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

Facts

• HM Treasury issued a direction under Paragraph 13 of Schedule 7 to the Counter-Terrorism Act 2008 prohibiting commercial transactions with Bank Mellat and its UK subsidiaries.
• The direction was based on allegations that Bank Mellat provided banking services to entities linked to Iran’s nuclear weapons program.
• Bank Mellat applied to set aside the order, initiating judicial review under section 63 of the Counter-Terrorism Act 2008.
• Both the Administrative Court and the Court of Appeal held partly closed hearings and issued both open and closed judgments due to sensitive, national security-related material.
• The appeal to the Supreme Court focused on whether that court had power to conduct closed material proceedings to consider the same confidential material as the lower courts.

Issues

1. Whether the Supreme Court, under the Constitutional Reform Act 2005 and its Rules, has the authority to conduct closed material proceedings on appeal.
2. Whether the Court can consider material not disclosed to one or more parties for reasons of national security or confidentiality.
3. Whether explicit parliamentary authorization is required for the Supreme Court to conduct proceedings that depart from the principle of open justice.

Decision

• The majority, led by Lord Neuberger, held that the Supreme Court could conduct closed material proceedings when necessary for justice, especially where lower courts had relied on such material.
• The majority reasoned that effective appellate jurisdiction requires reviewing any closed material that forms the basis of the appealed judgment.
• Recognizing the exceptional nature of closed proceedings, Lord Neuberger laid out general guidelines intended to ensure fairness, although these guidelines are not detailed in the provided material.
• In dissent, Lord Hope argued that such a fundamental departure from open justice requires express and explicit parliamentary approval, which the Constitutional Reform Act 2005 does not provide.
• The result affirmed the Supreme Court’s authority to employ closed material procedures in appropriate cases.

Legal Principles

• The Supreme Court derives appellate jurisdiction over “any” judgment of the Court of Appeal under section 40(2) of the Constitutional Reform Act 2005, including those based on closed material.
• Section 40(5) of the Act authorizes the Court to determine “any question necessary for the purposes of doing justice.”
• The majority held that powers to do justice may necessitate the use of closed procedures where lower courts have relied upon closed material.
• The dissent stressed that departures from open justice principles should occur only with explicit legislative sanction.

Conclusion

The Supreme Court determined it has the authority under the Constitutional Reform Act 2005 to conduct closed material proceedings in appeals when justice requires, provided such use is guided by principles ensuring fairness and recognizing the exceptional nature of the process. The decision established a mechanism for handling confidential national security material at the appellate level while maintaining sensitivity to open justice concerns.