Terrorist Asset-Freezing etc. Bill [HL]

Lord Wallace of Tankerness Excerpts

Wednesday 6th October 2010 Lords Chamber

[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.

[The Advocate-General for Scotland (Lord Wallace of Tankerness)]

My Lords, in responding to the amendment, I congratulate the noble and learned Lord, Lord Davidson of Glen Clova, on a very productive summer working on the Antipodean experiences, based on questions that he had already asked my noble friend Lord Sassoon, which are the origins of these new clauses. They raise important points about compensation in very real situations, such as the one described by my noble friend Lady Noakes, when an incorrect designation can lead to consequences of loss for those who have been wrongly designated, and also on the question of indemnity.

Amendment 46 introduces a new clause that imposes a duty on the Treasury to make an order providing for compensation for persons who have suffered loss as a result of an incorrect designation. The noble and learned Lord, Lord Davidson, said that this was based on Australian legislation in a similar field, and referred in his closing remarks to a parallel provision in the Anti-terrorism, Crime and Security Act 2001, under which the Treasury may include a provision for the award of compensation when a person has suffered a loss as a result of a freezing order or in relation to a licensing decision. The word “may” marks the distinction between the 2001 Act and the new clause before us today, which makes it a requirement by using the word “shall”.

With regard to our position, my noble friend Lady Noakes rightly anticipates the word “resist”, not because we do not recognise that there is an important issue here to be addressed but because the Bill already includes a number of important safeguards, including the right of any affected person to challenge a decision of the Treasury. Indeed, following our amendments, we have debated today the right of affected people to apply to the courts for a robust and in-depth consideration of a Treasury asset-freezing decision, as well as to apply for judicial review in terms of licensing matters. Should a designated person or any other person wish to seek compensation for loss suffered as a result of an incorrect designation, we believe that there are sufficient existing opportunities available for them to do so. It would be possible, in connection with a challenge of the sort that I have described above, for the person to claim damages.

I note that the new clause, as drafted, is in respect of an incorrect designation—in other words, it goes to the heart of a designation that has been made. That is in the terms of the new clause that has already been debated and which the House will vote upon later. The new clause relating to appeals to the court relates to a decision of the Treasury to make an interim or final designation of a person. I refer the Committee to the terms of that new clause, at Amendment 57:

“On such an appeal, the court may make such order as it considers appropriate”.

Therefore, as I have indicated, we believe that it would be possible, in connection with a successful challenge against the designation, for the person to claim damages, and it would be open to the court to award damages to a successful applicant. Indeed, there may be other circumstances—

[Baroness Noakes]

I apologise for interrupting the Minister. If I turn to Amendment 57, I see that it is the designated person who may appeal, which does not include all the potentially affected persons. Would he comment on that?

[Lord Wallace of Tankerness]

I acknowledge that point. My understanding is that if a person other than the designated person had suffered loss as a result of a decision of the Treasury, it would be possible for them to raise an action. I will get further information to confirm that to my noble friend, but the person whose designation is being challenged—the designated person—would have a forum and an opportunity in that context to seek damages. It may also, in some circumstances, be open to a person to claim damages under the Human Rights Act if the particular circumstances so arose, and therefore we not believe that any further provision for compensation is necessary.

The purpose of Amendment 52 would appear to be to increase the protection from prosecution given to a person complying with the provisions of Part 1 of the Bill. It would achieve that by specifying that no person complying with Part 1 was liable to court action as a result of such compliance. Again, the intention behind this is understandable, and we recognise that the rationale is to provide that additional protection from claims made against persons—it could be, for example, bank employees who have quite dutifully acted in compliance with the requirement under Part 1 of the Bill. However, we do not believe that the proposed clause is necessary. It is already a defence to claim that a person was acting in compliance with a lawful requirement, and the Government believe that this principle is sufficiently well established that the drafting of the Bill does not need to be amended. In fact, the basic principle is already there, and we do not need to add to it; indeed, it is often the case that when you add to something that is already well established in principle, you sometimes can give rise to questions about the extent of the principle. We believe that that principle is there, and it is well established. Accordingly, the amendment is not necessary. In the circumstances, I hope that the noble and learned Lord, Lord Davidson, will be prepared to withdraw his amendment.

