Bank Mellat v Her Majesty’s Treasury No. 1 [2013] UKSC 38 is a significant case for law students studying judicial review and closed material procedures. It explores national security interests and the rights of individuals under sanctions.

  • 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.

Facts of the Case Bank Mellat v Her Majesty’s Treasury

  • Under paragraph 13 of Schedule 7 of the Counter-Terrorism Act 2008, Her Majesty’s Treasury prohibited everyone from having commercial relationships with Bank Mellat and its subsidiaries because the Treasury found that this bank provided services to entities that were engaged in Iran’s nuclear weapons programme.
  • Under section 63 of the 2008 Act, the Bank sought for this order to be put aside.
  • At both the Administrative Court and the Court of Appeal, a partly closed procedure was used, where both open and closed hearings and judgements were undertaken.
  • On appeal to the Supreme Court, the Treasury requested that a partially closed procedure be used.

Issues

  • Was the Supreme Court authorised under Part 3 of the Constitutional Reform Act 2005 and the Rules of the Supreme Court to hold a closed material procedure?

Held by the Supreme Court

  • The Supreme Court found that they could hold a closed material procedure.

Lord Neuberger

  • “The contention that this court has the power to have a closed material procedure is based on section 40(2) of the 2005 Act, supported by section 40(5). The argument proceeds as follows. (i) Section 40(2) provides that an appeal lies to the Supreme Court against “any” judgment of the Court of Appeal; (ii) that must extend to a judgment which is wholly or partially closed; (iii) in order for an appeal against a wholly or partially closed judgment to be effective, the hearing would have to involve, normally only in part, a closed material procedure; (iv) such a conclusion is reinforced by the power accorded to the Court by section 40(5) to “determine any question necessary … for the purposes of doing justice”, as justice will not be able to be done in some such cases if the appellate court cannot consider the closed material.” [37]

Lord Hope (dissenting)

  • “The argument that the provisions of sections 40(2) and (5) of the 2005 Act show that this court can conduct such a procedure to dispose of an appeal where the judgment appealed against was wholly or partly closed does not meet my point that the issue is so fundamental that it must be left to an express and carefully defined provision by Parliament. I do not think that a point of such fundamental importance can be left to implication. It is plain that the issue was not brought before Parliament when it enacted Part 3 of the 2005 Act. There is nothing in the express language of section 40 which shows that the statute must have given authority to the Supreme Court.” [87]

Significance of the Case on the Development of the Law

The decision in Bank Mellat v Her Majesty’s Treasury No. 1 has significant implications for the development of law regarding judicial procedures and the rights of sanctioned entities:

  1. Judicial Review and National Security: This case emphasizes the courts’ capability to review decisions made on the basis of national security, even when such decisions involve sensitive material. This aligns with earlier precedents like Council of Civil Service Unions v Minister for the Civil Service [1985], where the House of Lords established the principle that national security decisions are amenable to judicial review. It also resonates with Secretary of State for the Home Department v Rehman [2001], where the court discussed the appropriate level of judicial deference in national security cases.
  2. Closed Material Procedures (CMP): Bank Mellat clarified the extent to which closed material procedures can be used in the UK courts, particularly in the context of financial sanctions. This has broader implications for cases like Al-Rawi v The Security Service [2011], where the Supreme Court ruled against the use of CMPs in civil trials unless specifically authorized by Parliament, and Tariq v Home Office [2011], which discussed the balance between fairness and security in employment tribunals involving national security.
  3. Proportionality and Fairness in Sanctions: The case underscored the necessity for proportionality and fairness in the application of financial sanctions, influencing subsequent cases and policies. It highlighted the need for specific evidentiary standards to justify sanctions, impacting later decisions such as Ahmad v HM Treasury [2012], which dealt with the rights of individuals to challenge asset freezes.

Exam Questions and Answers

Below you will find answers to questions that are most commonly asked based on this case.

How has the use of closed material procedures evolved in other areas of law following this case?

Following Bank Mellat v Her Majesty’s Treasury, the use of closed material procedures (CMP) has been cautiously expanded within the UK legal system, particularly in areas involving national security. The framework established in Secretary of State for the Home Department v AF (No 3) [2009] and later affirmed in Bank Mellat provides guidance on using CMPs while ensuring fairness in proceedings. The Justice and Security Act 2013 later codified the use of CMPs, indicating their controlled application across various legal contexts.

What are the current challenges in balancing national security with individual rights in the context of judicial reviews?

Balancing national security with individual rights remains a significant challenge. The key issue is ensuring sufficient transparency and accountability without compromising security. Cases such as A v Secretary of State for the Home Department (No 2) [2005] highlight the difficulties in providing enough information to the accused while protecting sensitive information. The courts continue to refine the standards of what constitutes a fair trial under these conditions, often emphasizing the minimal disclosure necessary to achieve fairness.

How have international standards on financial sanctions been influenced by this ruling?

The ruling in Bank Mellat has influenced international standards on financial sanctions by highlighting the need for proportionality and specific evidence to justify sanctions. This case has been referenced in international discussions and frameworks advocating for fair and transparent procedures in imposing sanctions, similar to the principles outlined in the European Union’s consolidated financial sanctions list, ensuring that sanctions regimes are subject to legal review to prevent arbitrary decisions.

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