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UK national security appeals ‘fly blind’ behind privacy curtain

Judicial reviews of the UK government’s decisions under national security legislation are likely to follow a closed-door procedure brought across from other fields, such as terrorism cases, lawyers told this news service.

The government is facing two challenges to recent unwinding orders under the National Security and Investment Act (NSIA), in Newport Wafer Fab/Nexperia and Upp/LetterOne.

Challenges may be heard in closed proceedings depending on the sensitive nature of material going before the court, the lawyers said.

Under the NSIA, companies can appeal against decisions taken by the government – including unwinding orders – to the High Court.
According to the explanatory notes accompanying the Act, the government is able to apply for a closed material procedure to protect sensitive matters in judicial review or appeal proceedings.

Under the 2013 Justice and Security Act, closed material procedure allows the State to disclose material that is sensitive to national security in closed procedures to the judge and a Special Advocate appoint to represent the other party’s interests, without having to disclose the material to the other party, the other party’s legal counsel or the public.

Rona Bar-Isaac, a partner at Addleshaw Goddard in London, said that the government could bring across the process used in terrorism cases to judicial reviews under NSIA, in order to protect highly sensitive material.

The lawyer said that the use of a Special Advocate is not provided for in the Act’s provisions, but that hearings held under closed material procedure are likely to be closed to the public and not listed by the court. “The Special Advocate cannot discuss that material, even with their own client. The client is flying blind,” Bar-Isaac said. The instruction of a Special Advocate would raise “complex tactical questions” in the course of litigation, the lawyer said.

John Schmidt, a partner at Arnold & Porter, said that there is an “inherent burden” in cases where national security is involved, with practitioners aware that secrecy is part of the process, even in judicial review. “There is always a tension between the parties having transparency and due process,” the lawyer said. This tension will need to be managed by a judge during the judicial review proceedings, he said.

Veronica Roberts, a partner at Herbert Smith Freehills, told this news service that the judicial review standard for reviewing government decisions “should militate” that court proceedings be held in public.

“I think it is important that the public, beyond the parties and the lawyers in those particular cases, can get a glimpse of the process itself,” Roberts said. “The judicial review is the final part of the process [and] knowing of the ability to challenge a public body’s decision is important,” she added.

The lawyer cited the US case of Ralls v CFIUS from 2015, where a company successfully challenged the government’s decision on national security grounds. The case, said Roberts, focused on the information given to an acquirer in the course of a national security review and whether the acquirer was given adequate reasons for a government decision.

Ralls Corporation, a US-based company owned by two Chinese nationals, successfully challenged an order to unwind the purchase of four wind farm companies, whose assets included a project site within US Navy airspace.

The DC Circuit Court allowed the company’s appeal on the grounds that it had not had an opportunity to see and rebut evidence on which CFIUS relied to make its findings regarding the threat to national security. The company subsequently reached a settlement agreement with CFIUS.

Roberts said that the Ralls case showed that reviews of government decisions on national security grounds do not strictly require the use of the closed material procedure, depending on the facts of a case.

“You should in principle be able to run [a] case outside of closed material procedure,” the lawyer said.

Grounds for review

Lawyers noted that the courts are confined to reviewing decisions by the Secretary of State on irrationality and reasonableness grounds. The current decisions under judicial review could also succeed on procedural grounds, they added.

The first legal challenge under the legislation came in January, when Netherlands-based semiconductor maker Nexperia announced it was appealing against the government’s decision to order the unwinding of its purchase of Newport Wafer Fab. 

A Nexperia spokesperson said that the company is awaiting the outcome of the judicial review.

In April, LetterOne filed for judicial review of the government’s order last year directing the private equity firm to unwind its completed acquisition of UK-based fibre network provider Upp Corporation (formerly Fibre Me), over national security grounds. According to reports, the company has distanced itself from its former owners, who were sanctioned in the wake of Russia’s war on Ukraine.

Commenting on LetterOne’s application for judicial review, Timothy McIver, a partner at Debevoise & Plimpton said that the case “will be difficult to review” as the courts give wide discretion to the government on national security grounds.

The lawyer said that the courts “do not usually question” decisions made by the Cabinet Office. If LetterOne is going to succeed in its judicial review, it will be on the grounds of a procedural misstep, he added.

In an emailed statement, LetterOne confirmed its filing of an application for judicial review on 19 December 2022.

L1’s ownership of Upp does not pose a national security risk, the statement added. "L1 is not sanctioned and has taken fast, decisive action to put in place strong measures to distance itself from its sanctioned shareholders. They have no role in L1, no access to premises, infrastructure, people and funds or benefits of any description".

"In addition, Upp is subject to stringent telecom regulations overseen by OFCOM and already has processes in place that remove any perceived threat to national security, including a UK leadership team; only UK, US and EU personnel on the Board of Directors; and clear security protocols about L1 access to information, data and any sites of critical technological infrastructure", the statement continued.

"L1 believes it is essential that this decision is reconsidered so that Upp can continue to deliver vital next-generation broadband to E. England and E. Midlands, with the significant social and economic benefits that brings to the regions”, the statement concluded.

by Aicha Marhfour and Wahida Ahmed in London