[Lord Pannick]

I would like clarification in relation to compensation. As I understood the Minister, he suggests that Amendment 57, giving the court the power to make such order as is considered appropriate, would be broad enough to empower the court to award compensation to the affected individual who had been designated. Is the Minister saying that this provision is broad enough and is intended to overturn the general principle of English administrative law—and, I presume, Scottish administrative law—that the law does not normally provide compensation for those who have suffered direct loss as the result of invalid administrative action? One normally needs to show some tort, a misfeasance—that either the official knew that what he was doing had no lawful basis or he was at least reckless. If it is the intention to give the court a power to grant compensation simply for the invalid nature of the designation, would it not be better to say so expressly in the Bill?

[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.

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[Baroness Hamwee]

This is a short amendment to Clause 16, which gives the Treasury powers to request information. Under subsection (3) we are told that the power is exercisable only where the Treasury believes that it is necessary to monitor compliance or detect evasion. My amendment would take out “the Treasury believe that” so that it reads “only where it is necessary for the purpose”, to provide a more objective test and give one the basis to ask for confirmation that the belief—assuming the clause is unamended—that the Treasury must have is reasonable. I beg to move.

[Lord Wallace of Tankerness]

I thank my noble friend for this amendment. As she has indicated, the effect of the amendment would be to make the grounds for a request under this part into an objective test by requiring it to be necessary, rather than—as provided and drafted as present—a subjective test. My noble friend would do that through the removal of the reference to the Treasury believing it to be necessary. I understand the concern that prompts the amendment. The clause makes whether to seek certain information a matter of subjective judgment for the Treasury. However, if this is challenged we believe that, as a consequence, the court will look at the reasonableness of the belief that it was necessary, rather than at whether it was objectively necessary. It is a high test and threshold for there to have to be a belief that the information must be necessary. Ultimately, whether the information is needed or not it is a matter for the Executive. However, as drafted, there is a high threshold to be satisfied, but it is nevertheless considerably preferable to the objective test that would result from my noble friend’s amendment. Therefore, I urge her to withdraw her amendment.

[Baroness Hamwee]

I am grateful. I beg leave to withdraw.

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[Baroness Hamwee]

This amendment is longer but I hope the debate will not take us very long. We have just dealt with Clauses 16 and 17, which allow the Treasury to request—though it really comes down to “require”—information or documents. Clause 18 makes it an offence to fail to comply with such a request. I am grateful, as always, to the organisations Justice and Liberty for the amendment, which makes provision in relation to that requirement where providing information or documents might result in self-incrimination.

The Human Rights Act provides under Article 6 the right to a fair trial and that includes privilege against self-incrimination. The amendment is modelled on provisions in existing legislation and would continue to require the person in question to provide the information, but would also provide that evidence which is self-incriminatory should not be admissible in any criminal proceedings against that person. I beg to move.

[Lord Wallace of Tankerness]

My Lords, as my noble friend has explained, the underlying concern which her amendment seeks to address is that there could be circumstances leading to self-incrimination. The amendment seeks to protect the privilege against self-incrimination. She has also indicated that it is based on provisions in other legislation. I think that the Companies Act may have similar provisions. The amendment appears to be born from a concern that the Bill infringes that right against self-incrimination. I seek to reassure my noble friend and the Committee that the privilege against self-incrimination is not overridden by the Bill. In particular, a concern held by a person that compliance with an information request would infringe that person’s right against self-incrimination would form a reasonable excuse. I draw the Committee’s attention to Clause 18(1), which states:

“A person commits an offence who—

(a) without reasonable excuse refuses or fails … to comply with any request made under this Chapter”.

We believe that the right against self-incrimination would form a reasonable excuse under Clause 18(1) to refuse to comply with such a request. I believe that this provision is sufficient to maintain the important privilege against self-incrimination to which my noble friend referred. I hope she will be reassured that it is sufficient and that she will therefore withdraw the amendment.

[Baroness Hamwee]

My Lords, indeed I am reassured and I beg leave to withdraw the amendment.

