Judicial Review Timeline

1. Bringing the Judicial Review
Dec2006 - Nov2007

2. Judicial Review hearing
Jan-Feb 2008

3. Changing the law
Mar-Jun 2008

4. Judicial Review ruling
Apr 2008

5. SFO appeal to House of Lords
Apr-Jul 2008

6. They think it's all over; it isn't now...
Oct 2008 -

Timeline of the legal challenge

5. SFO appeal to House of Lords

24 April 2008: Serious Fraud Office granted leave to appeal
7-8 July 2008: Appeal heard in House of Lords
30 July 2008: Serious Fraud Office wins appeal
 

24 April 2008:
Serious Fraud Office granted leave to appeal

Exactly two weeks after the landmark ruling, we were back in the High Court for a relief hearing at which the judges formally quashed the Serious Fraud Office's decision to drop its corruption investigation into arms deals between BAE Systems and Saudi Arabia.

At this hearing, however, the Serious Fraud Office asked for permission to appeal to the upper house of Parliament, the House of Lords, which then served as the UK's highest court, against the judges' 10th April ruling. (From October 2009, the UK had a separate supreme court as a result of the 2005 Constitutional Reform Act.)

CAAT and The Corner House didn't oppose this request because of the public importance of the legal issues involved, an aspect raised by the SFO itself and endorsed by the judges. Lord Justice Moses said this was a 'paradigm case' concerning 'the way this country is governed and a basic constitutional principle'.

Decisions from the House of Lords are conclusive, definitive and bind all lower courts. An appeal to the Lords must fulfil two requirements:
-- it can be brought only on a point of law; and
-- the point of law must be of public importance.

Two specific points of law for appeal were agreed, each having two parts.

The first concerns the lawfulness (or otherwise) of a prosecutor submitting to a threat by someone outside the courts' control, such as someone based outside the UK. As the judges ruled on 10th April, "had such a threat been made by one who was subject to the criminal law of this country, he would risk being charged with an attempt to pervert the course of justice" (para 59).

1.
(i) Is it unlawful for a prosecutor to surrender to a threat made by a person outside the control of the courts or public authorities of the United Kingdom for the purpose of halting a criminal investigation or prosecution, unless there is no alternative course open to the prosecutor?
(ii) If so, in reviewing the question whether the prosecutor's reaction was unavoidable submission or an unlawful surrender, to what extent must the prosecutor satisfy the court as to whether there was an alternative course open to the prosecutor?

The second point of law relates to UK compliance with the OECD Anti-bribery Convention:

2.
(i) Is the court entitled to construe an unincorporated treaty in circumstances where the prosecutor has publicly asserted that in deciding not to proceed he has acted in compliance with the treaty?
(ii) If so, is consideration of national security permitted under Article 5 of the Convention on Combating Bribery of Foreign Officials in International Business Transactions 1997 only in circumstances which would be regarded as justifying the defence of state necessity in international law, or in other and if so, what circumstances?

The UK Courts do not generally consider that they have jurisdiction to determine points of law arising under an international treaty unless the treaty has been incorporated by an Act of Parliament, which gives it domestic legal effect. The OECD Anti-bribery Convention, in UK legal terms, is an unincorporated treaty (even though the UK signed it in 1997) and in theory, therefore, has no legal effect within the UK.

But Section 109 of the 2001 Anti-Terrorism, Crime and Security Act, which makes bribing a foreign official a criminal offence, was, as the judges ruled on 10th April, "brought into force for the very purpose of complying with the UK’s obligation under Article 1" (para 121). Article 1 of the OECD Convention requires parties to make it a criminal offence to bribe a foreign public official. The judges noted that "Parliament has chosen to honour the UK’s international obligation under Article 1 and the decision of the Director ought to be considered in that context." (para 121) They also stated that, given this is the case, "the exercise of discretion, whether to continue to investigate or to prosecute in a manner which undermines the very purpose for which the criminal offence was created, seems to us a matter susceptible to the review of the courts."(para 121)

Furthermore, and critically, where a UK public authority voluntarily submits to the terms of an international treaty in making a decision, the UK Courts review such a decision under ordinary domestic law principles. In this instance, the Director of the SFO and the Attorney General both publicly avowed that the decision to discontinue the investigation was taken with the OECD Anti-bribery Convention in mind and, crucially, that the decision was permitted under the Convention. In these circumstances, the Court held that it was open to them to consider the construction and meaning of the Convention.

At this relief hearing, the judges ordered the Serious Fraud Office to pay CAAT's and The Corner Houses' legal costs of the judicial review. These had been capped and agreed at the Directions hearing in January to £95,000 plus an uplift (or success) fee, reflecting the fact that our lawyers had taken the case on a ‘no win, no fee’ basis.

The judges also ordered the Serious Fraud Office to pay all the reasonable costs of the House of Lords appeal, regardless of the outcome – "win, lose or draw".

The judges expressly thanked The Corner House and CAAT for our determination in bringing the judicial review of the SFO decision, despite the various setbacks encountered along the way. Lord Justice Moses said that, as a result of our efforts, an important fact had emerged that might not otherwise have seen the light of day, "namely the specific access given to 10 Downing Street and the threat issued there – 'drop it or else' – and it's that fact which has given rise to the important public issue which needs to be determined, namely, 'What is the lawful response when such a threat is issued?' "

7-8 July 2008:
Appeal heard in House of Lords

The two-day Appeal was heard in a crowded Committee Room in the Houses of Parliament overlooking the River Thames. The Appellate Committee comprised five law lords: Lord Bingham of Cornhill, Lord Hoffman, Lord Rodger of Earlsferry, Baroness Hale of Richmond, and Lord Brown of Eaton-under-Heywood.

The Serious Fraud Office presented its Printed Case (or written arguments) on the first day, along with three new witness statements from SFO Director Robert Wardle, SFO Assistant Director Helen Garlick and John Jenkins of the FCO.

