Mellat v HM Treasury

In financial restrictions proceedings, the court must balance public-interest immunity against the affected party’s right to a fair trial. It must first decide whether disclosure would be contrary to the public interest. If not, disclosure must be ordered. If so, the court must consider whether a safe summary can be provided.

Article 6 requires sufficient information about the allegations relied upon to enable effective instructions and a real opportunity to deny or rebut them. General assertions are insufficient where the case depends solely, or to a decisive degree, on closed material. The court must distinguish material forming the sole or decisive basis of an allegation from further examples or illustrations of an allegation adequately supported by open material.

Bank Mellat challenged financial restrictions imposed by the Financial Restrictions (Iran) Orders 2011 and 2012 under section 63 of the Counter-Terrorism Act 2008. The Treasury applied under CPR 79.25 for permission to withhold closed material relied upon in defending the claims.

The Bank argued that the open gists did not provide enough information to identify and answer the Treasury’s case. The court considered the statutory framework, CPR Part 79, and the earlier application of the principles in Secretary of State for the Home Department v AF (No. 3) [2009] UKHL 28 to financial restrictions proceedings. The central issue was whether the Treasury could withhold particular material consistently with the public interest and Article 6.

1. The court set out the required sequence under section 67 of the Counter-Terrorism Act 2008 and CPR 79.26. It first had to decide whether disclosure would be contrary to the public interest. If not, permission to withhold had to be refused and disclosure directed. If so, the court had to consider whether a non-sensitive summary should be served.

2. If the Treasury elected not to disclose material or a required summary, a further hearing on notice would ordinarily be required before directions were made under CPR 79.26(7). The court could then prevent reliance on material or allegations, require concessions, or impose other steps necessary to protect fairness.

3. The principles in Secretary of State for the Home Department v AF (No. 3) [2009] UKHL 28 applied. The Bank had to receive sufficient information about the allegations against it to give effective instructions and a real opportunity to deny or rebut specific allegations. Disclosure concerned allegations rather than every item of evidence, but where detail mattered, detail had to be provided.

4. The court had to assess the open material already disclosed. A distinction arose between closed material which was the sole or decisive basis of an allegation and closed material which merely supplied another example or illustration of an allegation supported by other disclosed material. The latter did not necessarily require further disclosure to secure a fair trial.

5. The court concluded in the separate closed judgment that some material could be withheld, while information contained in other material had to be disclosed. The precise reasons could not be included in the open judgment.

The judgment records earlier stages in the same litigation:

• High Court: Collins J held that the principles in Secretary of State for the Home Department v AF (No. 3) [2009] UKHL 28 applied to disclosure in financial restrictions proceedings: [2014] EWHC 3631 (Admin).
• Court of Appeal: the decision was upheld in Bank Mellat v HM Treasury (No 4) [2015] EWCA Civ 1052, reported at [2016] 1 WLR 1187.
• High Court (Administrative Court): the present court applied that framework and determined the Treasury’s application to withhold closed material.