judgment is particularly interesting in the light of the proposals by the European Court of Justice (currently being considered by the Council of the EU) to permit closed hearings which would not require this minimum level of disclosure in sanctions cases (see previous blog).

This entry was posted in English court cases, Terrorist Sanctions, United Kingdom by Maya Lester QC. Bookmark the permalink.

About Maya Lester QC

Maya Lester QC has a wide ranging practice in public law, European law, competition law, international law, human rights & civil liberties. She has a particular expertise in sanctions. As the most recent (2016) Chambers & Partners directory put it, she "owns the world of sanctions". She spent 2011-12 in New York at Columbia Law School lecturing and writing on sanctions. She represents and advises hundreds of companies and individuals before the European and English courts and has acted in most of the leading cases, including Kadi, Tay Za, Central Bank of Iran, NITC and IRISL.

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