Bank Mellat v Her Majesty’s Treasury (No 1)

JUSTICES: Lord Neuberger (President), Lord Hope (Deputy President), Lady Hale, Lord Kerr, Lord Clarke, Lord Dyson, Lord Sumption, Lord Reed, Lord Carnwath

BACKGROUND TO THE APPEAL

This appeal concerns the use of a closed material procedure (“CMP”) in the Supreme Court. A CMP involves the production of material which is so confidential and sensitive that it requires the court not only to sit in private, but to sit in a closed hearing. At a closed hearing, the court considers the material and hears submissions about it without one of the parties to the appeal seeing the material or being present, although that party’s interests are protected, at least to an extent, by the presence of special advocates who make such submissions as they can on behalf of that party. A CMP also involves the court at least contemplating giving a judgment, part of which will be closed and not be seen by one of the parties or the public.

Pursuant to various provisions of the Counter-Terrorism Act 2008 (“the 2008 Act”), the Treasury made the Financial Restrictions (Iran) Order 2009 (“the 2009 Order”), which Parliament subsequently approved. The 2009 Order effectively shut down the United Kingdom operations of Bank Mellat (“the Bank”) and its subsidiary. Section 63 of the 2008 Act gives any party affected by such an order the right to apply to the High Court to set it aside. The Bank made such an application. The Government took the view that some of the evidence relied on by the Treasury to justify the 2009 Order was of such sensitivity that it could not be shown to the Bank or its representatives.

In the High Court, Mitting J accepted the Government’s case that justice required that the evidence in question be put before the court and that it had to be dealt with by a CMP. The hearing before him was partly in open court and partly at a closed hearing. Mitting J handed down an open judgment, in which he dismissed the Bank’s application, and a shorter closed judgment, which was seen by the Treasury, but not by the Bank, and is not publicly available. In the Court of Appeal, the appeal was heard largely by way of an open hearing. However, there was a short closed hearing at which the closed judgment of Mitting J was considered. The Court of Appeal dismissed the Bank’s appeal in an open judgment, and while it referred in general terms to the closed material in that open judgment, the Court of Appeal found it unnecessary to give a closed judgment.

Before the Supreme Court, the Bank’s appeal was divided into two issues. The first issue concerned the use of a CMP in the Supreme Court. The second issue concerned the Bank’s appeal against the Court of Appeal’s decision to approve Mitting J’s upholding of the 2009 Order. This judgment is on the first issue. A second judgment is given on the second issue: see Bank Mellat v Her Majesty’s Treasury (No 2) [2013] UKSC 39.

JUDGMENT

The Supreme Court decides (i) by a majority of six to three (Lord Hope, Lord Kerr and Lord Reed dissenting), that it is possible for the Supreme Court to adopt a CMP on an appeal, (ii) by a majority of five to four (Lord Hope, Lord Kerr, Lord Dyson, and Lord Reed dissenting), that it was appropriate to adopt a CMP in this appeal. Lord Neuberger gives the judgment of the majority on both (i) and (ii).

REASONS FOR THE JUDGMENT

Closed material procedures in the Supreme Court

Section 40(2) of the Constitutional Reform Act 2005 (“the 2005 Act”) provides that an appeal lies to the Supreme Court against any judgment of the Court of Appeal. That must extend to a judgment which is wholly or partially closed. It would appear to be implicit in the notion that an appeal can be brought against a closed judgment that the appellate court can consider the closed judgment, and, at least at first sight, that could only be done at a closed hearing. That view is reinforced once one considers the other alternative courses of action, all of which are patently unsatisfactory [38]-[42]. The notion that the Supreme Court has power to take such a course is reinforced by section 40(5) of the 2005 Act, which gives the Court the power to determine any question necessary for the purposes of doing justice [37]. Therefore, the Supreme Court can conduct a CMP where it is satisfied that it may be necessary to do so in order to dispose of an appeal [43]. It follows that the Supreme Court has the power to entertain a CMP on appeals against decisions of the courts of England and Wales on applications brought under section 63 of the 2008 Act [47]. Where a CMP has been adopted at first instance and in the Court of Appeal, for the Supreme Court to entertain an appeal without considering the closed material would, at least in many cases, not be doing justice, either in the sense of fairly determining the appeal, or in the sense of being seen fairly to determine the appeal [44].

The minority consider that Parliament has not conferred the power to conduct a CMP on the Supreme Court [78],[134]. For the Supreme Court to conduct a CMP would be contrary to the fundamental principle of the common law right to a fair trial [103],[138]. There is a strong presumption that Parliament does not intend to interfere with the exercise of fundamental rights, and it will be understood as doing so only if it does so expressly or by necessary implication [105],[135]. In the 2008 Act, Parliament introduced a CMP for the High Court, the Court of Session, and the Court of Appeal, but did not introduce such a procedure for the Supreme Court [125]. It is inconceivable that it was intended that the Supreme Court should have the power to carry out a CMP while leaving it bereft of the structure and safeguards which were deemed essential for those courts in which such a hearing is expressly permitted [116]. There are alternatives to CMPs in the Supreme Court, and choices to be made in relation to them, which are appropriately made by Parliament after full consideration [137].

Closed material procedure in this appeal

Despite strong suspicions that nothing in Mitting J’s closed judgment would have any effect on the outcome of the appeal, the majority decided to grant the Treasury’s request to hold a CMP to consider it. This was because they could not be sure, without seeing the closed judgment and listening to submissions on it, whether the closed judgment would have any effect on the outcome of the appeal, and there seemed to be a real risk of justice not being seen to be done to the Treasury if the Supreme Court did not proceed to hold a closed hearing [64]. Having held a closed hearing, it turned out that there had been no point in the Supreme Court seeing the closed judgment, because there was nothing in it which could have affected the Supreme Court’s reasoning in relation to the substantive appeal on the 2009 Order [65]-[66]. Several conclusions can be drawn from this experience, which should be considered by any appellate court considering whether to adopt a CMP and by any advocate considering inviting an appellate court to take such a course [67]-[74],[89]-[97].

The minority consider that the Treasury fell far short of what was needed to show that a CMP was necessary in this case [90],[130],[139],[145]. This was because (i) the Court of Appeal did not find it necessary to refer to the closed judgment in any detail [91], (ii) there was no closed ground of appeal in this case [92], and (iii) the Treasury failed to indicate how looking at the closed judgment would assist in the disposal of the appeal [93]-[96]. A CMP should be resorted to only where it has been convincingly demonstrated to be genuinely necessary in the interests of justice [128],[140]. If the Court strongly suspects that nothing in the closed material is likely to affect the outcome of the appeal, it should not order a closed hearing [144].

References in square brackets are to paragraphs in the judgment

NOTE

This summary is provided to assist in understanding the Court’s decision. It does not form part of the reasons for the decision. The full judgment of the Court is the only authoritative document. Judgments are public documents and are available at:

https://www.supremecourt.uk/decided-cases/index.html