Lawyers for CAAT and The Corner House responded to this appeal at the end of the first day and much of the second with written submissions and oral arguments. CAAT presented a second witness statement, while JUSTICE, an independent human rights and law reform organisation, had been given permission to intervene in the Appeal and submitted a written case as well.

Below is a summary of the main arguments made orally during the two-day appeal hearing and in the Printed Cases submitted to the Apellate Committee.

The Serious Fraud Office appeal

Jonathan Sumption QC, the lead barrister representing the Serious Fraud Office, presented the SFO appeal for most of the first day, Monday 7 July, and responded to our lawyers' response at the end of the second day, Tuesday 8 July.

Sumption argued that the appeal against the High Court ruling was based on:

• the discretion of the SFO Director to investigate and prosecute crime;
• the role of the Courts in reviewing the SFO's decisions;
• the SFO Director not being bound by the OECD Anti-bribery Convention because it has not been incorporated into UK law.

He stated that Parliament had granted the SFO Director the power to investigate and prosecute serious or complex fraud and to exercise his/her discretion in doing so. Given this statutory discretion, Sumption argued, the Director was entitled to halt the investigation, as he did, on national public interest grounds.

In making its appeal, the SFO accepted that a decision not to investigate or prosecute might in principle be subject to a judicial review, but stressed that the courts have accepted for many years that a prosecutor's discretion is wide and that the power of review should be exercised sparingly.

Sumption drew attention to the public law principles of judicial review; he identified these as being to ensure that administrative decisions are taken rationally in accordance with a fair procedure and within the powers conferred by Parliament.  He maintained that these principles "apply in just the same way in a case where the subject matter of a discretionary decision includes a threat as they do in any other case."

Although the High Court had ruled that there was a critical legal distinction between deciding to stop the investigation when a threat had been made and doing so when it had not, Sumption argued that there was no basis in law for this distinction, particularly given the Director's discretion. He said that the Director could have decided to stop the investigation at any time because of risks that Saudi Arabia would withdraw its counter-terrorism cooperation, and that the threat merely confirmed these risks.

He added that "invocation of the rule of law [in the High Court ruling] adds nothing to [this] ordinary public law analysis". The rule of law, he argued, requires the Director to act in accordance with the principles of public law and to comply with the duties that Parliament has laid upon him, which are subject to his discretion.

"If his decision [to stop the investigation] was within the scope of his discretion . . . if it was made rationally and in accordance with an appropriate procedure, then the rule of law imposes no greater obligation upon him."

Sumption argued that, given these principles of judicial review, it was not the function of the courts, nor within their power, to decide whether to initiate or discontinue a criminal investigation nor to determine the public interests involved nor to have any superintendence over such decisions. He maintained that it was the function of the Director exercising his discretionary power conferred by statute and superintended by the Attorney General. In quashing the decision to drop the investigation, the High Court had "in significant respects" assumed the role that Parliament had assigned to the Director under the superintendence of the Attorney General, argued Sumption.

The SFO appeal maintained that the High Court should not have ruled that the courts are responsible for dealing with threats affecting the administration of justice and for assessing whether a decision-maker yielded too readily to a threat.

The High Court had also ruled that the Director would have acted lawfully if he had had no alternative but to give in to the Saudi threat, and had referred to the common law concepts of "duress" and "necessity" in assessing whether there was no alternative. Sumption maintained, however, that these concepts were justifications of criminal conduct whereas the SFO Director was simply exercising his discretion, and thus the concepts were irrelevant.

Given the Director's discretion and the role of the Courts, Sumption argued that SFO Director Robert Wardle had made a legal and appropriate decision to stop the SFO's BAE-Saudi corruption inquiry in December 2006 after Saudi Arabia had threatened to withdraw diplomatic and intelligence cooperation with the UK. He held that the decision had been a lawful exercise of the Director's discretion, made on the basis of information he had obtained, that was in no way irrational. He concluded that the High Court should not have ruled on the lawfulness or otherwise of the Director's decision to stop the investigation because the Director was simply exercising his discretion according to powers conferred by Parliament and the courts should have not interfered.

He also argued that it was not the threat itself of withdrawing diplomatic and intelligence cooperation (which he said was made through several Saudi Arabian channels) that was critical to the SFO Director's decision, but the consequences of the threat if it was carried out, particularly its impact on national security.

Sumption rejected criticism that the Government and the Serious Fraud Office had done little to persuade the Saudis that their threat could not succeed. Extracts of previously secret documents were produced in three new witness statements, which, he said, showed the government had sought for months to resist pressure from the Saudis and had considered ways of fending off the threats and persuading the Saudis to withdraw them.

Sumption argued that the OECD Anti-bribery Convention does not form part of English domestic law and that the Director had no legal duty, therefore, to exercise his discretion in accordance with Article 5. It was thus inappropriate of the High Court to construe the OECD Convention, as it had done in its ruling (despite not actually making a decision on whether the SFO Director's had breached the Convention).

Sumption argued nonetheless that the Director had not been influenced by the potential damaging effect per se of the investigation on the UK's relations with Saudi Arabia (which is not allowed under the Convention's Article 5), but on the practical consequences of that effect for the UK's national security. He maintained that considerations of national security are not co-terminous with foreign policy or relations with other states. National security, moreover, is a fundamental interest of states.

He stated that the Director did not base his decision on the provisions of the OECD Anti-bribery Convention, but on the UK's public interest in safeguarding national security. This being the case, he argued that it was unnecessary and inappropriate to determine what the Director's understanding and interpretation of Article 5 was.

Sumption also said that, while Article 5 holds that a bribery investigation should not be dropped in order to preserve economic interests (such as a contract) or relations with another country, it does not mention national security, and thus Article 5 does not prevent an investigation from being dropped on national security grounds.

