The Supreme Court held that two asset-freezing Orders in Council made by the Treasury under the United Nations Act 1946 were ultra vires. The Terrorism Order exceeded powers by imposing freezing on mere suspicion without Parliamentary scrutiny, while the Al-Qaida Order denied designated persons access to effective judicial remedy. The case affirmed the principle of legality against uncontrolled executive power.
Background
The appellants were individuals designated under two Orders in Council made by HM Treasury purportedly under section 1 of the United Nations Act 1946. The Terrorism (United Nations Measures) Order 2006 (‘the TO’) implemented Security Council Resolution 1373(2001), while the Al-Qaida and Taliban (United Nations Measures) Order 2006 (‘the AQO’) implemented Resolutions 1267, 1333 and 1390. Both Orders imposed severe asset-freezing regimes upon designated persons, effectively rendering them, as Sedley LJ observed in the Court of Appeal, ‘prisoners of the state’. The Orders were made by the executive without any form of Parliamentary scrutiny beyond being laid before Parliament for information only. The designations had devastating consequences: the appellants were denied access to any funds or economic resources, their family lives were severely disrupted, and in the cases of A and K, their marriages broke down and they disappeared.
A, K and M were designated under the TO on the basis that the Treasury had ‘reasonable grounds for suspecting’ they were persons who facilitated the commission of acts of terrorism. G was designated under both the TO and the AQO, the latter because his name was added to the Consolidated List maintained by the 1267 Committee at the United Kingdom’s request. HAY was designated under the AQO because his name was added to the Consolidated List by another state, and despite the United Kingdom considering his listing no longer appropriate, de-listing had not been achieved.
The Issue(s)
Common to both Orders
Whether the Orders were ultra vires section 1 of the 1946 Act by reference to the principle of legality, and whether they were incompatible with Convention rights under the Human Rights Act 1998.
The TO
Whether the TO exceeded the powers conferred by the 1946 Act because its terms, particularly the ‘reasonable grounds for suspecting’ test, went beyond those required by SCR 1373(2001).
The AQO
Whether the AQO was ultra vires the 1946 Act because it violated the right of effective judicial review, since designated persons had no effective means of challenging their listing by the 1267 Committee before any court or tribunal.
The Court’s Reasoning
The principle of legality and section 1 of the 1946 Act
The Supreme Court placed the principle of legality at the centre of its analysis. Lord Hope, delivering the lead judgment with which Lord Walker and Lady Hale agreed, invoked the foundational constitutional principle that general or ambiguous statutory words cannot override fundamental rights. He cited Lord Browne-Wilkinson in R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539, 575:
A power conferred by Parliament in general terms is not to be taken to authorise the doing of acts by the donee of the power which adversely affect the legal rights of the citizen or the basic principles on which the law of the United Kingdom is based unless the statute conferring the power makes it clear that such was the intention of Parliament.
Lord Hope emphasised that section 1 of the 1946 Act was enacted in 1946 in circumstances where Parliament contemplated non-military sanctions directed at states, not coercive measures targeted against individuals within the United Kingdom. There was no indication during the Parliamentary debates that it was envisaged the Security Council would require states to impose restraints on their own citizens, nor was the appropriateness of doing so by Order in Council discussed.
Lord Hope stated:
Even in the face of the threat of international terrorism, the safety of the people is not the supreme law. We must be just as careful to guard against unrestrained encroachments on personal liberty.
He further observed:
The consequences of the Orders that were made in this case are so drastic and so oppressive that we must be just as alert to see that the coercive action that the Treasury have taken really is within the powers that the 1946 Act has given them.
The TO: reasonable suspicion test
The TO permitted the Treasury to designate a person if it had ‘reasonable grounds for suspecting’ that person was involved in terrorism. SCR 1373(2001), however, referred to persons ‘who commit, or attempt to commit, terrorist acts’. Lord Hope held that by introducing the reasonable suspicion test, the Treasury exceeded the powers of section 1(1). The Resolution did not require or contemplate freezing on the basis of mere suspicion, and such a drastic interference with fundamental rights could not be justified as ‘necessary or expedient’ under the Act without explicit Parliamentary authority.
Lord Hope stated:
I would hold that, by introducing the reasonable suspicion test as a means of giving effect to SCR 1373(2001), the Treasury exceeded their powers under section 1(1) of the 1946 Act. This is a clear example of an attempt to adversely affect the basic rights of the citizen without the clear authority of Parliament.
