Social security


International law - local government - benefits - economic resources - European community - interpretation - sanctions - Security Council - terrorism - supply of funds and economic resources to listed persons - scope of implementing legislation



(1) M (2) A (3) MM (claimants) v HM Treasury (defendant) & (1) Revenue & Customs Commissioners (2) Secretary Of State For Works & Pensions (3) Hammersmith & Fulham London Borough Council (4) Birmingham City Council (5) Manchester City Council (interested parties): QBD (Admin) (Kenneth Parker QC): 22 September 2006



The claimants (C) applied for judicial review of a decision of HM Treasury that payment of certain social security benefits to them fell within the scope of provisions applicable to listed persons under UN Security Council resolution 1390 (2002) and was therefore required to be licensed by HM Treasury.



C were housewives and mothers qualifying under statutory criteria for the receipt of certain social security benefits, but each was the wife of a person listed under the resolution as having a connection with international terrorism. Compliance with that and other UN legislative provisions entailed the freezing of funds and financial resources to ensure that they were not made available to a listed person, except as might be authorised by the Security Council's sanctions committee on a case-by-case basis on humanitarian grounds.



C were themselves prevented by implementing legislation from passing any funds to a listed person, namely by article 2 of regulation (EC) No881/2002 as amended and by article 7 of the Al-Qaeda and Taliban (United Nations Measures) Order 2002.



C submitted that payment of the relevant social security benefits did not fall within the prohibitions of article 2 of the regulation or article 7 of the order, so no funds or economic resources were made available through them to, or for the benefit of, any listed person.



They argued that the provisions did not apply to funds to be used to provide the listed person with services and items that were not economic resources, and that a wider interpretation would capture cases beyond any rational object of the prohibitions, which was to prevent the obtaining of items and services of use for terrorism. To impose a valid limitation on expenditure, a licence had to define with sufficient clarity the expenditure each of C was prohibited from or allowed to make, and the licences at issue did not do so.



Held, C's interpretation of the prohibitions was incorrect, as the payments at issue fell squarely within the plain language of article 2.2 of the regulation. Funds were being made available indirectly for the benefit of listed persons, being paid regularly to C, who were married to listed persons living in the same households with them, where it could reasonably be expected that C would use the funds to confer significant economic benefits on them, such as payment of rent, utility charges and normal household expenses for which those persons would otherwise be at least partly responsible.



The intention of the Security Council had been to remove, in principle and subject to humanitarian considerations, all economic support from listed persons with a view to achieve public policy objectives of the highest importance, namely combating international terrorism and promoting peace, security and safety. For that reason, the prohibitions were deliberately Draconian, as shown by article 2.1 of the regulation. Any borderline cases could be addressed on a case-by-case basis.



The concept of 'basic expenses' in the licences was derived directly from United Nations resolution 1452 (2002), and was the term used in the implementing regulation, as amended. The latter was directly applicable, and the community legislator did not intend to confer on member states the right to adopt national measures substituting for, adding to, or detracting from its terms. Rather, the intention shown by the language used was that the competent national authority should determine whether the particular funds or economic resources were necessary to cover 'basic expenses'.



Certain such items were specified, but precise arrangements for determination in a particular case were left to its discretion. Thus, there was both sufficient certainty and sufficient flexibility.



Applications refused.



Simon Cox (instructed by Birnberg Peirce & Partners for M and MM and by Public Law Solicitors for A) for the claimants; Jonathan Swift (instructed by the Treasury solicitor) for the defendant and first and second interested parties; Irene Sabic (instructed by the local authority solicitor) for the fifth interested party.