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Moved by

[Lord Wallace of Tankerness]

55: Clause 19, page 9, line 43, at end insert—
“(ba) to any law officer of the Crown for Jersey or Guernsey;”

[Lord Wallace of Tankerness]

My Lords, this is a short technical amendment. Clause 19 as a whole provides that the Treasury may disclose information obtained under Part 1 to various persons, organisations and bodies within the United Kingdom and elsewhere for the purposes of facilitating compliance with the asset-freezing regime, promoting co-operation among those on whom it falls to implement it and enabling effective enforcement of the financial restrictions within the United Kingdom and across borders. Therefore, the ability to share information is essential to the maintenance of an effective asset regime. However, I take the opportunity to stress that the Treasury will share information only when it is necessary to do so, and will disclose only those aspects of the information which need to be disclosed. However, the Government have tabled this small amendment to remove any doubt that the disclosure of information obtained under Part 1 may be disclosed to the law officers of Jersey or Guernsey. We have done so because the law officers of Jersey and Guernsey are appointed by the Crown in Right of Jersey and Guernsey but are independent of the two states. Because of this distinction, we felt that it was necessary to ensure that the original intention of the clause—namely, the ability of the Treasury to share information with these law officers—has been met. I hope that your Lordships will be able to support this technical amendment to the Bill.

Amendment 55 agreed.

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[Lord Wallace of Tankerness]

My Lords, Amendment 70 from my noble friend Lady Hamwee raises some important points about the use of special advocates and disclosure, as has been reflected in the speeches in this—albeit short—debate.

Amendment 70 relates to the supplementary provisions in relation to anyone wishing to challenge an asset-freezing decision. Clause 23(4), which the amendment seeks to delete, applies the procedures to be followed in determining an application made to the court for a Treasury decision to be set aside. The provisions of subsection (4) require the maker of the rules of court to have regard both to the need for a proper review of the decision that is subject to challenge and to the need to ensure that disclosures are not made where to do so would be contrary to the public interest such as—to give the most obvious example—for reasons of national security.

As asset-freezing proceedings relate to issues of national security, some cases will inevitably involve the use of sensitive, or closed, material such as intelligence material that it would not be in the public interest to disclose to the individual concerned. However, I emphasise that the starting point must be that the individual is given as much information as possible, subject only to the legitimate public interest concern. However, the provisions in Clause 23 ensure that closed material can also be used in court proceedings through the special advocate system, which is the system that Amendment 70 seeks to restrict but which nevertheless should, we believe, be part of the system that is used.

The special advocate system and the disclosure procedure are designed to ensure procedural justice for individuals in admittedly difficult circumstances in which in the public interest material cannot be disclosed to them. The special advocate, who is a specially cleared lawyer, will take instructions from the individual and will then have access to the closed material. Without this subsection, the court might not be able to appoint a special advocate, whose role would be to argue for more information to be disclosed to the individual and also, in effect, to mount a challenge against the Treasury decision involving closed information.

As this debate reflects, as other exchanges have reflected and indeed as court cases reflect, the Government recognise that a range of concerns have been expressed about the special advocate system. I assure the Committee that the Government are committed to meeting our obligations under the European Convention on Human Rights with respect to a right to a fair trial and we believe that the special advocate system is part of the process. I can advise the Committee that there will be an opportunity to raise the concerns that this amendment is aimed at more widely during a consultation on a government Green Paper on the use of sensitive information in judicial proceedings. That Green Paper will aim to develop a framework for ensuring appropriate judicial and non-judicial scrutiny of intelligence and security activities in line with the Government’s commitment to individual rights, the rule of law and properly protecting national security. It is anticipated that that Green Paper will be published next year.

Ultimately, we must constantly strive to secure in a modern legal framework the best balance between the interests of justice and the interests of security. We referred earlier to the case in which the noble Lord, Lord Pannick, represented the successful appellants. I indicated to him that that case obviously related to control orders and that the Government do not necessarily accept a read-across. I think he will understand why we are not in a position to make that read-across. I pointed out to him in an earlier exchange that fact and context are important in these circumstances. However, I reiterate what I said earlier: our starting point is that, so far as is consistent with the legitimate interests of national security, we should advise persons subject to a designation order what the grounds of that order are.

I acknowledge that this is a difficult and sensitive matter. I have indicated that we want to look at this whole issue next year on the basis of a Green Paper but, for the purposes of the present Bill and this amendment, we believe that it would be a mistake and not necessarily in the interests of the person who is subject to designation for this subsection to be removed. Controversial though the special advocate’s role may be, we nevertheless believe that it will be necessary in dealing with appeals or indeed judicial reviews that may arise under these provisions.