In conclusion, the SFO's Director appeal against the High Court's ruling identified six reasons why the ruling should be set aside:

• the decision whether or not to proceed with the investigation was a matter for the Director, subject to the ordinary requirements of legality, rationality and fairness;
• the Director was entitled in his discretion to discontinue the investigation if he considered that the public interest required it, even though the public interest issue arose from the danger to national security occasioned by threats from Saudi Arabia to withdraw security cooperation with the UK;
• there was no evidence of any adverse effect of national security arising from the Director's decision to discontinue the investigation, nor was he under any obligation to consider the possibility that there might be;
• the lawfulness and rationality of the Director's decision did not depend on Article 5 of the OECD Anti-bribery Convention;
• the decision was consistent with the Convention;
• the decision of the High Court was wrong.

CAAT and The Corner House response

Two barristers were advocates for CAAT and The Corner House: David Pannick QC responded to points concerning the rule of law while Dinah Rose QC addressed those involving the OECD Anti-Bribery Convention.

Rule of law

David Pannick QC responded to the appeal issues about the SFO Director's discretion to make decisions and the role of the courts in reviewing them by identifying "five links in a chain of causation":

1. The general function of judicial review.

2. One function of judicial review is maintenance of the rule of law.

3. One element of the rule of law is that whether a person is subject to criminal proceedings or not depends on what the suspect has done or not done, not on their power or influence or that of their friends or associates, whether within the UK or abroad.

4. The rule of law is not absolute. But any departure from it is lawful only in the most exceptional circumstances. In a judicial review, a court has a responsibility to apply a strict necessity test to assess the decision. The Director must show that all reasonable alternatives have been exhausted and the issues have been properly understood and analysed.

5. On his own evidence, the Director has not satisfied a strict necessity test: alternative steps were open to the UK and were not exhausted, while damage to the rule of law was not properly addressed.

Whereas the SFO claimed that the principles of judicial review confine the Courts to assessing whether the Director acted within the scope of his discretion for a proper purpose, referring to relevant factors and acting according to an appropriate procedure and in a rational manner, Pannick maintained that the Courts also have to provide appropriate protection for fundamental constitutional principles, one of which is the rule of law.

The "rule of law" simply means the best way of protecting everyone's rights from the arbitrary exercise of power is to apply and uphold legal rules impartially. Doing so requires an independent judiciary (prosecutors, judges, magistrates, courts) that acts "without fear, favour or prejudice". Any action that undermines the impartial application and upholding of the law undermines the rule of law.

Pannick emphasized that a judicial review often involves identifying and protecting constitutional principles, "indeed, this is one of the most important functions of judicial review."

And one of the most basic constitutional principles is that of the rule of law -- "This is not controversial", said Pannick, "as it is difficult to think of a more basic constitutional principle. The concept of the 'rule of law' dates back to Aristotle: 'At his best, man is the best of all animals, but when separated from law and justice, he is the worst'."

A central element of the rule of law is that criminal liability depends on what the relevant person has done or not done, irrespective of their identity or the power they or their friends or allies have to cause adverse consequences, or the threats they make to do so. In the context of criminal investigations and prosecutions, moreover, the rule of law assumes particular importance.

On the discretion of prosecutors, Pannick stressed that while prosecutors should certainly be independent, national and international standards do not grant them unconstrained discretion as to what to take into account when deciding whether to investigate or prosecute: a prosecutor has a duty to uphold the rule of law when exercising his discretion and must therefore carry out his tasks 'without fear or favour'.

"We say that discretionary powers are exercised -- and can only be exercised -- in accordance with constitutional principles. The dispute between us is whether the rule of law is a relevant constitutional principle in this case. The real battleground is not the breadth of the SFO Director's discretion but of this constitutional principle and whether it has been breached. It is not enough to say that the Director acted reasonably in good faith – it won't do."

Parliament legislated to make the bribery of a foreign public official an offence by means of sections 108-110 of the Anti-Terrorism, Crime and Security Act 2001. When deciding whether to investigate or prosecute such an alleged offence, a prosecutor should not consider threats (akin to an attempt to pervert the course of justice), whether express or implied, by or on behalf of a foreign public official allegedly involved in the criminal conduct. Succumbing to such threats is contrary to the objects and purpose of the criminal law, which the Director has a duty to enforce. If it were otherwise, the more severe the threat that a foreign public official can make, and the more powerful s/he is, the less likely that criminal conduct would be investigated or prosecuted.

Pannick gave a hypothetical example of a domestic threat to illustrate the point:

"Suppose BAE had threatened to close its plants in the UK if the investigation continued with a resulting loss of jobs. If the Director thought that BAE meant it and if he acceded to this threat, his decision would be a plain breach of the rule of law."

He stressed that the issue of legality concerns the decision taken in the UK, not the threat:

"It doesn't matter what the geographic location of the person or state making the threat is. The foreign nature of the threat is irrelevant, especially given that Parliament decided to extend what is a criminal offence under UK common law [bribery] to offences committed abroad."

Pannick also pointed out that it did not matter whether the Saudi threat was itself lawful or not – "the lawfulness of the threats is nothing to the point" – because upholding the rule of law is the responsibility of the SFO Director.

As to the role of the courts in reviewing a prosecutor's decision, UK legal bodies have expressly stated that the decision of a prosecutor to surrender to a threat is subject to judicial review. The Judicial Committee of the Privy Council stated in 2007 that:

"It is well established that a decision to prosecute is ordinarily susceptible to judicial review, and surrender of what should be an independent prosecutorial decision to political instruction (or the Board would add, persuasion or pressure) is a recognised ground of review".

The Judicial Committee of the Privy Council is the court of final appeal for UK overseas territories and Crown dependencies, and for some Commonwealth countries.

