The Government has suffered another legal humiliation over its implementation of anti-terror legislation. The UK Supreme Court has ruled that special Treasury orders freezing the assets of individuals it believes may be connected to terrorism have been applied unlawfully.
The legal rights NGO Justice declared it to be  a "ground breaking judgment" that is a "victory for the rule of law" in the struggle against terrorism. It said the government had been using UN Security Council resolutions to give itself powers on the basis of suspicion and secret evidence.
The appeal is the very first to be heard by the Supreme Court, the new successor to the Appellate Committee of the House of Lords (generally known as the Law Lords).
In its judgment on 27 January 2010, the Court quashed the Terrorism (UN Measures) Order 2006 in its entirety. It held that the Terrorism Order was unlawful because the Government had acted beyond its powers in introducing these measures by Orders in Council instead of legislating through parliament.
In relation to another Order (the Al Qaida Order), the Court declared that the Government was not entitled to automatically freeze the asset of individuals listed by the United Nations, in circumstances where they could not challenge that listing, unless such a regime had been approved by parliament.
Lord Hope, describing the Orders as “so drastic and so oppressive”, stated that “even in the face of the threat of international terrorism, the safety of the people is not the supreme law. We must be just as careful to guard against unrestrained encroachments on personal liberty."
However, the immediate effect of the judgment may be stayed, as the Government has requested a short period to formulate a legislative response.
The Treasury appeared to make short shrift of the Court's ruling that their Orders "interfere so profoundly with individuals' fundamental rights without parliamentary scrutiny". They declared defiantly: "We will introduce fast-track legislation to ensure there is no disruption to our terrorist asset freezing powers."
But civil rights campaigners and lawyers will be monitoring the situation very closely and further challenges are probable if the Government seeks to preserve powers without due democratic accountability and fairness.
Eric Metcalfe, human rights policy director of the respected law reform and legal rights group Justice, which made written submissions in the case, said that the Supreme Court's ruling was a victory for democratic principles in Britain.
He said: "This is a democracy governed by the rule of law and it is profoundly important that democratic representatives deliberate in a proper manner about how laws are made and whether the right balance has been struck.
"More generally I think there has been a wholesale shift away from using the criminal justice system, which is in legal terms our most effective weapon in the fight against terrorism," he added.
"Of course it is right that we take measures against people who finance or assist terrorists, but this should be done through prosecutions in the criminal courts. As it is, individuals are being listed as associates of al-Qaeda or the Taliban on suspicion alone, with no opportunity to clear their name," said Metcalfe in reference to listing.
Justice was granted leave to intervene in the appeal in October 2009.
After the lifting of an anonymity order, four of those involved in the case today were named by the Supreme Court as Mohammed Jabar Ahmed, Mohammed Azmir Khan, Michael Marteen and Hani El Sayed Sabaei Youssef. At an earlier hearing the justices lifted the anonymity order against the fifth, Mohammed al-Ghabra.
The Court's decision is highly significant, say rights advocates, but the judgement is lengthy and the issues involved complex. One of the firms acting on behalf of the appellants issued a briefing to the media on the background to the case today.
In 2006 the Government introduced two financial sanctions measures to give effect to UN Security Council Resolutions, it explained. The Terrorism (UN Measures) Order 2006 and the Al Qa’ida and Taliban (UN Measures) Order 2006 were introduced to give effect to UN SCR 1373/2001 and UN SCR 1267/1999; Security Council Resolutions directed at freezing terrorist assets.
However, the UK Government chose to introduce measures through Orders in Council rather than through parliament. An Order in Council is a legislative instrument which comes into effect without any parliamentary scrutiny or debate. They are executive orders.
The Terrorism Order and the Al Qa’ida Order freeze (potentially indefinitely) the assets and economic resources of those suspected of terrorism. The Government’s suspicion of involvement in terrorism is enough for the orders to take effect. Asset freezing can be imposed on information that is secret.
The Al Qa’ida Order, similar in outcome to the Terrorism Order, freezes the assets of nominated individuals to give automatic effect to a UN Security Council Committee list of persons who are said to be associates of Al Qa’ida and the Taliban. An asset freeze means that every aspect of the designated individual’s economic activity is regulated and monitored by the Treasury. This applies to every transaction however small, including freezing bank accounts, wages, and benefit claims.
The legal challenges to these regimes focused primarily on whether the Government was entitled to enact these measures using the Orders in Council mechanism where parliament had no say in their introduction. Those subject to the regimes (which include the families of those listed) suffer extraordinary interference with their daily lives. In an earlier judgment, referred to by the Supreme Court, characterised those subject to an asset freeze as being “effectively prisoners of the state”.
Those caught by the Al Qa’ida Order are designated by a UN Committee meeting in secret - one they cannot approach directly. They are not automatically entitled to know who nominated them to the Committee for their assets to be frozen. They are only provided minimal information to justify their designation. There is no court or independent procedure to challenge their designation.
In the case of Hany Youssef (a person subject to the Al Qa’ida Order) the Foreign Office in June 2009, having conducted their own review of the information before the Committee, concluded that he is not someone who they believe is an associate of the Taliban or Al Qa’ida, which are prerequisites for being subject to the asset freeze.
The UK Government requested that Mr Youssef be removed from the list. Despite this request Mr Youssef remains listed. Although the Foreign Office believes that he is someone against whom these measures should not be taken, the asset freeze continues to apply until the Committee in New York agrees to de-list him.
Lord Phillips, president of the Supreme Court, said that the result of these appeals "upholds the supremacy of Parliament in deciding whether or not measures should be imposed that affect the fundamental rights of those in this country."
There are believed to be around 650 people on the worldwide asset freezing list, including 150 on specific UK lists. Forty of those affected are living in (or holding bank accounts in) Britain with £150,000 worth of frozen funds.
The full Supreme Court judgement may be read here .
See here for the full written submissions  from Justice.