Bank Mellat v HM Treasury (UK Supreme Court, 2013)

Bank Mellat v HM Treasury produced two United Kingdom Supreme Court judgments on 19 June 2013. No 1 addressed the court's use of closed material. No 2 held that a 2009 Treasury direction restricting financial-sector dealings with Bank Mellat was procedurally unfair and disproportionate. The decisions concern a particular statutory measure and record; they do not immunise the bank from other lawful restrictions or establish every factual allegation made by either side.

Measure and proceedings

HM Treasury made the direction under Schedule 7 to the Counter-Terrorism Act 2008. It required relevant United Kingdom financial and credit institutions to cease business relationships and transactions with Bank Mellat. The government linked the measure to risks associated with Iran's nuclear and ballistic-missile programmes. Bank Mellat denied the allegations and challenged the direction.

In No 1, the Court held that it could adopt a closed material procedure for the appeal. The judgment addressed the court's procedure and statutory setting, not the substantive legality of secret evidence in every sanctions case.

Holding in No 2

The majority in No 2 held that the direction was unlawful. The bank had not received adequate notice of the essential grounds before the measure was made, depriving it of a fair opportunity to make representations. The majority also found the direction irrational in singling out Bank Mellat and disproportionate in relation to the stated objective and evidential basis.

Lord Sumption's proportionality analysis described four questions concerning legitimate objective, rational connection, less intrusive means and fair balance. The formulation has influenced later public-law argument, but its application remained tied to the facts, statute and measure before the Court.

Statecraft significance and allegation control

The judgments show that targeted financial restrictions can face exacting judicial review even where national security and sensitive material are involved. Government may protect intelligence through authorised procedures, but secrecy does not remove the need to identify the legal basis, affected party, reasons and proportionality of a measure.

The Court's disposition should not be restated as a final factual finding that the bank had no relationship to proliferation-sensitive activity. It held the challenged direction unlawful on the record and procedure before it. Later disputes, settlements or restrictions require their own authority and evidence.

Review discipline

The case is useful because it separates national-security deference from legal abdication. A reviewing court can recognise the sensitivity of intelligence while asking whether the affected party received enough of the case to answer it and whether the measure rationally selected the stated target. The less-intrusive-means question does not require a court to design policy from scratch, but it does require attention to realistic alternatives. Proportionality also differs from proof of innocence. The government may have a legitimate proliferation objective and still choose an unlawful instrument. Conversely, quashing one direction does not prevent Parliament or ministers from adopting a properly authorised and justified measure on a different record.

See also

Targeted financial sanctions · Judicial review of sanctions · Proportionality in sanctions review · Economic statecraft

Sources

• UK Supreme Court, [Bank Mellat v HM Treasury (No 1) [2013] UKSC 38](https://www.supremecourt.uk/cases/uksc-2011-0040).
• UK Supreme Court, judgment in *No 1*, 19 June 2013.
• UK Supreme Court, [Bank Mellat v HM Treasury (No 2) [2013] UKSC 39](https://www.supremecourt.uk/cases/uksc-2011-0041).
• UK Supreme Court, judgment in *No 2*, 19 June 2013.
• HM Treasury, Financial Restrictions (Iran) Order 2009.
• UK Parliament, Counter-Terrorism Act 2008, Schedule 7.