Terrorist Asset-Freezing etc. Bill [HL]

Lord Davidson of Glen Clova Excerpts

Wednesday 6th October 2010 Lords Chamber

Moved by

[Lord Davidson of Glen Clova]

46: After Clause 12, insert the following new Clause—
“Compensation
(1) The Secretary of State shall, by order, provide for the compensation of persons who have suffered loss as a result of an incorrect designation.
(2) An order under subsection (1) shall include provisions about—
(a) who may make a claim for an award;(b) to whom a claim for an award is to be made (which may be provision that it is to be made to the High Court or, in Scotland, the Court of Session);(c) the procedure for making and deciding a claim;(d) the circumstances under which compensation must be awarded (which may include provision that the circumstances involve negligence or other fault);(e) the amount that is to be awarded;(f) who is to pay any compensation awarded (which may include provision that it is to be paid or reimbursed by the Treasury);(g) how compensation is to be paid (which may include provision for payment to a person other than the claimant).”

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[Lord Davidson of Glen Clova]

My Lords, the purpose of our amendments is to raise the broad issue of compensation and indemnity for consideration by the Committee. The suggested amendments have, as their provenance, the Australian terrorist asset-freezing regime. There are two principal parts to our proposed scheme: first, to indemnify persons from civil litigation for loss suffered as a result of having assets wrongly frozen when the person holding the asset has acted in good faith and without negligence, which includes protection from the Crown, needless to say; and, secondly, to compensate those persons who have suffered loss as a result of having assets wrongly frozen, when the person holding the asset has acted in good faith and without negligence.

The draft of the proposed amendment differs from the Antipodean legislation but follows the same approach as adopted in Australia. The position in Amendment 52 on indemnity is self-explanatory—namely, to exclude liability when the person has acted in good faith and without negligence in compliance or purported compliance with this part. It then sets out, perhaps a little inelegantly, how the various persons and institutions might be identified by reference to designation.

The second, related, aspect is compensation, set out in Amendment 46, which suggests a power for the Secretary of State to make orders providing for compensation when people have suffered loss as a result of an incorrect designation. The order may include various provisions, as is set out in the proposed amendment, on who can claim for an award, with which court the claim may be made, and so on. The phrase adopted,

“suffered loss as a result of an incorrect designation”,

would include persons incorrectly covered by a designation, such as someone with a similar name or the same name as the designated person—and US experience teaches us that that has become an increasing problem with terrorist-related issues. It would also include a designated person who has had their assets frozen incorrectly—for example, inconsistently with an applicable licence.

As I indicated earlier, we understand that the Government consider that there is sufficient compensation by way of a mechanism through appeal to the court. When I queried the Minister about this, I am not sure that I detected a complete response to our understanding. If my understanding is correct, one is in the position that the Appeal Court may make these orders, presumably by way of compensation. It would be helpful if the Minister could give some indication as to how it might be envisaged that such a process would work. It may be that it is seen as part of the judicial review process. Again, it would be helpful if it could be indicated how that might work.

The Government have also not included any particular compensation scheme in this Bill, but in so doing have distinguished the Bill from the Anti-terrorism, Crime and Security Act 2001, which provides a compensation scheme to be included with a freezing order. The proposal that is before the Committee in this amendment seeks to redress the dissonance between that Act and this Bill and to provide a transparent compensation scheme together with a proposed scheme for indemnity. That would avoid what might be called collateral damage from the operation of the asset-freezing regime proposed in the Bill. I beg to move.

[Baroness Noakes]

My Lords, I am sure that the Minister has “resist” written in large letters all over his speaking notes, but before he rushes to do so I shall add one example from the real world, which came to my party when we were preparing for the emergency Bill earlier this year. Our adviser at that stage, who was an eminent QC, gave us an example in relation to analogous legislation in which a company had been included on a blocked list because its shares had previously been held by a suspected person. Some months before his inclusion on this list, the person had sold his shares in the company on an arm’s-length basis and for value, but the company was nevertheless incorrectly included on a blocked list. It took a fair amount of time for the designation to be challenged and for the various other licences to be obtained, but in that intervening period the company suffered a considerable period of loss. My point in raising this is merely to say that there are real-world examples when loss can occur. We are not dealing with theoretical situations of safeguards to be included in the Bill. I hope that the Minister can give some reassurance to the Committee that remedies are available when that sort of situation arises.

