Asset Freezing (Compensation) Bill [HL]

Viscount Younger of Leckie Excerpts

Friday 10th June 2016 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, I am grateful for the opportunity to contribute and to speak about this important issue. I thank the noble Lord, Lord Empey, for securing not just the number one slot, as others have alluded to, but this debate and for proposing the Bill, and I thank all noble Lords for their contributions.

The Bill seeks to prevent the release of frozen assets in the UK that belong to persons involved in supplying arms used in terrorist attacks in the UK, so that they could be used as compensation for the victims. While I have much sympathy for the noble Lord’s intentions, I have some difficulties with the legal implications of the Bill and how it would work in practice. As noble Lords might imagine, I have had considerable discussions with officials. The conclusion is that it is likely that, by using the powers that would be granted by the Bill, the UK would be in breach of its obligations under UN Security Council resolutions, EU sanctions regulations and the European Convention on Human Rights.

The human rights issues relate in particular to the settlements referred to in Clause 1(5). Depending on what is meant by this provision, it could amount to the denial of a fair trial in breach of Article 6 of the ECHR, or a breach of the right to enjoyment of property in Article 1 of Protocol 1 of the ECHR. The person, entity or state whose assets are frozen may be forced to pay extortionate compensation simply to get the asset freeze lifted. They may also then take legal action against the UK to make good their losses.

It is also important to note that various EU and UN sanctions regimes freeze the assets of individuals and entities but give no power to transfer ownership of these assets. Further, these regimes also allow the Treasury to issue licences for the release of frozen assets for specific purposes, such as to meet basic needs or cover reasonable legal expenses of the sanctioned individual, but the Bill would prevent the Treasury doing so. The Bill would also allow the Treasury to release these funds to third parties. Both actions would place the UK in contravention of EU regulations and UN Security Council resolutions. This would leave the UK exposed to infringement proceedings by the European Commission, as well as domestic judicial review proceedings and claims under the Human Rights Act.

I want to be as helpful as I can to the noble Lord, Lord Empey, by going into a little more detail about the derogations, specifically on the circumstances in which the frozen assets can be unfrozen. While sanctions remain in force, access to the frozen assets can be licensed only in accordance with the grounds set out by the UN and the EU. In the UK, as the competent authority for administering sanctions, HM Treasury is responsible for licensing derogations from financial sanctions.

Seven licensing grounds are applicable in the Libya sanctions regime. To summarise, they allow for payments in the following categories: the basic needs of the designated person; the legal fees of the designated person; fees for the routine maintenance of frozen assets; extraordinary expenses of the designated person; satisfaction of judicial or administrative orders enforceable in the EU; humanitarian purposes; and obligations arising under contracts prior to the imposition of sanctions.

It is important to remember that different sanctions regimes will have different derogations. To clarify further, a Treasury licence would not compel the payment to be made but would simply provide that the payment would not be in breach of financial sanctions. In this case, it is the UK Government’s view that there are no grounds in the EU regulation and therefore no legal basis that would permit a licence to be issued for the purposes of releasing frozen funds to compensate victims of Gaddafi-sponsored IRA attacks.

However, the Bill also proposes to use the Terrorist Asset-Freezing etc. Act 2010—so-called TAFA—to supplement EU sanctions regimes, although it is unlikely that this would be possible. Designation under TAFA currently involves strict legal tests, including that the use of the power is necessary to protect members of the public from terrorism. It is difficult to see how this test would be fulfilled where funds have already been frozen under EU sanctions. It is also difficult to see how TAFA would enable compensation to be paid, as TAFA provides no power to transfer ownership of funds.

I understand that the noble Lord has, with good intentions, tabled this Bill to allow Libyan frozen assets to be used to pay compensation to victims of Gaddafi-sponsored IRA attacks both in Northern Ireland and across Great Britain. I completely agree about the importance of taking the correct approach towards compensation for victims of these terrible attacks, but the difficulties with the Bill that I have outlined are relevant to all the sanctions regimes, including the Libya regime. Also, in relation to the Libya regime, the nearly £9.5 billion in frozen Libyan assets in the UK are largely part of sovereign wealth funds and very little belongs to individuals, for whom in any event it would be difficult to establish a direct link to IRA-related terrorism in the UK.

It is right that those whose lives were affected by these senseless attacks should be able to seek redress and compensation. This morning, I have been moved by the comments of the noble Lords, Lord Rogan and Lord Empey, who mentioned a number of atrocities as a reminder for the House—as if the House needed reminding. I was particularly moved by the comments of the noble Lord, Lord Brennan, who outlined in some graphic detail the effects on the victims of these outrages. He stated that the victims were in the front line of terrorism. Of course, he is absolutely right. We will do all we can to facilitate efforts by victims and their families to seek compensation. However, the provisions of the Bill as they stand are not a suitable remedy.

The Government maintain the position that we want to see a fair solution for all victims of terrorism, including attacks perpetrated by the IRA and in particular Gaddafi-sponsored IRA terrorism, but these compensation claims are private matters that are best pursued directly with the Libyan authorities. However, I am aware that the Foreign and Commonwealth Office provides facilitation support to campaign groups when requested through its Libya reconciliation unit and continues to stress to the new Libyan Government of National Accord—the so-called GNA—that legacy issues are a priority for Government. Mr Ellwood, the FCO Minister responsible for Libya, raised the issue of redress with Prime Minister Fayez Sarraj in Tunis last November, and officials reiterated this point during the Foreign Secretary’s visit to Tripoli on 18 April—quite recently.

Also, the Northern Ireland Affairs Committee, which is doing great work on legacy issues and championing the cause of victims, is currently looking into government support for UK victims of Gaddafi-sponsored IRA terrorism. I understand that the inquiry is still ongoing. The FCO gave evidence to it in September 2015 and in March 2016. A report will be published in due course. I am keen that the Government continue with these efforts, which I hope give some comfort to the noble Lord, Lord Empey, and to the noble Lord, Lord Rogan, who raised the issue of timing. It is an important issue, but I have outlined the difficulties with the legal implications of the Bill and how it will work in practice, particularly in relation to the Libya sanctions regime.

I finish with an important point that the noble Lord, Lord Empey, raised. He stated that the Governments of the US, France and Germany have had some success in acting on this. I think he was claiming that the UK had not. I do not agree with him on that. I should also point out that the US, French and German Governments’ claims were for direct atrocities, of which Lockerbie and the dreadful Berlin discotheque bombings are part. Those were highlighted in UN resolutions, where the responsibility could be assigned to the Libyan state. I should stress to the House that there has been no such UN resolution in relation to the IRA bombings. With that, I thank the noble Lord, Lord Empey, once again for securing this important debate.