Wednesday, 10 February 2010

More on the Terrorist Asset-Freezing (Temporary Provisions) Bill

On this blog and on another there were wonderings as to why the Government were not using the Bill to protect actions taken under the ultra vires orders since the date they were made rather than the date on which the Supreme Court declared them ultra vires.  

In the House of Lords last night (the Bill is fast tracking through Parliament and is being considered for only a short period in each House) this point was spotted by Lord Pannick :

Perhaps I may also ask the Minister about the retrospective effect of the Bill. He mentioned that Clause 2 has a retrospective effect, back to 4 February, to protect the interests of the banks. However, as I understand it, the Bill has no retrospective effect for the period before 4 February. That means, I assume, that someone whose funds were frozen last year and who asked the bank to release the funds on 27 January-the date when the Supreme Court handed down its substantive judgment-would have a good claim against the bank for damages. Will the Minister please clarify whether my understanding is correct, because I do not understand what is the point in distinguishing in this temporary Bill between what occurred on 3 February and what occurred on 4 February? 

Lord Myners for the Government did not seem to understand the point and replied with this, there is an intervention and then he says he will think about it:

The noble Lord, Lord Pannick, also said that he was a little puzzled as to why Clause 2 gives retrospection to the banks only back to 4 February, and raised the question of what would happen if banks were to be sued for having maintained frozen accounts on 27 January, after the first Supreme Court judgment. We believe that retrospection should be used only where absolutely necessary, especially in a fast-track Bill. The reason we do not provide banks with retrospective cover predating 4 February in this Bill is that the Supreme Court judgment did not take effect until 4 February. Prior to that date, the banks were therefore in a position where they could reasonably argue that they properly thought they had a valid legal base to freeze terrorist assets. The noble Lord also expressed concerns about why we-
Lord Wallace of Tankerness: I hear what the Minister says on retrospection. Am I right in thinking, as the noble and learned Lord, Lord Mackay, indicated, that as a result of the Supreme Court decision, these orders have been null ab initio-from the very beginning? Therefore, previously, if a person failed to comply with a prohibition or obligation-prior to 27 January, for example-they might have been guilty of a crime. However, is the Minister saying that no crime will have been committed if a person failed to comply with a prohibition or obligation under these orders prior to 4 February, or even 27 January?
Lord Myners: I thank the noble Lord, Lord Wallace, for his intervention. I will no doubt reflect on that question while I complete my answers to the noble Lord, Lord Pannick. With assistance, I might provide him with the accurate and precise answer that his question justifies, and which I know that he would expect. As I think I said, we abhor retrospection-particularly in a fast-track Bill-and would only seek to use it where we believed that the arguments for so doing were compelling.

He did not actually return to the question as far as I can see and the Bill passed second reading.

Later the Bill was in Committee and the Attorney General said this about the retrospective validation clause:

The clause validates actions taken by any person, except the Treasury-a very important exception-to maintain existing asset freezes during the period between the court quashing the terrorism order on 4 February and this Bill receiving Royal Assent by providing that the orders will be treated as validly made, should their actions be questioned. 

It seems that she didn't get the point about the orders being void from their promulgation either

But then she also said this:

I have to confess to the noble Baroness that having had intimidate dealings with the Bill only today,

I think she meant intimate.

Lord Thomas of Gresford (a QC) did note the point:

It was confirmed by the later decision of the Supreme Court that it had no discretion to suspend the order. It had the effect of declaring that the 2006 order had never possessed legal force and that it had been void from the start. It was therefore never an order in any legal sense.

But nobody apparently took it any further.

Lord Pannick did say this:

I hope I am not the only noble Lord for whom the constitutional principles set out by the Supreme Court matter. I hope I am not the only noble Lord who is most reluctant to wave a magic wand over these measures to validate, even temporarily, what is otherwise constitutionally objectionable. It is ironic indeed that when the Supreme Court has found these orders to be invalid because of the absence of parliamentary debate and parliamentary approval we are now asked to negate that invalidity by a procedure which allows for the most limited debate in Parliament. 

Here Here

But what about the retrospective effect point - the Bill passed third reading last night without any amendment (as far as I can tell) to deal with the issue and will probably receive Royal Assent today.  

But is anybody from the Government going to answer and deal with Lord Pannick's question?


  1. As ever, Pannick hit the nail on the head. Myners clearly had no grasp of the meaning of the word VOID. Wallace did grasp it. For once, it is good to be in the exalted company of Lord Pannick!

    There is going to be further legislation on this matter and hopefully it will receive more comprehensive examination in Parliament.

    Another interesting angle is this: just what was the status of the Supreme Court's judgment between it being delivered on 27th January and 4th February?

  2. It is common in the appellate courts for judgment to be handed down and for the Court to ask for submissions on the form of order to reflect the judgment. Hence the judgment does not take effect until the consequential order is made. So the judgment on 27th January had no effect until the order of 4th February. Although curious in this case - the point HMG has yet to grasp - the judgment and the order had no effect on the Orders in Council because they were ultra vires from inception.