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[Lord Wallace of Tankerness]

I am grateful to the noble Lord for that intervention. I sought to draw a distinction, which I think my noble friend Lady Noakes made, under Amendment 57, where the question is of the designated person himself or herself. My noble friend made a different point, the position on which I indicated I would write to her and clarify.

My understanding is that it would be possible for the court to make, as he says, such orders as it considers appropriate. That is not qualified in any way, although I take the noble Lord’s point. If indeed it requires further specification then I will be willing to consider that. If it is felt that the nature of what is in the Bill, although it seems very wide, is insufficiently wide to cover the reassurance that I have given, I will undertake to look further at that.

[Lord Davidson of Glen Clova]

I am invited to withdraw, and the Minister has always been remarkably persuasive when I appeared against him in court. There are a couple of points though. First, one cannot write off the Antipodes with a wave of the hand in the way that the Minister sought to do; they face the same problems and have produced imaginative responses.

With regard to the question of imposing a duty in respect of compensation, true it is that that differs from the 2001 Act; but it does not avoid the dissonance that the 2001 Act actually refers to a possibility—that is, a discretion in relation to compensation. I invite the Minister at least to consider whether there might be a similar discretion, if not a duty, in the Bill.

In relation to the safeguards already in place, one may obtain damages whether one is the designated person or a non-designated person. I am still slightly confused as to where in the Bill one is to find this. If it is to the Appeal Court that one must go, then not only is there the issue that the noble Baroness, Lady Noakes, raised—we will find out in due course what the answer to that is—but there is also the question of how the Appeal Court is going to deal with damages. As the Minister well knows, simply because one asserts a damage, it does not follow that it will be accepted by the authorities. Is the Appeal Court to have a fact-finding role in relation to damages?

In relation to judicial review, again, for a party who is not the designated person to raise their own judicial review and proceed to damages is perhaps not necessarily—as a matter of law, as the noble Lord, Lord Pannick, suggests—the most obvious way of acquiring damages. Again, it would be helpful in due course to have some clarification on that. I welcome the Minister’s embrace of the Human Rights Act, for which I know he has a strong regard, although it has not always been demonstrated by other members of the coalition. The way in which this is to proceed leaves a certain gap as to where the Human Rights Act will go in these issues. I will accede to the Minister’s suggestion that I withdraw the amendment, but I also note that we may well return to this on Report.

Amendment 46 withdrawn.

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[Lord Davidson of Glen Clova]

My Lords, I shall speak to Amendments 78 and 79, which stand in my name and that of my noble friend Lord Davies of Oldham. Amendment 78 is self-explanatory. It seeks consolidation of the legislation in relation to terrorist asset-freezing regimes throughout the United Kingdom. I am conscious that time after time it is suggested that all manner of laws should be consolidated, but that is not always possible due to parliamentary time and so on. In this case, I bring to the Minister’s attention—although I am sure he already knows—that in Ahmed the Supreme Court has already suggested that consolidation may be useful in this area. That view was repeated by the Constitution Committee. I immediately accept that consolidation is outside the scope of the Bill and, as the noble and learned Lord, Lord Wallace, has indicated, it might produce delay that could not be countenanced, given the need for the Bill to be in place by the end of the year. Therefore, only this limited amendment is proposed. It provides that the independent reviewer should include recommendations about whether there should be consolidation of the legislation.

Amendment 79 is also self-explanatory. It requires the independent reviewer to publish expenses and allowances. This is our usual requirement of transparency in relation to this innovation of a new reviewer.

[Baroness Falkner of Margravine]

The report by the Constitution Committee, of which the noble Lord, Lord Pannick, and I are members, recommended that there should be consolidation of the legislation. I think there are two other Acts that relate to terrorist-asset freezing regimes. Will the Minister tell us his views on that consolidation?