[Lord Pannick]

Can we be clear about this? Although the Government have introduced a very welcome right of appeal for persons who are designated, the Minister is telling the Committee that there may be cases where an individual is told absolutely nothing about the reasons for his designation and he will be left to rely on the special advocate, to whom he cannot talk and who cannot take instructions from him. Is that the Government’s position?

[Lord Wallace of Tankerness]

As I believe I indicated when I started to address this matter, the starting point is that the individual should be given as much information as possible, subject to a legitimate public interest concern. That is our position. We would wish to give as much information as possible, subject to the important question of where there may be legitimate national security reasons for not going beyond a particular area. Clearly, a special advocate can argue that that is insufficient. One of the duties of a special advocate is perhaps to challenge the Treasury about whether more information should be made available. Indeed, as court cases show, the courts look at this matter very seriously. However, in terms of the amendment, we believe it is important that the role of the special advocate is in place; otherwise, the amount of protection available to the person who is the subject of a designation order may be reduced.

[Baroness Falkner of Margravine]

The forensic intervention of the noble Lord, Lord Pannick, has gone to the heart of the problem. If I understood my noble and learned friend correctly, I think he was saying that we will have a Green Paper. That will be some time next year, but in the mean time my noble friend Lord Macdonald is conducting a review of the counterterrorism and security regimes which will report some time this autumn. Yet, we are asked with these events anticipated to leave the Bill as it is. What will we get? Will we have bad legislation which will be overturned shortly as it will be deemed inappropriate if my noble friend Lord Macdonald finds that that is the case; or will it be overturned as a result of the consultation? As this Bill is such an improvement on the previous regime, would it not be sensible to take this improving zeal forward slightly and stick with our consistent respect on this side of the House for the rule of law in civil liberties?

[Lord Wallace of Tankerness]

I recognise and appreciate the zeal with which my noble friend makes her point. I reiterate that the disclosure process is designed to ensure that the maximum amount of material that can be disclosed to the individual without damaging the public interest should be disclosed. We heard today of the Law Lords judgment in the case of AF and Others that in certain cases, such as control order hearings, even when public interest concerns arise, the disclosure obligations were considerable. Because of the legitimate concerns that have been expressed, we want to look at this issue. We do not need to reiterate the fact that this legislation has to be on the statute book. I do not think that anyone has advocated that we should extend sunset clauses. It is common ground that we wish this legislation to be on the statute book by 31 December this year. That is not sufficient time to allow this important review to take place, but I can give an assurance that the matter is of such importance that we are looking at it. However, I emphasise that removing this subsection could lead to protection that would otherwise be available through special advocates not being available.

[Baroness Hamwee]

The noble Lord, Lord Pannick, as my noble friend said, has described the situation very graphically. But his description, my noble friend’s flattery or my amendment will not get us further tonight. I am not surprised that the Government resist dealing with special advocates separately in this regime from how they might be dealt with overall. It occurred to me because of the counterterrorism review to suggest a sunset clause to this Bill so that we would be forced to reconsider it all when we had the outcome, but I thought that that would not endear me to my noble friends, and more importantly it is not entirely the proper way to go about things. However, it was quite tempting. I am not at all surprised at the response. I share the concerns that have been expressed and beg leave to withdraw the amendment.

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Moved by

[Lord Wallace of Tankerness]

71: Clause 23, page 12, line 4, after “on” insert “an appeal under section (Appeal to the court in relation to designations) or”

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Moved by

[Lord Wallace of Tankerness]