Pannick went on to stress, however, that despite its importance, the principle of the rule of law is not absolute and does not have to be followed no matter what. He emphasised that a prosecutor can take account of a threat that would damage the public interest and thus violate the rule of law, but any such violation would be lawful only if the decision could meet a "strict necessity test".

Pannick emphasised that we were not arguing that the SFO Director should, before departing from the rule of law, seek the permission of a court that would apply this test. "We are only saying that if he makes a decision and if a judicial review is brought, then the Director has to answer to satisfy a strict necessity test." This is similar to the onus on a decision-maker to justify, when challenged, that their decision accords with human rights legislation.

Our lawyers also argued that, even in contexts of terrorism and national security, the courts have competence to assess whether a decision meets a strict necessity test justifying a departure from the rule of law. Administrative decisions involving national security are generally accepted to be the sole responsibility of the Government. But Pannick stressed that this case raises additional issues that are not exclusively the responsibility of the executive. He emphasised that the judiciary has a particular expertise and responsibility to protect the rule of law and that, for this reason, "the courts will adopt a more interventionist role" to challenge any threats to it.

He illustrated this point by referring to two administrative decisions taken to combat terrorism and protect national security that the law lords had reviewed: the use in a trial of evidence obtained by torture; and a guarantee of a fair trial. The courts still had the responsibility, Pannick argued, to consider whether the correct legal principles had been applied in making these decisions and whether the evidence for doing so meets the applicable legal standard.

In December 2005, seven law lords ruled that evidence that may have been obtained from terrorist suspects by torture cannot be used in British courts; in December 2004, nine law lords ruled that foreign nationals suspected of terrorism cannot be detained indefinitely without being charged but are entitled to a fair trial.

The "strict necessity test" comprises three elements:

1. There was an imminent threat of loss of life or serious injury to identifiable persons or groups of persons.

2. All reasonable alternatives to violating the rule of law had been tried and failed.

3. The consequences of violating the rule of law had been properly recognised and considered (in particular the encouragement given to others to make similar threats in the future), and weighed in the balance.

During the Direction's hearing, lawyers acting for the SFO Director had agreed when questioned by the judge that the threats did not pose an imminent threat of loss of life, the first point of the necessity test.

For the second point, our lawyers argued that the SFO Director had not presented any evidence until the appeal to show that any proper consideration had been given as to how to resist the threats made, or how to seek to persuade Saudi Arabia to withdraw them. Pannick acknowledged the three new witness statements (from SFO Director Robert Wardle , SFO Assistant Director Helen Garlick and John Jenkins of the FCO that the Director had now presented as evidence that the SFO and various government departments did do so.

But, he stated, the statements only confirm the failure on the part of the authorities to take steps to explain to Saudi Arabia that the UK government cannot attempt to interfere with an independent criminal investigation; to consider the implications for the rule of law of stopping the investigation; or to give any consideration to alternative ways by which the threats could be resisted, including by recourse to international institutions and international law, such as through the United Nations.

In her second witness statement, for example, the SFO Assistant Director, Helen Garlick, confirmed that she had asked the UK's Ambassador to Saudi Arabia in one of the three meetings that the SFO had with him in November and early December 2006 whether he could explain to Saudi Arabia that the SFO was independent of the UK Government. According to the witness statement, the Ambassador replied that "this would not be a viable approach" because:

"The Saudis had a very different understanding of criminal justice systems and despite a great deal of experience in dealing with the West, the Saudis would find it difficult to accept, in comparison with their own system, that the UK Government and the Prime Minister could not stop the investigation if they chose to do so."

Dr John Jenkins, the Middle East Director in the Foreign and Commonwealth Office (FCO), provides further evidence on the same issue. Jenkins went through the records held by the FCO and other government departments and provided extracts from documents to show that the Government did seek to explain to Saudi officials that the SFO was independent of government. But the majority of these documents date from 2004 and 2005, before the threats were made.

Dr Jenkins's evidence makes clear, said Pannick, that no attempt was made in 2006 – the threats to withdraw diplomatic and intelligence cooperation were issued in September 2006 -- to dissuade the Saudis from their threats. He quoted at length from the only document mentioned in Dr Jenkins evidence from 2006, a letter from the UK's Ambassador to Saudi Arabia to the Permanent Secretary at the FCO, Sir Peter Ricketts. This was dated 25 September 2006, immediately after the threats had been made:

"I recall that . . . I had brief oral exchanges with [a senior representative of the Saudi Arabian Government] on the SFO enquiry, including those mentioned [above]. I remember [the senior representative of the Saudi Arabian Government] giving that impression that he had information of his own about the SFO enquiry (for example, he volunteered that he understood that the enquiry could be discontinued if it was not in the public interest (although he used a curious phrase which I can't now recall). I remember telling him more than once that senior officials in London were well aware of just how serious the enquiry could be, and that we were working to persuade the legal authorities of this. But I always made clear that the enquiry was not in our hands, and that there could be no guarantees. I remember being worried that [senior representative of the Saudi Arabian Government] was more optimistic about the SFO enquiry than seemed justified on the facts available to me. I confess that I did ask myself at least once whether I should have done more to disabuse him. But he always gave the impression he had his own information, and really just wanted to use me to convey to London how concerned he was". (omissions in the original)

Pannick stressed that, although the Ambassador confesses his concern that he "should have done more to disabuse" the Saudi official making threats, he did not do so, either at the time or subsequently. Despite this concern, the Ambassador told Ms Garlick and the Director of the Serious Fraud Office that it would not be "viable" to seek to persuade the Saudis to withdraw their threats, or to disabuse them of the notion that further threats might produce the desired results.

