UK APPEALS COURT UPHOLDS ASSET-FREEZING REGIME

UNCLAS LONDON 002766

SENSITIVE
SIPDIS

REF LONDON 01170

E.O. 12598: N/A
TAGS: ECON KTFN UK
SUBJECT: UK APPEALS COURT UPHOLDS ASSET-FREEZING REGIME


1. (SBU) Summary: The UK Court of Appeals supported the British
government's asset-freezing regime after it had been struck down in
an April High Court ruling, in an October 30 decision. HM Treasury
was largely pleased with the outcome, although they will have to
make modifications to UK regulations (Orders),which implement UN
terrorist financing designations into UK practice. End Summary


2. (SBU) Six months after a UK High Court (court of first instance)
ruled against the UK asset-freezing regime, the Court of Appeals has
essentially returned the HM Treasury-run program to its prior form,
with a few modifications. The following comes from HM Treasury's
immediate analysis of the ruling.

(1) The Terrorism Order remains lawful, but the "or may be" [a
terrorist financier, supporter of terrorism, etc.] element of the
test for designation should be excised;

(2) The Directions against the five petitioners should be quashed as
they contain the "or may be" test;

(3) The Al-Qaida and Taliban Order remains lawful, although people
designated under the Orders should be able to apply to UK courts to
investigate the basis of their UN listing and, if appropriate, the
courts could require the Government to seek a delisting at the UN;

(4) Courts can appoint special advocates within their jurisdictions
[this would allow HMG to use special advocates in the current
challenges and any further challenges commenced before the pending
Counter-Terrorism Bill is finally approved (probably in late
November).

Impact on the Five Un-named Designees
--------------


3. (SBU) All five designations were initially revoked by HMT
following the High Court decision, but fresh decisions were made in
four of the five cases. In effect, apart from one case (which HMG
determined prior to receiving the embargoed judgment should be
delisted) the freezes remain intact and uninterrupted. HMT sent a
notice on its website on October 31.


4. (SBU) The court did not rule that designations made against other
persons on the basis of the "or may be" test should be quashed but
HMG is reviewing all other Terrorism Order designations to head off
legal action.


5. (SBU) In practice, the court's order to remove the "may be"
evidentiary level is unlikely to have a major impact on UK cases,
because HMT rarely utilize it in designations. They believe they
will only have to delist two of 100 cases who will not meet this
higher test. One case has less than $300 of frozen assets, and the
other is Yasim Al Qadi, whose designation in the UK will be
maintained as long as the EU designation continues to maintain the
UN listing.


6. (SBU) COMMENT: The Court of Appeals decision now seems to put a
floor under what had been a tenuous asset-freezing regime,
particularly since the April decision cast doubt on the entire
program. Through minor modifications to the regulations, and
improvements in the current Counter-Terrorism bill working its way
through Parliament, the British government should be on stronger
ground domestically in its fight against terrorist finance.

LeBaron