Terrorist Asset-Freezing etc. Bill [HL]

My Lords, as the noble Lord, Lord Bach, indicated, this has been a short but fundamentally important debate. As he also indicated, it focuses on the challenge and dilemma of balancing the interests of liberty and those of security. I know that the noble Lord, having relatively recently been in government, had to do that himself. These are not easy issues to determine. It is important to recognise, too, that they are issues with which the Government constantly wrestle. It is fair to say that in its preliminary report—I welcome the fact that we have that report to help us today—the Joint Committee on Human Rights acknowledged the amendments that were moved in Committee and welcomed the Government’s willingness to consider the human rights issues raised during the debate at Second Reading and their amendments to the Bill, which are designed to improve the balance between national security and human rights in the asset-freezing regime. This is an issue of which Ministers are acutely conscious as they constantly try to ensure that the balance is correct. Amendment 23, moved by the noble Lord, Lord Pannick, seeks to create a new subsection within Section 67 of the Counter-Terrorism Act 2008 that would apply to the content of the court rules about disclosure in financial restrictions proceedings and to court rules made in relation to challenges to decisions under the Bill. The amendment would require the court rules, which are to be made initially by the Lord Chancellor for England and Wales and Northern Ireland, to ensure that the Treasury provides sufficient open disclosure to enable the designated person to give instructions to the special advocate. As has been reflected in some contributions to the debate, the form of words is based on the European Court of Human Rights judgment in A, which was applied by your Lordships’ Judicial Committee in AF and Others to the stringent control orders that it was considering. The effect of the amendment is to apply AF (No. 3) to challenges to final designations. As was foreshadowed in the letter of my noble friend Lord Sassoon to the committee, the Government do not support this amendment, and I shall explain why. I start by stressing a fundamental point on which I know there is common ground all round the House. Designated persons must have the full protections afforded to them under Article 6 of the European Convention on Human Rights; namely, the right to a fair hearing. Section 67(6) of the Counter-Terrorism Act 2008, which is imported into the regime for dealing with asset freezing, is absolutely clear that nothing in that section, or in rules of court made under it—they include provisions relating to the Treasury’s disclosure of information only to the court and a special advocate—requires the court to act in a way that is inconsistent with Article 6 of the ECHR. It is important to emphasise that the judge also has an important role to play in challenging the closed material and in weighing the impact that non-disclosure has on the fairness of the proceedings. The court determines whether material should be withheld, and 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 is disclosed. The Government and the legislation are absolutely clear that Article 6 rights apply in full to asset freezing. Therefore, it would be inaccurate to say—and I do not think that this was suggested—that advocates of the amendment support Article 6 rights while the Government do not. To make it clear, not only do the Government support Article 6 rights but those rights are there in the Bill by reference to the Counter-Terrorism Act 2008. I hope that there is broad agreement that the legal position regarding the application of AF (No. 3) principles to asset freezing has not been fully determined by the courts. That is probably a matter of fact but it is clear that different views are being expressed in the House this evening regarding the applicability of the decision in AF (No. 3) to asset-freezing designations. Of course, the courts have determined—indeed, it was determined in the case itself—that AF (No. 3) principles apply to stringent control orders and to financial restrictions proceedings under the Counter-Terrorism Act 2008. That was the subject matter of the case to which the noble Lord, Lord Pannick, referred. However, the courts have not yet determined that AF (No. 3) principles apply to asset-freezing cases. The Government’s view is that it would certainly be wrong to say that legally there is no room for doubt on this. I shall now seek to address the points that the noble Lord, Lord Pannick, made in moving the amendment. When the Bill was discussed in Committee, I indicated that in the Government’s view the principles do not apply to asset freezing because, although I do not in any way wish to minimise their significance or importance, asset freezes do not have the same impact on individuals as stringent control orders, nor are they as wide-ranging in their financial and economic impacts as decisions to impose financial restrictions under the Counter-Terrorism Act 2008. Perhaps I can assist the noble Lord, Lord Bach, who asked me to identify some of the distinctions. Asset freezes are not of the same nature or magnitude of interference, because they restrict the rights to property and indeed can be modified or alleviated by licences, whereas control orders restrict people’s liberty, communications and movement. As I said, I do not in any way diminish the seriousness of asset-freezing designations but, in our argument, their impact is not of the same magnitude as that of stringent control orders. However, it is open to the courts to determine whether the Government’s position is to be challenged. It is certainly possible to draw a distinction in the case of Kadi, which was determined by the European Court of Justice. That judgment concerned the process followed by the European Commission in listing Kadi, and the Government would certainly argue that it had no direct bearing on the process to be followed by the United Kingdom Government in applying asset freezes domestically against persons believed to be involved in terrorism. We believe that the European Court of Justice judgment in Kadi is separate from the question of whether AF (No. 3) principles should apply to asset freezes. Likewise, in the Bank Mellat case, which was determined in May this year, the court’s rulings on disclosure were specific to the cases concerned and there was no general ruling on whether AF (No. 3) should apply in asset-freezing cases. The court ruled that the application of AF (No. 3) applied in the context of financial restrictions imposed against the Iranian bank, but the circumstances of such financial restrictions, where the Treasury issued a direction that the UK financial sector must cease dealings with the bank, were very different from those where an individual is subject to an asset freeze because of his alleged involvement in terrorism. Therefore, I do not think that a direct read-across of the court’s ruling is right, applying the specific circumstances under consideration to the freezing of terrorist assets, where different considerations may well apply.