Terrorist Asset-Freezing etc. Bill [HL]

My Lords, in responding to an amendment moved by the noble Lord, Lord Pannick, I feel somewhat guilty as I do not feel able to go so far as my noble friend Lord Sassoon in offering concessions. However, I welcome the noble Lord’s amendments as they have given us the chance to have a very useful discussion. Notwithstanding the points that have been made about the adequacy or inadequacy of Pepper v Hart statements in providing clarity, I hope that the noble Lord, Lord Pannick, will feel that sufficient clarity is provided. This amendment relates to the debate that we had in Committee about the avenues available to a person who has suffered loss as a consequence of an asset freeze to obtain compensation. During that debate, the noble Lord, Lord Pannick, the noble and learned Lord, Lord Davidson of Glen Clova, and my noble friend Lady Noakes were particularly keen for the Government to indicate their position on this point, and I shall try to do so. The amendment of the noble Lord, Lord Pannick, would provide that the court can, in relation to appeals by designated persons against designation-related decisions, award damages if and to the extent that the court thinks it just and appropriate to do so. The noble Lord has tabled the amendment following our discussion on the scope of the orders available to be made by the court under Clause 26(3). In that discussion I drew the Committee’s attention to that provision and indicated 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””.—[Official Report, 6/10/10; col. 193.]" I was not suggesting—as my noble friend queried; and I am grateful for the opportunity to set the record straight—that it would be open to the court to award damages, "““simply for the invalid nature of the designation””." As the noble Lord rightly observed then, and repeated tonight, that would be contrary to, "““the general principle of … administrative law … that the law does not normally provide compensation for those who have suffered direct loss as the result of invalid administrative action””.—[Official Report, 6/10/10; col. 194.]" It is not the Government’s intention to overturn that principle. However, it is the case that a designated person appealing a designation-related decision under Clause 26 can in certain circumstances make a damages claim in connection with that appeal. I apologise to your Lordships’ House if I did not make that distinction clear. To clarify the effect of Clause 26(3), the orders that a court may consider appropriate in connection with an appeal of a designation could include, for example, an order to revoke the designation, or the renewal of it, or an order to uphold the designation. It would be open to a designated person to include in these, or subsequent, proceedings claims for damages under the Human Rights Act, as I believe my noble friend Lord Lester indicated, such as breach of the person’s right to enjoyment of property under Article 1 of Protocol 1 as a consequence of being invalidly designated, or—as I indicated in relation to the previous amendment—or breach of Article 8, the right to respect for private and family life. There have been relatively few legal challenges to designations, but where such challenges have been made a number of them have either included Human Rights Act damages claims or have given rise to separate Human Rights Act damages claims. Those claims which are being pursued are at a very early stage and as yet there has been no judicial determination of any of them. It may also be possible—although I appreciate that this would be more difficult—to found claims in tort or delict. My noble friend Lady Noakes raised in Committee concerns about persons other than the designated person suffering loss as a result of a designation. Nothing in this Bill is intended to change the existing grounds—whether as a matter of the law of tort or delict or under the Human Rights Act—on which anyone affected by an asset freeze, whether the designated person, such person’s spouse or other family member, or any other third party, can claim damages against the Treasury if they believe that they have suffered loss as a consequence of an unlawful asset freeze. In relation to loss suffered by both designated persons and persons other than designated persons, I should like to make one further crucial point. The purpose of the asset-freezing regime is to prevent the diversion of funds and economic resources for terrorist activity. It is the Treasury’s policy as far as is possible and consistent with that aim to license the use of funds and economic resources. The licensing regime successfully mitigates the impact on designated persons, their families and other third parties of an asset freeze. The general presumption is that a licence will be granted unless there is a risk that the transaction carries a risk of funds being used or diverted for terrorist purposes. Where third parties are affected, the power to grant a licence is exercised so as to ensure that, so far as is possible, no loss is suffered by any third party. For example, where payments to a family member or other third party would be prohibited because the designated person would thereby receive a significant financial benefit—for example, the discharge of a debt owed by the designated person—the Treasury can license such payments. Similarly, payments by a designated person to a third party in respect of, for example, contractual debts owed by the designated person to that third party are capable of being licensed. I have heard the request that it would be useful to put something in the Bill. My concern is that although that might to some extent allow the individual to look at it and not necessarily contact a lawyer—however, I rather suspect that in many cases a lawyer will be quickly contacted—it might not cover the ingenuity of lawyers. If you put something in the Bill, it might seem to be limiting whereas lawyers might use their ingenuity to come up with other grounds under the Human Rights Act under which a claim could be made in the context of appeal proceedings or other proceedings. I shall certainly reflect on what has been said but I—