UK Supreme Court upholds legislative limitations on the right to a fair trial

Bank Mellat v Her Majesty's Treasury (No 1) [2013] UKSC 38 (19 June 2013)

Summary

A narrow majority of the UK Supreme Court has ruled that it is entitled to consider "closed materials", being materials only available to one party to a proceeding, in certain cases arising under the Counter-Terrorism Act 2008 (Act). The court, in coming to its decision, sought to balance the principles of open justice and a person's right to a fair trial with considerations of national security.

Facts

The Act empowers the state to take steps to prevent money laundering, terrorist financing and the proliferation of nuclear weapons. Specifically, it empowers the Treasury to direct financial institutions not to engage in transactions or dealings with specified others, in circumstances where it has a reasonable belief that money laundering or the financing of terrorist or nuclear weapons programs has occurred. The underlying rationale of the Act is the protection of national security.

On 9 October 2009, the Treasury issued a directive that all members of the UK's financial sector cease dealing with Bank Mellat, an Iranian bank with substantial operations in the UK and other countries. This directive "effectively shut down the United Kingdom operations of the Bank and its subsidiary, and is said to have damaged the Bank's reputation and goodwill both in this country and abroad".

The issues

The Bank applied to the High Court to have the directive set aside. The government argued that it had highly sensitive and confidential evidence in support of the directive which ought not be disclosed to the Bank or others. The trial judge agreed to engage the closed procedures specifically provided for under the Act.

The two-day trial before the High Court was partly open and partly closed.  During the closed part of the hearing, the Bank's interests were represented by "special advocates" who had been given clearance to access the sensitive material, but were not permitted to disclose it or seek instructions from the Bank in relation to that material. At the conclusion of the hearing, the trial judge issued two judgments, one open and one closed. Ultimately, the trial judge confirmed that the Bank had facilitated Iran's nuclear weapons program and, thus, upheld the directive.

The Bank then appealed to the Court of Appeal. That appeal was held largely by way of an ordinary open hearing, although there was a short closed hearing at which the Court of Appeal considered the trial judge's closed judgment. The Court of Appeal declined to grant the appeal and the directive was upheld.

The Bank then appealed to the Supreme Court. One of the key issues before the Supreme Court was the question of whether it was entitled to conduct its own closed procedure and consider the closed judgment of the trial judge. This question was a complex one because, unlike the High Court and the Court of Appeal, the Act made no specific provisions for closed hearings in the Supreme Court, which was still in the process of being established when the Act was enacted. Hence, the source of the legislative power to establish closed procedures – if it existed at all – was unclear.

Decision

Majority decision

A five-member majority found that the Supreme Court did have the power to adopt the closed procedures. This power, according to the majority, was derived from legislation and was not an inherent power.

The majority distinguished the present case from the landmark decision in Al Rawi v Security Service [2012] 1 AC 531, in which the Court had previously held it had no inherent power to create closed processes. In Al Rawi, Lord Dyson had said:

…the right to be confronted by one's accusers is such a fundamental element of the common law right to a fair trial that the court cannot abrogate it in the exercise of its inherent power. Only Parliament can do that.

The majority endorsed the rationale in Al Rawi and emphasised the fundamental importance of the principles of open justice and the right to a fair trial. In this case, however, the majority said Parliament had abrogated the right to a fair trial through the provisions of the Act, which translated to the Supreme Court notwithstanding that the Act did not make specific reference to the Supreme Court. 

The majority overcame this lacuna by relying on the rules of the Supreme Court which, in essence, require that court to deliver justice in appeals from lower courts. In other words, in order to properly hear appeals and deliver justice, the Supreme Court must be able to adopt the same processes relating to closed materials as lawfully adopted in the courts below.

The majority clearly had misgivings about the closed processes generally, and issued guidance about the steps that parties and courts ought to take to address proportionality and limit the abrogation of rights as much as practical.

Minority decisions

Three members of the Supreme Court issued dissenting judgments, including Lord Kerr and Lord Reed who found that the rights to open justice and a fair trial prevailed in the absence of any express provisions in the Act enabling the Supreme Court to conduct closed processes. 

Lord Dyson also dissented, finding that although the Supreme Court had the power to adopt a closed material procedure, "the power should only be exercised where it has been convincingly demonstrated that it is necessary to do so in the interests of justice." He argued that the threshold was not met in this case, because the closed judgment added nothing to the Supreme Court's ultimate conclusions in the appeal.

Commentary

The right to a fair trial, which encompasses a person's right to know the case against them and properly test that case, has been the subject of a number of international human rights decisions.

This right has also been the subject of legislative limitations in Australia, where refugees who are given negative security assessments by ASIO may be detained indefinitely without being informed of the evidence that ASIO has against them, or the opportunity to test that evidence. Refer to Madeline Forster's case note on ZZ v Secretary of State for the Home Department [2013] EUECJ C-300/11 from a previous edition of this bulletin for a further discussion of these issues. 

The decision is available online at: http://www.bailii.org/uk/cases/UKSC/2013/38.html

Emma Purdue is a lawyer at Lander & Rogers.