Bank Mellat v HM Treasury (No 1) [2013] UKSC 38

Bank Mellat challenged a Treasury direction restricting dealings with it by businesses operating in the United Kingdom's financial sector. The measure was made under counter-terrorism legislation because of concerns about Iranian nuclear proliferation. During the challenge, the Treasury relied on sensitive evidence that the bank and its ordinary legal representatives were not permitted to see. The courts below considered that material using a closed procedure and produced both open and closed judgments. When the bank appealed further, the Supreme Court had to decide how it could deal with the lower court's closed reasoning. The procedural ruling reported as No 1 addressed that question separately from the substantive challenge to the Treasury's measure.

Could the Supreme Court's statutory appellate powers support consideration of evidence withheld from a party, and what limits governed the use of that procedure?

By a majority, the Supreme Court held that it had power to use a closed material procedure when determining an appeal from a lower court decision involving lawfully closed material. The majority read section 40 of the Constitutional Reform Act 2005 as enabling an effective appeal from such a judgment. Otherwise the court could be unable to examine material necessary to decide the appeal properly. The dissent considered that a departure of this importance required clearer, express legislative authority. The decision concerned a limited appellate situation, not a general power to create closed civil trials. The Court stressed that use of the procedure required close scrutiny and should not become routine.

In the case of Bank Mellat v Her Majesty’s Treasury No 1 [2013] UKSC 38, it was found that the Supreme Court is able to engage in closed material proceedings on the hearing of an appeal.

Bank Mellat (No 1) concerns appellate procedure and should be distinguished from the separate substantive sanctions judgment in No 2. It addresses the practical problem of reviewing a lower court decision that lawfully relies on closed evidence. The majority located power in the statutory appellate framework, while the dissent demanded clearer parliamentary authority. Read alongside Al Rawi: a limited statutory basis for reviewing an existing closed judgment is different from creating a general common law closed procedure for ordinary civil claims.