Our lawyers also highlighted further aspects of the chronology of events. In November 2006 (around two months after the Ambassador sent the letter quoted above), the Ambassador met with unnamed Saudi officials, who repeated and intensified their threats, while in early December 2006, Prince Bandar met Foreign Office officials. Records would have been kept of both meetings, which Dr Jenkins no doubt reviewed as part of his search for relevant material. Nothing has been disclosed, so it appears clear that no attempt was made at the critical stage to attempt to dissuade the Saudi officials from their threats. Indeed, argued Pannick, it is plain from the letter cited above that the Government's actual concern was to pacify the Saudis by assuring them that the Government was doing everything it could to dispose of the SFO enquiry.

In sum, concluded Pannick, the new evidence makes it clear that, after the threats were made, no attempt was made to seek to persuade the Saudis to withdraw them, or to explain that the threats were futile.

Pannick went on to indicate some other alternatives that could have been pursued:

"The United Kingdom could and should have countered the threats by calling Saudi Arabia to account before the UN Security Council, or by warning Saudi Arabia that it would do so if the threats were not withdrawn."

Mandatory rules of international law adopted by the UN Security Council impose a duty of cooperation in relation to international terrorism and would prohibit threats of the kind made by the Saudis. Security Council Resolution 1373/2001, adopted in the aftermath of the attacks on New York's World Trade Center on 11th September 2001, requires all states (including Saudi Arabia) to co-operate to prevent any repetition. Saudi Arabia has publicly affirmed its support for this Resolution, and given assurances about its counter-terrorist co-operation procedures.

CAAT and Corner House lawyers pointed out that if Saudi Arabia had terminated security and intelligence co-operation with the UK, as it threatened, it would have been in breach of Resolution 1373 and its assurances to the Security Council. It could therefore have been called to account by the UK before the Security Council in the normal way in which such disputes are resolved between states. The United Kingdom could also have warned Saudi Arabia that this step would be taken if the threats were not withdrawn.

"The SFO Director's silence on this point indicates that no such steps were taken or considered", Pannick told the Appellate Committee. "On his own evidence, there were alternative steps open to the United Kingdom, which were not pursued. The Director's own evidence in response to criticism from the High Court indicates that there was in fact no response."

"The court does not have to consider whether these alternative steps could have been productive," stressed Pannick, "given that the court does not have the diplomatic or political experience enjoyed by the Ambassador and the FCO. It has to consider simply whether they were followed."

On the third point of the 'strict necessity test' – recognising and considering the consequences of violating the rule of law – Pannick argued that the SFO Director had not considered the damage to the UK's national security from discontinuing the investigation because of the perception that Britain easily succumbs to threats from other states to its security. The 'Printed Case' of the SFO Appeal (the written arguments submitted to the Lords) states "The Director accepts that he did not himself consider whether there was a risk that discontinuing the investigation might itself damage national security." (paragraph 37(1)) Said Pannick:

"The Director failed to assess properly the damage to national security by ending the investigation – that others will think, if they're powerful enough, 'we too can prevent an investigation'. On his own evidence, not newspaper articles, the Director gave inadequate consideration to these vital matters."

Pannick concluded that the SFO Director hadn't proved there was an "absolute necessity'' to stop the investigation and that therefore there was no basis for departing from the rule of law by succumbing to the threats.

He stated that stopping an investigation into alleged criminal conduct because of an extraneous threat undermines the rule of law, in particular, the equal application of the law without fear or favour:

"Permitting a powerful person to frustrate a criminal investigation by the making of threats is the very opposite of the notion of equality under the law. All must be equal before the law, even if they are powerful and are able to make weighty and convincing threats."

Upholding the rule of law depends on ensuring that those whose criminal conduct was being investigated do not escape criminal liability because they have powerful friends who make threats of adverse consequences if the investigation continues.

Threats made in an attempt to dissuade a prosecutor from investigating alleged criminal conduct are a direct attack on the integrity of the justice system. The courts will intervene to protect the integrity of that system, even where national security concerns are raised.

In these circumstances, it was unlawful for the Director to permit such threats to influence the decision to discontinue the investigation. If it were otherwise, the more powerful, ruthless and unscrupulous the foreign public official, the more likely it is that crime can be committed with impunity.

Pannick also pointed out that US and Swiss investigators had been probing the Saudi allegations "without any suggestions of damage to national security". CAAT presented a second witness statement outlining the current state of the Swiss and US investigations.  

OECD Anti-bribery Convention

Dinah Rose QC stressed that the OECD Anti-bribery Convention was the second major question in the appeal and that it was an independent and free-standing issue from that of the rule of law.

The essence of this Convention is to require an effective domestic remedy against bribery and corruption by means of prosecution and enforcement by competent national authorities in accordance with the standards set out in the Convention. The Convention's purpose is to remove barriers to the prosecution of international bribery and corruption. Signatories to the Convention agree not to accede to diplomatic threats and other forms of blackmail commonly used to frustrate embarrassing international bribery prosecutions in exchange for a similar promise by other states. All states thereby benefit and the rule of law is promoted and upheld.

Rose acknowledged that domestic courts do not have jurisdiction to adjudicate on the UK's international treaty obligations.

But she went on to point out the well-established principle of public law that where a public body had stated that it has complied with, or taken into account, an international law obligation when making a decision, the court does in fact have jurisdiction to review the decision so as to assess compliance with that obligation. In doing so, the court would apply ordinary public law principles: testing the rationality and legality of a decision against the standard that the decision-maker has chosen to adopt.

Rose stressed that the SFO Director and the Attorney General repeatedly informed the public, Parliament and the OECD that the decision to halt the BAE-Saudi investigation was taken in accordance and compliance with the OECD Anti-bribery Convention. They stated that the Director had not taken into account the forbidden considerations in Article 5 (national economic interest; the potential effect upon relations with another State; or the identity of the natural or legal persons involved). In his first witness statement of December 2007, the Director stressed that:

"In reaching my decision, and throughout my consideration of the issues in the case, I had well in mind that the United Kingdom is a signatory to the OECD Convention. In particular, I had in mind Article 5 of the Convention." (para 44)

In a public submission to the OECD in March 2007, the SFO Director assured the OECD that the UK's domestic courts would determine whether the decision to halt the BAE-Saudi investigation was compatible with Article 5 of the Convention.

