Clause 61 - Damages at risk of being used for the purposes of terrorism

National Security Bill – in a Public Bill Committee am 2:45 pm ar 8 Medi 2022.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Question proposed, That the clause stand part of the Bill.

Photo of Rushanara Ali Rushanara Ali Llafur, Bethnal Green and Bow

With this it will be convenient to discuss the following:

Amendment 58, in schedule 10, page 140, line 12, leave out

“there is a real risk that”.

This amendment would ensure the court was satisfied on the balance of probabilities that damages were to be used for terrorism purposes before frozen funds could be forfeited.

That schedule 10 be the Tenth schedule to the Bill.

Photo of Thomas Tugendhat Thomas Tugendhat Minister of State (Home Office) (Security)

The Bill contains measures that will enable a Minister to apply freezing and forfeiture orders where they assess that there is a real risk of the damages awarded being used to fund acts of terror. That will be done only at the request of law enforcement or security services, but I am sure that the whole House, and the Committee, will appreciate the importance of avoiding accidentally enabling those acts against us. The measure is designed to meet the Government’s overriding policy objective of protecting the public and society. We believe it is important, fair and proportionate that damages can be frozen at source, at the point of award, where there is a real risk of their being used to support terrorism.

The freezing orders would last for a period of two years, and can be extended to another two years. We believe this is an appropriate, reasonable and fair approach, which disincentivises claimants from engaging with potential terrorist activity. Where UK security services assess there to be an ongoing risk that damages will be used for the purposes of terrorism, and where they have renewed the freezing order twice, they can apply for a forfeiture order. If granted, this would result in the award being permanently withheld, and paid into the consolidated fund.

We anticipate that in the main, applications will be made when the security services are already engaged in defending litigation from a claimant associated with terrorism. However, we believe it is important to make this additional power a general one, so that where there is a risk to national security from potential damages in any litigation, it can be addressed by a freezing order application. It is important to note that the Bill does not otherwise fetter a court’s discretion. Judges will be able to freely assess whether, on the balance of probabilities, there is a real risk of the award being used to support terrorism, and whether to make the order. They will receive submissions from both the security services and claimant on this point, and there will be a right of appeal. The measure includes provision that a court will have discretion to award part of the damages. This is an equitable measure designed to ensure that a court may award a sum to cover legal expenses, or, for example, essential care costs, in the circumstances of an individual case. We trust our courts and judges to make these assessments while being mindful of the context of public protection. While there are existing powers in relation to freezing and forfeiture of terrorist assets, this measure will enable the award of damages to be frozen at source, removing the prospect of compensation being spirited away before proceedings in other courts can commence.

Amendment 58 seeks to raise the threshold for forfeiture orders, so that a court will grant one only where, on the balance of probabilities, the money will be used for terrorism, rather than where there is a risk that it will be so used. As I have said, the Government believe it is important, fair and proportionate that damages can be frozen at source, at the point of award, where there is a real risk of their being used to support terrorism. We believe that the same test is appropriate for forfeiture of damages, where the real risk is ongoing and where the subject has also, on two prior occasions, been found to pose that risk.

It is important to remember that the court will be dealing not with whether something happened in the past but whether something may happen in the future. The context is therefore inherently one of risk. How much risk a society will tolerate of an event happening depends on how dangerous the matter is. Terrorism is one of the most dangerous, if not the most dangerous, issue facing society. It is aimed at the very fabric of our society and all our lives, and employs horrific means to achieve its aims. A real risk of terrorism is one that society need not tolerate and should not tolerate. National security determinations are rarely made in black and white. There are always measures of risk and probability, which have to be assessed and proven. The level contained in the proposition that the hon. Member for Birmingham, Yardley is trying to introduce is not, I am afraid, appropriate. There are safeguards in place. This is not an arbitrary power of the executive but an order that an independent judiciary had to agree on the balance of probabilities, which may be appealed. The Government will have to establish the risk, and the facts that underpin that risk, and on the balance of probabilities, as the hon. Member rightly reflects.

