UK Court Rules Asset Freeze Process Exceeds Government Authority

On Jan. 27, the United Kingdom (UK) Supreme Court upheld a challenge to asset freezing orders against five suspected terrorists, who said the 2006 orders should have been considered and approved by Parliament. None of the five have been charged with a terrorism related offense. The court suspended its judgment for 30 days, and UK Treasury officials said they would seek fast-track passage of legislation on asset freezing. That may change the current program, as Parliament may consider fairness problems in the current program that were cited by the court.

The 90 page decision in Her Majesty’s Treasury v. Ahmed, et al., noted that the asset freeze orders were issued in 2006 by current Prime Minister Gordon Brown when he was Chancellor of the Exchequer, in response to United Nations (UN) resolutions requiring international cooperation in freezing assets. However, the court said if “such far-reaching measures are necessary or expedient for combating terrorism or honouring the United Kingdom’s international obligations it must obtain approval for them from Parliament.” In addition, it said the government lacked power to “interfere so profoundly with individuals’ fundamental rights without parliamentary scrutiny.”

The court also said the lack of fair process to challenge the basis of the asset freeze is problematic. The opinion cited the August 2009 ruling bythe United States District Court for the Northern District of Ohio in the KindHearts case [p. 29-30], which “upheld a challenge to a provisional determination under President Bush’s Executive Order No. 13224 … on the ground that blocking access to its assets pending investigation was contrary to its Fourth Amendment right to be secure against unreasonable search and seizure. The judge held that the Office’s handling of KindHearts’ request for access to blocked assets to pay counsel’s fees had been arbitrary and capricious without individualised consideration of the facts of the case.”

The KindHearts case is still before the Ohio court, which is considering what the appropriate remedy should be. On Feb. 5 lawyers for KindHearts filed a supplementary notice of authority informing the court of the UK decision. Although UK law has no binding effect on U.S. courts, the lawyers said the case may be of interest to the court because of the due process concerns raised.

The practical impact of asset freezes on the targeted individuals and their families was noted in the opinion, which said the five men were limited to living on the equivalent of about $13.60 a week, and had to get permission from the Ministry to drive their cars or buy groceries. This court noted the effect is “very burdensome…The impact on normal family life is remorseless and it can be devastating.” The result is to effectively make them “prisoners of the state.”

In a related case filed by media organizations the court ordered the identity of the five men to be made public. One of the plaintiffs, Mohammed Al-Gabra, is a UK citizen whose assets were frozen based on U.S. Treasury allegations that he provided material support to al Quaeda. Another, Harin Youseef, was listed at the request of an undisclosed UN member country. The basis for action against the remaining three individuals is unclear. New delisting procedures established by the UN may provide a forum for challenges to such cross-national listings in the future.