Michael Brindle QC, Timothy Otty QC and Amy Rogers (instructed by Zaiwalla & Co ) for the claimant; Steven Kovats QC, Patrick Goodall QC and Julian Blake (instructed by Government Legal Department ) for the defendant.
The bank claimed damages against the Treasury under section 8 of the Human Rights Act 1998 for loss and damages caused by the Financial Restrictions (Iran) Order 2009 made under section 62 of, and Schedule 7 to, the Counter-Terrrorism Act 2008. The effect of the 2009 Order was to shut the bank out from the United Kingdom financial sector: see the Supreme Court’s decision in Bank Mellat v HM Treasury (No 2) [2014] 1 AC 700. The following questions were ordered to be tried as preliminary issues: (1) whether, in light of the judgment of the Supreme Court, it was open to the Treasury to contend that it had not acted in a way which was incompatible with a right under the Convention for the Protection of Human rights and Fundamental Freedoms and/or unlawful contrary to section 6(1) of the 1998 Act. (2) Whether, as a matter of law, it was open to the Treasury to contend that loss caused to the bank by a diminution in earnings before taxation generated by its subsidiaries (“PIB”, “FEE” and “EIH”) was irrecoverable. (3)(a) Whether the only “possessions” of the bank within the meaning of article 1 of the First Protocol to the Convention with which the 2009 Order could have interfered were (i) any “unperformed concluded transactions” as defined in the amended defence, and (ii) marketable goodwill to the extent, if any, that it was represented by or referable to any such “unperformed concluded transactions”. (b) If not, whether the 2009 Order could in law have interfered with each of the categories of “possessions” identified in the bank’s schedule served on 5 December 2014.
(1) It was not open to the Treasury to contend that it had not acted in a way which was incompatible with a Convention right when a majority of the Supreme Court decided that it had. (2) The Strasbourg jurisprudence recognised that, as a general rule, a rule equivalent to the English law rule against recovery of reflective loss, unless there were exceptional circumstances, such as that the company could not bring a claim against the wrongdoer. Thus the court was against the bank on its second ground for submitting that the rule against reflective loss had no application in the present case. However, since the court had found in favour of the bank on its first ground as regards the shareholding in PIB namely that PIB could not have brought a claim against the Treasury under the 1998 Act or at common law, for the purposes of the Strasbourg jurisdiction there were exceptional circumstances in the present case. It followed that (subject to the outcome of the third preliminary issue) the bank was free to pursue a claim for diminution in the value of its shareholding in PIB and that the Treasury’s application to strike out that claim was refused. (3) It would be wrong to lay down prescriptions at the present stage as to what damages would be recoverable by the bank for the unlawful interference with their possessions. For present purposes it was only necessary to record that to the extent that, by the third preliminary issue, the Treasury sought to limit the damages recoverable by the bank, the court found against the Treasury.