While real risk is the same threshold for both freezing and forfeiture, we are clear that its application will be different. With respect to a freezing order, the court will be considering the risk of the duration of that order—two years—and that is what the evidence will have to address. The decision for a forfeiture order will be different. The court will be considering risk on a balance of probabilities, in the context of loss, of the award for all time. The evidential basis it considers will therefore necessarily be different. It should also be borne in mind that the forfeiture order application will not be considered in a vacuum. It will have followed two court proceedings over a four-year period, where evidence would have been assessed and properly tested by the claimant. The court will also have that evidence at its disposal to inform its conclusions. The evidential basis of a forfeiture order will therefore be much stronger.

Photo of Maria Eagle Maria Eagle Llafur, Garston and Halewood 3:00, 8 Medi 2022

Can the Minister tell us whether these provisions have been based on some existing case, or cases, where the Government think this has happened and needs to be stopped, or are they just being made in anticipation of the unlikely circumstances in which damages are used in the way these provision seek to prevent? Are there existing cases the Government are concerned about?

Photo of Thomas Tugendhat Thomas Tugendhat Minister of State (Home Office) (Security)

The hon. Lady asks a fair question. This is a plan for the future or rather a concern over the future, rather than provisions based on existing cases. It is the Government, I hope, doing a responsible thing and looking forward, which is, I hope, what we would expect them to do.

Let me give an example. When making their application, the security services will provide evidence of the claimant’s involvement in terrorist activity and relevant associations, together with their risk assessment of the likelihood of the claimant’s using the money to fund terror activities.

Photo of Kevan Jones Kevan Jones Llafur, North Durham

I like the idea of the Government being able to look into the future. We have established that there are no cases so far, so what are the limitations of the existing legislation on the statute books? What is the difference that explains why we need this provision? I ask because I am never in favour of putting on the statute book things that are already covered by an existing freezing order, provisions on proceeds of crime, or anything else.

Photo of Thomas Tugendhat Thomas Tugendhat Minister of State (Home Office) (Security)

The right hon. Member will know that I am going to write to him about that, because he raises some interesting questions. I will come back to him.

At the freezing stage, the court is looking at essentially the immediate term, given that a freezing order lasts for two years, so the court will want to be satisfied that the claimant’s involvement in terrorism is current and is such that an award of damages is at real risk of being used at once, or within a short timescale, for terrorist purposes. However, the court has the comfort of knowing that the money is only frozen. It may be given to the claimant at a future date if the security services assess the risk as having abated sufficiently, or if the court hearing a later application overturns this.

At the forfeiture stage, the stakes are much higher: the claimant’s award would be permanently withheld. The court knows that the evidence of risk will need to justify that greater intervention. Evidence of entrenchment, of a markedly poor outlook, and that, given their activities, they are always likely to represent a risk will no doubt be uppermost in a court’s mind in a way they may not be for a freezing order. Questions of alternatives to forfeiture such as periodical payments to care providers in order to remove that risk will no doubt also come to the fore. But, where the strength of the evidence cannot be avoided and points to that risk, it is right that the money is forfeited. The court will also be aware that a forfeiture order interferes with property rights under the European convention on human rights and it will need to know that interference is proportionate to the risks, in the context of the need to protect the public.

It is important to note that the Bill does not fetter a court’s discretion in considering whether the risk has been proven. For the finality of the forfeiture application, the court will be able to require the Government to meet the evidentiary burden that it considers to be commensurate to it. The claimant will therefore have a total of three chances to fully challenge in court the evidence that the Government present, before forfeiture can occur. That test does not therefore reflect a low standard; instead, it reflects the right standard.

There are already terrorist freezing provisions, but the process is complicated and the compensation is not frozen at source. As I have said, and to further reassure the Committee, this measure includes provision that a court will have discretion to award part of the damages. This is an equitable measure designed to ensure that a court may award a sum to cover, say, legal expenses or essential care costs in the circumstances of an individual case. We trust our courts and judges to make these assessments while being mindful of the context of public protection. I ask the right hon. Member for Dundee East to withdraw the amendment and I will be communicating with the right hon. Member for North Durham again as well.

Photo of Stewart Hosie Stewart Hosie Shadow SNP Spokesperson (Cabinet Office), Shadow SNP Spokesperson (Constitution)

I thank the Minister for his remarks on clause 61 and schedule 10. He said that these were about concern for the future. I think we are all concerned about the future. He said that they were designed to tackle something that might happen in the future. I think we all are concerned about ensuring that nothing bad happens in future, but it appears from what the Minister has said that we are measuring risk on a very subjective basis—"real risk” is not a commonly used term.