"The SFO Director cannot have it both ways", said Rose.

"He cannot simultaneously assure the OECD that it need not be concerned because the English courts will rule on the compatibility of his decision with Article 5 and also argue before those English courts, as in this Appeal, that the matter cannot be evaluated or resolved by the courts."

Rose then went on to outline the meaning of Article 5, which provides for the enforcement of Article 1: bribing a foreign public official is a criminal offence.

Cross-border corruption is particularly difficult to tackle if the bribed foreign public official is senior in status and in a position to make powerful threats to ensure that his conduct is not exposed, and to protect the interests of the company that has purchased his cooperation, pointed out Rose. If states capitulate to such threats, the end result is that bribery flourishes. "This is the mischief that Article 5 was intended to address."

The SFO Director contends that signing up to an international treaty does not prevent a state from acting to protect its national security. Rose drew attention to modern treaty law, however, which does not permit important aspects of the treaty to be cut down by way of a general appeal to national security.

Where state parties want a general national security opt-out from an international treaty obligation, they address this explicitly when signing the treaty. he United Kingdom is party to a large number of modern bilateral treaties that include express provisions for a national security exception, several of which were negotiated and adopted at the same time as the OECD Convention.

Conversely, where the United Kingdom does not wish to permit an international law obligation to be avoided on national security grounds, no express provision is made. In a 2007 survey published by the OECD of the United Kingdom's bilateral investment treaties, 90 of the 91 treaties reviewed did not contain a national security exception. The same situation pertains in relation to numerous multilateral treaties to which the UK is party.

In the absence of any such provision in the OECD Anti-bribery Convention, the United Kingdom is not entitled, as a matter of international treaty law, to imply a general national security exception to justify its actions or override its obligations. under the Convention. Moreover, a general national security exception should not be implied into a multinational treaty if to do so would impair its effectiveness.

As with the domestic rule of law issue, however, Article 5 does not preclude a state from invoking a national security requirement in exceptional cases. A state can invoke the "necessity" of violating an international obligation if doing so is the only way to safeguard an essential interest against a grave and imminent peril.

The International Court of Justice (ICJ) has held that this "state of necessity" is recognised by customary international law, but can be invoked only under certain strictly defined conditions and that the country concerned is not the sole judge of whether those conditions have been met. The ICJ identified these conditions, including violation of the international obligation being the only means of safeguarding the essential interest.

In the decision to stop the BAE-Saudi corruption investigation, however, there is no evidence that the essential interest was threatened by a "grave and imminent peril" or that stopping the investigation was the "only means" of safeguarding that interest.

In sum, lawyers for CAAT and The Corner House argued:

• (a) The rule of law means that an independent prosecutor should not give way to threats.

  The constitutional principle of the rule of law requires an independent prosecutor not to give way to threats of adverse consequences in deciding whether to pursue an investigation or a prosecution. Otherwise, the more powerful the alleged criminal and their supporters, the less likely it is that a prosecution will take place and the law upheld. A central element of the rule of law is that the law must be applied to all equally, regardless of their identity, power or influence, or that of their supporters.

• (b) But if s/he does so, the decision should pass a strict necessity test.

  A prosecutor must uphold the constitutional principle of the rule of law (unless or until Parliament provides for different criteria) unless the facts of the case satisfy a test of strict necessity -- there is an imminent risk to life; ways of addressing the problem have been exhausted; and the consequences of giving in to the threat have been considered.

• (c) The courts must especially scrutinise administrative decisions made after a threat has been issued

  Because of the importance of the constitutional principle of the rule of law, the courts should scrutinise, and scrutinise particularly carefully, a decision to stop a criminal investigation or prosecution in response to a threat.

• (d) In the present case, there was no imminent risk to life; other means to address the problem had not been exhausted; and the damaging consequences of giving in to the threats were not properly considered.

  Therefore to stop the investigation by reference to the threats was a breach of the constitutional principle of the rule of law.

• (e) OECD Anti-bribery Convention.

  Further, the Director stated expressly that he had regard to Article 5 of the OECD Anti-bribery Convention when making his decision and that he had complied with the Article and had not taken into account prohibited considerations. The Courts do therefore have the authority under English law to consider whether the Director correctly understood and applied the OECD Anti-bribery Convention, and whether his decision complied with it or not, even thought the Convention is not itself part of English law.

• (f) Article 5 of OECD Anti-bribery Convention.

  Under Article 5 of the OECD Convention, the Director was prohibited when investigating the bribery of a foreign public official from being influenced by the potential effect on relations with another State. In deciding to stop the investigation because of the threats to withdraw diplomatic and intelligence co-operation made by Saudi Arabian officials, the Director did take into account the potential effect on relations with another State and thus acted contrary to Article 5 of the OECD Convention.

• (g) The SFO Director should make his decision again as to whether or not to continue with the investigation into BAE's alleged corruption in its recent arms deals with Saudi Arabia and do so on a correct legal basis.

30 July 2008:
Serious Fraud Office wins appeal

House of Lords ruling

Just three weeks later, the House of Lords overturned the High Court's decision; its judgment stated that the SFO Director had acted lawfully in stopping the investigation when faced with a threat to national security. In the view of the five Law Lords, the Director’s discretion to drop criminal proceedings did legally extend to taking account of the threat uttered by Saudi Arabia, even though the threat was ugly and obviously unwelcome. Lord Bingham concluded his opinion by stating:

"In the opinion of the House, the Director’s decision was one that he was lawfully entitled to make. It may indeed be doubted whether a responsible decision-maker could, on the facts before the Director, have decided otherwise."