Lord Phillips agreed, analysing the natural meaning of the Resolution and concluding that it required the freezing of assets of criminals, not suspects. He held:
The Resolution nowhere requires, expressly or by implication, the freezing of the assets of those who are merely suspected of the criminal offences in question.
Lord Mance concurred, holding that the Order substituted a different and much wider prohibition than that mandated by Resolution 1373:
A measure cannot be regarded as effectively applying that core prohibition, if it substitutes another, essentially different prohibition freezing the assets of a different and much wider group of persons on an indefinite basis.
The AQO: denial of effective judicial remedy
The AQO automatically designated persons listed by the 1267 Committee, without any domestic merits-based challenge being available. Lord Hope held that article 3(1)(b) of the AQO was ultra vires because it deprived designated persons of access to an effective remedy. There was nothing in the listing or de-listing procedure that recognised principles of natural justice or provided basic procedural fairness. He cited Zinn J in Abdelrazik v The Minister of Foreign Affairs [2009] FC 580:
I add my name to those who view the 1267 Committee regime as a denial of basic legal remedies and as untenable under the principles of international human rights. There is nothing in the listing or de-listing procedure that recognises the principles of natural justice or that provides for basic procedural fairness.
Lord Hope held:
I would hold that article 3(1)(b) of the AQO, which has this effect, is ultra vires section 1 of the 1946 Act.
Lord Phillips reached the same conclusion, applying the principle of legality:
Does an Order in Council that subjects individuals to severe interference with their rights to the enjoyment of property, to privacy and to family life on the ground that they are associated with terrorists, in circumstances where they are denied the right to know the case against them or to have access to a court to challenge that case, fall within the power conferred by section 1 of the 1946 Act?
He concluded that Parliament would not have foreseen the possibility that the Security Council would decide on measures that seriously interfered with the rights of individuals without providing them with a means of effective challenge before a court, and that the principle of legality therefore excluded such measures from the scope of section 1.
Convention rights
On the Convention rights arguments, the Court held that, following R (Al-Jedda) v Secretary of State for Defence [2008] 1 AC 332, obligations under the UN Charter prevailed over Convention obligations by virtue of article 103 of the Charter. The appellants’ invitation to reconsider Al-Jedda in light of the ECJ decision in Kadi v Council of the European Union [2009] AC 1225 was declined, as the Court held it was not possible to predict how the Strasbourg Court would approach the matter and that it should not depart from the House of Lords’ reasoning pending authoritative guidance from Strasbourg.
Lord Brown’s dissent on the AQO
Lord Brown dissented in part. While agreeing that the TO should be struck down because it was not sufficiently mandated by SCR 1373, he would have upheld the AQO, reasoning that it faithfully implemented the specific requirements of Resolutions 1267, 1333 and 1390. He argued that there could be no political cost in doing what the UK’s Charter obligations required, and that the Simms principle was therefore inapplicable. The majority rejected this analysis.
Practical Significance
This decision is of constitutional importance in several respects. First, it powerfully affirmed the principle of legality as a constraint on executive power exercised through delegated legislation, even where international obligations are invoked. The Court made clear that the executive cannot use general statutory powers to override fundamental rights without explicit Parliamentary authorisation. Second, the decision underscored the importance of Parliamentary scrutiny of measures that interfere with basic individual rights, rejecting the Treasury’s argument that political control was sufficient. Third, the Court recognised the right of access to an effective judicial remedy as a fundamental common law right that cannot be overridden by general statutory language.
As Lord Phillips concluded:
Nobody should conclude that the result of these appeals constitutes judicial interference with the will of Parliament. On the contrary it upholds the supremacy of Parliament in deciding whether or not measures should be imposed that affect the fundamental rights of those in this country.
The decision prompted the Government to introduce primary legislation — the Terrorist Asset-Freezing etc. Act 2010 — to replace the quashed Orders with a regime subject to Parliamentary oversight and judicial safeguards.
Verdict: The Supreme Court allowed the appeals of A, K, M and G. The Terrorism (United Nations Measures) Order 2006 was declared ultra vires and quashed. Article 3(1)(b) of the Al-Qaida and Taliban (United Nations Measures) Order 2006 was declared ultra vires. The Treasury’s appeal in HAY’s case was allowed only to the extent that Owen J’s declaration that the AQO as a whole was ultra vires was set aside and replaced with a declaration that article 3(1)(b) was ultra vires. The operation of orders relating to the AQO was suspended for one month to allow the Treasury to consider what steps to take.