74: After Clause 23, insert the following new Clause—
“Initial exercise of powers to make rules of court
(1) The first time after the passing of this Act that rules of court are made in exercise of the powers conferred by section 23(4) in relation to proceedings in England and Wales—
(a) on an appeal under section (Appeal to the court in relation to designations), or(b) on a claim arising from any matter to which such an appeal relates,those rules (together with any related rules of court) may be made by the Lord Chancellor instead of by the person who would otherwise make them.(2) The first time after the passing of this Act that rules of court are made in exercise of the powers conferred by section 23(4) in relation to proceedings in Northern Ireland—
(a) on an appeal under section (Appeal to the court in relation to designations), or(b) on a claim arising from any matter to which such an appeal relates,those rules (together with any related rules of court) may be made by the Lord Chancellor instead of by the person who would otherwise make them.(3) Before making rules of court under this section, the Lord Chancellor must consult—
(a) in relation to rules applicable to proceedings in England and Wales, the Lord Chief Justice of England and Wales;(b) in relation to rules applicable to proceedings in Northern Ireland, the Lord Chief Justice of Northern Ireland.(4) The Lord Chancellor is not required to undertake any other consultation before making the rules.
(5) The requirements of subsection (3)(a) and (b) may be satisfied by consultation that took place wholly or partly before the passing of this Act.
(6) Rules of court made by the Lord Chancellor under this section—
(a) must be laid before Parliament, and(b) if not approved by a resolution of each House before the end of 40 days beginning with the day on which they were made, cease to have effect at the end of that period.(7) In reckoning the period of 40 days no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.
(8) If rules cease to have effect in accordance with subsection (6)(b)—
(a) that does not affect anything previously done in reliance on the rules, and(b) subsection (1) or (as the case may be) (2) applies as if the rules had not been made.(9) The following provisions do not apply to rules of court made by the Lord Chancellor under this section—
(a) section 3(6) of the Civil Procedure Act 1997 (Parliamentary procedure for civil procedure rules);(b) section 56(1), (2) and (4) of the Judicature (Northern Ireland) Act 1978 (statutory rules procedure).(10) But section 4(1) of the Statutory Instruments Act 1946 (statutory instruments which are required to be laid before Parliament) applies to any such rules applicable to proceedings in Northern Ireland as it applies to a statutory instrument which is required to be laid before Parliament after being made.
(11) Until section 85 of the Courts Act 2003 (process for making civil procedure rules) comes into force, in subsection (9)(a) above, for “section 3(6)” substitute “section 3(2)”.
(12) In this section—
“related rules of court” means rules of court that—
(a) are contained in the same instrument as the rules mentioned in subsection (1) or (as the case may be) (2), and
(b) relate specifically to the same kind of proceedings as those rules,
“rules of court” means rules for regulating the practice and procedure to be followed in the High Court or the Court of Appeal.”

[Lord Wallace of Tankerness]

This group of government amendments make provision for court rules for the hearing of challenges to decisions by the Treasury. Amendment 74 is designed to ensure that court rules tailored to the requirements of an appeal from a designation decision are in place shortly after the Bill is enacted. Having court rules in place might self-evidently be necessary to ensure that there is a procedure for hearing any challenges that commence shortly after Royal Assent.

Ordinarily, court rules are made by the relevant committee—in this case, either in the Civil Procedure Rule Committee or the Northern Ireland Supreme Court Rules Committee. However, the amendment gives the Lord Chancellor power to make the initial rules. It is important to explain that the reason for doing that is entirely one of practicality. Rules are needed immediately the Act is in force and, given the short timeframe, it would be very difficult for the committees to make such provision. We therefore think that the Lord Chancellor is best placed to do so. However, after that initial exercise of the power, any future changes to the rules would be solely for those committees to determine.

A similar situation arose in the context of tailoring court rules for asset-freezing proceedings under the Counter-Terrorism Act. Again, rules were needed to be in place immediately after designation, and provision in that case was made for the Lord Chancellor to make the rules in a similar way. I can assure the Committee that, before making rules, the Lord Chancellor will be required to consult the Lord Chief Justice of England and Wales and the Lord Chief Justice of Northern Ireland as appropriate. Rules must be laid before Parliament and be approved by both Houses within 40 days, failing which they will cease to have effect.

Amendments 92 and 93 make small technical changes to the existing court rules made by the Lord Chancellor under the Counter-Terrorism Act 2008 to apply these rules to any challenges to Treasury decisions other than designation decisions. These will fall to be determined by judicial review. Amendments 89 to 91 make consequential changes, primarily to set out the territorial extent of the amendments to the court rules made by Amendments 92 and 93. Anticipating a possible question from the noble and learned Lord, Lord Davidson of Glen Clova, when I saw these provisions I asked what was the position in Scotland. I am assured that the rules of court in Scotland can be made under the Court of Session Act 1988, that no additional power needs to be taken in the Bill and that the Office of the Solicitor to the Advocate-General has been in touch with the Lord President's private office about specific rules which need to be made. With those reassurances, I beg to move.

Amendment 74 agreed.