One of the five Law Lords, Baroness Hale, said that she would have liked to have been able to say that it was wrong to stop the investigation as it was "extremely distasteful that an independent public official should feel himself obliged to give way to threats of any sort." She maintained that the threats and risks were matters that the Director was entitled to take into account, but unlike the other four law lords, she did not "accept that this was the only decision he could have made." However, she agreed that the decision taken by the SFO Director was lawful.

The Law Lords approached the decision of the SFO Director to stop the BAE-Saudi investigation solely from the perspective of whether the Director had exceeded his discretion in weighing the public interest in continuing the investigation and the competing public interest in safeguarding British lives by discontinuing it – they concluded that he has not exceeded his discretion. By contrast the High Court approached the decision from the perspective of whether the SFO Director could have taken any other course of action when confronted with the threat and whether the circumstances amounted to those of "utmost necessity".

The Law Lords also ruled that it was not for the UK courts to determine whether the decision was compatible or not with Article 5 of the OECD Anti-bribery Convention, or to interpret and construe the meaning of Article 5, but for the OECD’s Working Group on Bribery to do so as the dispute mechanism provided for in the Convention. They were also swayed by the SFO Director’s admission that he would have taken the same decision irrespective of the Convention.

The House of Lords judgment, therefore, makes it quite clear that the UK has failed to incorporate Article 5 of the Anti-bribery Convention into its domestic legislation, that the government and the SFO are not prepared to follow it, that the Article’s provisions (and even those of the whole Convention) are completely unenforceable in the UK, because the Courts are not prepared to enforce them. This means that, regardless of whether or not it was unlawful for the SFO to halt its BAE-Saudi investigation, the UK is in breach of its international law obligations – and continues to be in breach.

Disappointed but not dejected

CAAT and The Corner House immediately issued a statement highlighting the implications of the Lords judgment:

"Under UK law, a supposedly independent prosecutor can do nothing to resist a threat made by someone abroad if the UK government asserts that the threat endangers national security. The unscrupulous with friends in high places overseas who are willing to make such threats now have a legally valid 'Get Out of Jail Free' card. With the law as it is, a government can simply invoke 'national security' to drive a coach and horses through international anti-bribery legislation, as the UK has done in this instance, to stop corruption investigations. The dangers of abuse are obvious."

The statement stressed that both groups accept that the Government has a duty to protect the public from threats to national security. But they also emphasised how critical it is "that the public has absolute confidence and trust that the Government is not abusing national security arguments in order to avoid embarrassment (in this instance, offending Saudi Arabia) or to pursue the commercial interests of favoured companies, such as BAE, or to get out of its obligations under international law. Such confidence and trust is especially important at a time of heightened concern about international terrorism."

Both CAAT and The Corner House also pointed out that they were not dejected by the result as it brought the whole issue into the public realm and clarified the law. The highest court in the land effectively admitted that there is nothing in law to prevent a prosecutor from being bullied into dropping an investigation (or potentially a prosecution). The gaping holes in the law revealed by the Lords’ judgment point the way for the real challenges ahead:

• Pressing for changes to the law to ensure that prosecutors can remain independent and are empowered to resist threats from abroad.
• Ensuring that national security advice can be scrutinised by the courts and by parliament so that the Government cannot arbitrarily invoke national security – without effective checks and balances – to trump the rule of law.
• Opposing the clauses in the draft Constitutional Renewal Bill that would prevent a judicial review like ours from being taken in the future and that would give the Government 'carte blanche' to invoke national security to stop a fraud investigation or criminal prosecution without effective checks and balances.
• Insisting that the Government fulfil its international obligations to cooperate with requests for assistance from the US and Swiss authorities in their investigations into BAE’s dealings with Saudi Arabia.
• Pressing the OECD to clarify the circumstances under which national security concerns can legitimately be invoked to exempt signatories from fulfilling their obligations under the OECD Anti-bribery Convention
• Pressing the Serious Fraud Office to re-open its investigation into BAE's dealings with Saudi Arabia given that circumstances have changed since the investigation was dropped in December 2006. Much of the information that Saudi Arabia was apparently concerned to keep out of the public domain is now public knowledge.
• Exposing the preferential access of arms companies, such as BAE, to the Government, and campaigning to end public subsidies to the arms industry.

A storm of academic criticism

Legal scholars immediately began to pore over both the High Court and Lords judgments in a case destined to become compulsory textbook reading. Professor John R. Spencer, writing in the Cambridge Law Journal (J.R.Spencer, "Case Comment: Fiat justicia, ruatque concordia cum Arabe?", Cambridge Law Journal, 67 (3), pp.456-458), compared the British press with the British legal system:

"The kleptocrats and tyrants by whom, alas, too much of the world has the misfortune to be run are often angry when the truth is told about them by the BBC or by British press; but they know that it is pointless to press the British government to put a stop to unfavourable media coverage because, happily, the media in this country is not government controlled. Aliter, however, if they wish to prevent embarrassing truths about themselves emerging in the course of a prosecution." (p.457)

Spencer went on to quote Lord Bingham from the House of Lords judgment:

"'Evidence before this House shows that the Saudis were repeatedly told of the separation, under our system, between the prosecuting authority and the executive but, according to the Ambassador, found it difficult to accept that the UK government and the Prime Minister could not stop the investigation if they chose to . . . No wonder that the Saudis received this sermon on the separation of powers with scepticism. Their grasp of the realities was correct!' (p.457)

"'In theory, the decision [to stop the SFO BAE-Saudi investigation] was made by the Director of the Serious Fraud Office, acting 'independently', but on 'advice' provided by the Attorney General, who in turn was acting 'independently' of the Government. But in reality the independence of both agents was severely qualified – as the Saudis had correctly understood.'" (p.458)

