M v HM Treasury (Case C-340/08)
| Jurisdiction | UK Non-devolved |
| Judgment Date | 30 April 2008 |
| Neutral Citation | [2008] UKHL 26 |
| Court | House of Lords |
| Date | 30 April 2008 |
and two other actions
[2008] UKHL 26
HOUSE OF LORDS
Appellants:
Rabinder Singh QC
Simon Cox
(Instructed by Birnberg Peirce and Partners)
Respondent:
Jonathan Swift
Cecilia Ivimy
(Instructed by Treasury Solicitor)
Ordered to Report
The Committee (Lord Bingham of Cornhill, Lord Hoffmann, Lord Walker of Gestingthorpe, Baroness Hale of Richmond and Lord Brown of Eaton-under-Heywood) have met and considered the cause R (on the application of M)(FC)(Appellant) v Her Majesty's Treasury (Respondents) and two other actions. We have heard counsel on behalf of the appellant and respondent.
This is the considered opinion of the Committee.
The committee has decided to advise the House to refer to the Court of Justice for a preliminary ruling, pursuant to article 234 of the Treaty establishing the European Community, a question on the interpretation of article 2.2 of Council Regulation (EC) No 881/2002. In case it should be of assistance to the Court, the committee will briefly state their own opinion on this question.
The Regulation was made to implement Resolution 1390 (2002) of the United Nations Security Council imposing sanctions on the Taliban and the Al-Qa'ida network. Article 2 of the Resolution called upon all states to take various measures with respect to persons and groups named in a list drawn up by the Sanctions Committee established pursuant to Resolution 1267 (1999). These measures included an obligation to—
"(a) Freeze without delay the funds and other financial assets or economic resources of these individuals, groups, undertakings and entities, including funds derived from property owned or controlled, directly or indirectly, by them or by persons acting on their behalf or at their direction, and ensure that neither these nor any other funds, financial assets or economic resources are made available, directly or indirectly, for such persons' benefit, by their nationals or by any persons within their territory;"
The Regulation defines "funds" and "economic resources" in article 1. Funds are widely defined by article 1 to include what the United Nations Resolution calls financial assets. "Economic resources" are defined to mean what might for brevity be called convertible assets—
"assets of every kind, whether tangible or intangible, movable or immovable, which are not funds but can be used to obtain funds, goods or services"
Article 2 then gives effect to article 2(a) of the United Nations Resolution:
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1. All funds and economic resources belonging to, or owned or held by, a natural or legal person, group or entity designated by the Sanctions Committee and listed in Annex I shall be frozen.
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2. No funds shall be made available, directly or indirectly, to, or for the benefit of, a natural or legal person, group or entity designated by the Sanctions Committee and listed in Annex I.
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3. No economic resources shall be made available, directly or indirectly, to, or for the benefit of, a natural or legal person, group or entity designated by the Sanctions Committee and listed in Annex I, so as to enable that person, group or entity to obtain funds, goods or services."
The effect of this Regulation was completely to deprive listed persons of any resources whatever. Their own assets were frozen by article 2.1 and article 2.2 and 2.3 prevented anyone else from providing them with funds or economic resources. To mitigate the severity of these sanctions, Security Council Resolution 1452 (2002) allowed some exceptions. The Council decided that the prohibitions of paragraph 2(a) of Resolution 1390 should not apply to—
funds and other financial assets or economic resources that have been determined by the relevant State(s) to be:
(a) necessary for basic expenses, including payments for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, and public utility charges, or exclusively for payment of reasonable professional fees and reimbursement of incurred expenses associated with the provision of legal services, or fees or service charges for routine holding or maintenance of frozen funds or other financial assets or economic resources, after notification by the relevant State(s) to the [Sanctions] Committee…(hereinafter referred to as "the Committee") of the intention to authorize, where appropriate, access to such funds, assets or resources and in the absence of a negative decision by the Committee within 48 hours of such notification;
(b) necessary for extraordinary expenses, provided that such determination has been notified by the relevant State(s) to the Committee and has been approved by the Committee."
Pursuant to this Resolution, the Regulation was amended by Council Regulation (EC) No 561/2003 to add article 2a:
"1. Article 2 shall not apply to funds or economic resources where:
(a) any of the competent authorities of the Member States, as listed in Annex II, has determined, upon a request made by an interested natural or legal person, that these funds or economic resources are:
(i) necessary to cover basic expenses, including payments for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, and public utility charges;
(ii) intended exclusively for payment of reasonable professional fees...
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