New Judgment: Bank Mellat v Her Majesty’s Treasury (Nos. 1 and 2)  UKSC 38 and UKSC 39
19 Wednesday Jun 2013
On appeal from:  EWCA Civ 1
The respondent Treasury made an order under the Counter-Terrorism Act 2008, which effectively shut down the operations of the appellant Iranian bank. The bank made an application under s 63 of the 2008 Act to set aside the order, and the Government argued that some of the evidence relied on to justify the order was of such confidentiality and sensitivity that it could not be shown to the bank or its representatives.
The High Court accepted the Government’s case that the evidence in question had to be dealt with by a closed material procedure, and handed down an open judgment that dismissed the bank’s application, and a closed judgment only seen by the Treasury. The Court of Appeal held a largely open hearing, with a short closed hearing which considered the previous closed judgment, and dismissed the bank’s appeal.
The Supreme Court appeal was split into two issues: the first concerned the use of a closed material procedure in the SC; the second concerned the bank’s appeal against the decision to dismiss the application to set aside the order.
The Supreme Court handed down two judgments. In the first ( UKSC 38) it was decided by a majority of six to three (L Hope, L Kerr and L Reed dissenting) that it was possible for the SC to adopt a closed material procedure on appeal, and was appropriate to do so in this instance.
The Constitutional Reform Act 2005, s 40(2) provided that a route of appeal lies to the SC from any Court of Appeal judgment, and that must extend to wholly or partially closed judgments. Appellate courts can only consider closed judgments in a closed hearing, at least at first sight. S 40(5) of the 2005 Act gives the Supreme Court the power to determine any question necessary for the purposes of doing justice. Not considering the closed material would, in many cases, not be doing justice. In this case there was found to be nothing in the closed material that would have affected the Supreme Court’s reasoning in the substantive appeal.
The dissenting minority considered that Parliament had not conferred the power to conduct a closed material procedure on the SC. There was a strong presumption that Parliament did not intend to interfere with the exercise of fundamental rights, and for the SC to conduct a closed trial would be contrary to fundamental principles of the common law right to a fair trial. The Supreme Court did not have the structure or safeguards deemed essential for those courts which are expressly permitted to conduct such hearings.
In the second judgment ( UKSC 39) the Supreme Court allowed Bank Mellat’s appeal on the procedural ground by a majority of six to three (L Hope, L Reed and L Carnwath dissenting), and on the substantive grounds by a majority of five to four (L Neuberger, L Hope, L Dyson and L Reed dissenting).
On the procedural ground the bank succeeded as it had received no notice of the Treasury’s intention to make the order, and therefore had no opportunity to make representations before it was made.
The interruption of Bank Mellat’s commercial dealings in the UK did not bear a rational and proportionate relationship to the purpose of hindering the pursuit of nuclear weapons by Iran. The risk was not specific to Bank Mellat but an inherent risk of banking, and the risk posed by Bank Mellat’s access to certain markets was no different to that posed by comparable banks.