Spencer contrasted a UK public prosecutor’s discretion to prosecute, encompassing non-prosecution on the grounds of ‘public interest’ with the obligation of a prosecutor in Germany, Italy and Sweden "to prosecute anyone against whom he [sic] has solid evidence of the commission of a crime", a principle "explicitly designed to prevent the administration of criminal justice being distorted by political pressure. He concluded that "lawyers from those countries would be shocked to learn what happened here".(p.458)

Spencer pointed to the key issue highlighted by the judicial review that encompasses arms sales and corruption but is also of wider significance and importance and goes to the heart of democratic accountability:

"If it is right in principle that criminal proceedings can be halted for urgent reasons of national safety and security, the next question is: whose job should it be to make such a decision?" (p.458)

In this case, the SFO Director, as Lord Bingham put it, is "obliged and entitled to rely on the expert assessment of others" – but which others? Concludes Spencer, "about the theoretical position, in other words, there is more than a whiff of hypocrisy. Though notionally the Director, the defendant the case, as [Lord Justice] Moses rightly said [in the High Court judgment], was 'in reality the Government'."

Another legal writer, Andrew J Roberts, has also drawn attention to this issue of national security, even while agreeing with the Lords’ decision (Andrew J. Roberts, "Case Comment: Prosecution: Director of SFO – lawfulness of decision to discontinue prosecution", Criminal Law Review 2009 (1), pp.46-49):

"The Lords’ conclusion that the Director was entitled to take account of the issue of national security in reaching a decision is unobjectionable. However, such decisions still need to be rational, in the sense that there must be a satisfactory evidential foundation to the claims about the threat to national security. Baroness Hale, while accepting that the Director was entitled to rely on the judgment of others in this respect, pointed out that a decision-maker would be obliged to probe any evidence or advice in order to ascertain its accuracy and attach appropriate weight. It is not difficult to envisage the problems likely to be encountered by decision-makers who are confronted with assertions regarding threats to national security. Such claims often lack specificity and those who make them are unlikely to be willing to divulge a great deal about the factual basis of their claims, still less to provide decision-makers with tangible evidence. As Baroness Hale concluded, the Director had to rely on the assurances of others that the risks were real."

These questions – Who decides on issues of national security? Are the checks and balances on such decisions sufficient to ensure democratic accountability? – are for the general public and Members of Parliament to ponder, but to do so urgently. Legislation is already being drafted that answers the questions in favour of the executive (see above), while 'national security' is being cited as the rationale for more and more intrusive legislation.

As another legal article supporting the Lords decision pointed out, the Law Lords "safeguarded executive discretion" (Robin Hopkins and Can V Yeginsu, "Storm in a Teacup: Domestic and International Conservatism from the Corner House Case", Judicial Review, Volume 13, Number 4, December 2008, pp.267-272.). Given the history of the "Al Yamamah affair", however, this is a matter of concern rather than consolation. Constitutional lawyer Jeffrey Jowell QC described the Law Lords "highly deferential approach to the exercise of broad discretion by a prosecutor" as "reminiscent of our administrative law in the middle of the last century" (Jeffrey Jowell, "Caving In: Threats and the Rule of Law", Judicial Review, Volume 13, Number 4, December 2008, pp.273-276.).

Jowell stressed that this case involved not just one threat – to public safety, "British lives on British streets" – but two: "to the integrity of our system of justice". "Here the Director has to consider the risk of caving in to blackmail to the confidence and resilience of our legal structures as a whole".

"[T]he House [of Lords] conspicuously disregarded the now established line of cases that require more rigorous scrutiny where constitutional principle or fundamental rights are engaged. In those cases the courts have, time and again, required more anxious scrutiny than the . . . test of ‘fair balance’ allows. In some cases they have gone even further by requiring the decision-maker positively to justify his departure from the relevant right or principle on the basis of the structured test of proportionality, under which the infringement must be shown to be 'necessary' and not merely 'desirable'.

"If only the first threat (to public safety) were in play, then of course the assessment of risk would, within the limits of reason, good faith, relevant considerations, etc., be for the prosecutor to decide . . . The second threat, however, is directed at a fundamental feature of the rule of law, namely that a person’s criminal liability must depend on what he has done, and not his power or influence, here or abroad. Another element of the rule of law is that the process of investigation or prosecution should not be influenced by extraneous threats or inducements . . .

"It has rightly been established in a distinguished line of case that an important function of judicial review is to ensure that discretionary principles are exercised consistently with constitutional principles. The constitutional principle that has most often explicitly been invoked in the rule of law. A number of recent cases have held that the rule of law should be upheld even in the fact of international terrorism.

"The rule of law, like some other fundamental principles and rights, is not absolute, but the courts should only countenance its limitation where strictly necessary for the preservation of some other important interest in a democratic society, of which public safety may be one. It is surprising that the House of Lords ... positively encourages the view that the rule of law is on a par with any other ‘relevant consideration’ taken into account by the prosecutor. Lord Bingham has recently identified the various underlying elements of the rule of law, of which the core is that the law should be enforced; and enforced equally against all (Lord Bingham "The Rule of Law", Cambridge Law Journal, 2007, 66, pp.67-85. See also). Lord Bingham was among the first to endorse stricter scrutiny of discretionary power where fundamental rights are in issue. And Lord Hoffmann has made the important point that government’s duty to protect ‘the life of the nation’ requires regard not only to physical safety but also to our values of freedom and liberty . . ."

"There is a regrettable failure in this case fully to confront, and therefore to guide, the approach to constitutional principle. It is to be hoped that this does not signal an abrupt lapse into the unnecessarily deferential administrative law of yesteryear."

The consequences of doing so, and of this judgment, are that "potential blackmailers will in future know to threaten the greatest ill for the greatest number."