Let me speak to amendment 58 to schedule 10. The schedule relates to civil proceedings where a Minister can apply to the court to freeze a possible award of damages if the Court is satisfied that there is a real risk of those damages being used for terrorist purposes. That, of course, is lower than the ordinary standard of proof and does not require the claimant to have even been convicted of a criminal offence. It requires only that there is a possibility that they might. Therefore, they will be deprived of any compensation for other matters that they are due. That is a very challenging provision. We clearly understand the policy intent, but what about other moneys than compensatory payments: earnings, pensions, savings, a lottery win or an inheritance? If this is about freezing cash because of a real risk that it may be used for terrorism, why do we need a specific provision for damages legally and properly awarded by a court after full consideration?

Photo of Kevan Jones Kevan Jones Llafur, North Durham

Also, if the money was used to support terrorism there is existing legislation about finance of terrorism, so it would fall under that legislation that exists already, rather than this provision.

Photo of Stewart Hosie Stewart Hosie Shadow SNP Spokesperson (Cabinet Office), Shadow SNP Spokesperson (Constitution)

My right hon. Friend is right that there is already legislation on terrorist financing. As the Minister pointed out in his opening remarks, there is already a way of freezing terrorist assets, but he said that it was complicated. If we are not just to do things properly and legally but to be seen to be doing them properly, legally and fairly, it may be worth going through those processes to do that.

Schedule 10 proposes, as the Minister said, a freezing order for two years under paragraph (1). Then, an extension is possible for four years under paragraph (2) and, even more drastically, the funds can be forfeited altogether. But the standard of proof in the Bill—the real risk—means no criminal conviction for anything. Even if the court were to think that damages would probably be used for legitimate purposes, but there was a real possibility that they might be used for something else, the damages could be frozen or forfeited entirely.

I can just about live with a general scheme—none of us is naive and none of us wants to see money from any source used to finance terrorism—but, surely, such a drastic step requires actual proof, at least on the balance of probability, that there is a risk of the funds being used for terrorism. That is precisely what the amendment, which removes reference to “real risk”, would achieve.

Photo of Jess Phillips Jess Phillips Shadow Minister (Home Office), Shadow Minister (Domestic Violence and Safeguarding)

I want to speak to the amendment and to the desire of my hon. Friend the Member for Garston and Halewood, who is momentarily not in her place, to speak to a case, although the Minister said that the schedule was not based on any particular case.

The right hon. Member for Dundee East asked about other moneys, specifically a lottery win. Why should the schedule be just for damages? What if we thought somebody’s lottery win, for example, was going to be used? That seems outrageous and unlikely, except it happened to me. The only time I have ever had any personal relations with anti-terror police was when they turned up mob-handed to my office, because of threats to my life that I had received from inside a prison. The threats were jihadist in nature and largely about how the person in prison—obviously a risk factor, on the balance of probabilities—was working with people on the outside to kill me and my family. The terror police came and we undertook a case against the man.

It came to pass—through the process of convicting the man, who is now in prison for a term of another 10 years for the crime against me—that the reason why the police had such grave concerns, even though they were not sure whether he was part of a particular network or indeed working with anyone else, was that while on mental health day release, he had won the lottery and had access to quite substantial sums that could have been used in the commission of crimes against me while still in prison.

Photo of Kevan Jones Kevan Jones Llafur, North Durham 3:15, 8 Medi 2022

I do not know whether my hon. Friend is aware of the international comparison with the gangster in Boston called Whitey Bulger. He was a notorious gangster whose unexplained wealth was explained by a lottery win, which was outside the jurisdiction of the courts in the United States.

Photo of Jess Phillips Jess Phillips Shadow Minister (Home Office), Shadow Minister (Domestic Violence and Safeguarding)

With Boston bosses.

One of the risk factors in the case was that issue of a lottery win. There was a certain evidential threshold in the case that was easy to prove in court, because he was threatening to kill me! Please excuse me laughing—one has to laugh at such things, because life becomes ridiculous otherwise.

Why stop with damages? Why should we have a different rule? Nothing could be done in the case that I outlined. I think it is a one in 1.8 million chance of my case happening, so if we have no cases to base it on, I wonder why the focus is on this and not on the case that I outlined.

Photo of Kevan Jones Kevan Jones Llafur, North Durham

The Ministry of Justice and the Home Office employ a wide variety of talents among the individuals whom they recruit, but I did not realise that they actually recruit fortune tellers. That is what we are into here. We have established that there have been no such cases. I am not aware—perhaps the Minister can provide some examples—of why the security services think this is a risk. If that does not exist, this is in the realms of predicting the future, and if there is one thing that we can all agree on—possibly everyone—it is that we cannot predict what happens in the future.

As my hon. Friend the Member for Birmingham, Yardley just said, why only the damages? There is already extensive legislation on the statute books to freeze proceeds of crime and bank accounts if they are to be used for criminal activities. What extra weapons will we give to the courts? I do not see anything that is not there at the moment.

As for using the measure—as opposed to freezing, for example, as I said to the right hon. Member for Dundee East—there is already legislation on the statute book to prevent someone from financing terrorism. In such a situation, what evidence would the Government or the state actually put before the courts? They cannot say simply, “We think he or she might use their proceeds for terrorist activity in future”; it has to be based on intelligence. Again, putting the evidence into court would still expose the state. I presume the existing process would be followed, but it would still mean that we might be putting intelligence in the courts that is not just historical, but actually live, in terms of things such as associations. I just think it is a very clumsy way of trying to proceed. We do not want any money, wherever it comes from, to be used for financing terrorism, but I do not understand where the proposal has come from in the first place. I would be interested if the Minister could find out, because I am also clear that we should not put measures on the statue book unless we have to.

Another point—it is quite amusing in one respect—is the idea that we can decide that an individual who is going to potentially fund terrorism is only going to get half or part of their settlement. I am reassured that the lawyers will be getting their fees, because it would be dreadful if they were having to go to food banks after not getting their pay from a case. However, the Minister then said that care costs and other things would be taken into account. How would the decision be made? Using care costs as an example, if a person gets a certain amount in damages, they might need them for a few years to come if their care costs are ongoing. So, we could not really cap where that is going to go, and that affects the individual’s ability to claim on the state for their care costs. This is a mess. It is one of the examples in the Bill where the odd thing is just thrown in that is not needed. If the Minister could demonstrate to me why this is so important to include in the Bill, I would back him 100%. However, I think that the measure is clumsy, that it will never be used, and that it will damage the reputation of this Bill, which some people have done a good enough job of doing as it is. The Minister certainly will not accept the amendment, but this is another issue that he might want to cogitate on, and decide whether it is worth the candle.

Photo of Thomas Tugendhat Thomas Tugendhat Minister of State (Home Office) (Security)

I welcome Committee members’ comments. I notice that Occam has many cousins in this place, and that his razor is very sharp. On that basis, I merely mention that the issue is with not just damages payments, but the enormous resource currently used in fighting such claims.

Photo of Kevan Jones Kevan Jones Llafur, North Durham

That is absolute tosh. If this gets on the statute book, what on earth would it cost if somebody challenges and appeals? The initial damages will be completely insignificant compared with what it will cost to have special courts and everything else like that.

Photo of Thomas Tugendhat Thomas Tugendhat Minister of State (Home Office) (Security)

The right hon. Member and I will delight in having a conversation about this when I have written to him.

The reality is that this is looking at an identifiable risk, which is from court proceedings, rather than an unidentifiable risk, which is lottery winnings. I have put that on record and we will no doubt discuss this later. It is also worth making the case that the courts are experienced in calculating case costs and ongoing costs. I will leave it there.

Photo of Stewart Hosie Stewart Hosie Shadow SNP Spokesperson (Cabinet Office), Shadow SNP Spokesperson (Constitution)

I am not sure that we are particularly enlightened by the Government’s response. I must say I share the scepticism of the right hon. Member for North Durham. How many times are the Government going to have to spend huge amounts of money to fight against somebody who has been awarded some damages on the grounds that they may then wish to use those damages to support terrorism? I am not dreadfully convinced by that argument.

I will not press the amendment, but given we are into the sphere of crystal balls, subjectivity and a judicial threshold that is far too low for this action, I would not be at all surprised if a similar amendment to this one sees the light of day at a later stage of the Bill.

Question put and agreed to.

Clause 61 accordingly ordered to stand part of the Bill.

Schedule 10 agreed to.