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Table of Contents

  1. Acknowledgments
  2. Chapter one: Defining the constitution
  3. Chapter two: Parliamentary sovereignty
  4. Chapter three: The rule of law and the separation of powers
  5. Chapter four: The royal prerogative
  6. Chapter five: The House of Commons
  7. Chapter six: The House of Lords
  8. Chapter seven: The electoral system
  9. Chapter eight: Parliamentary privilege
  10. Chapter nine: Constitutional conventions
  11. Chapter ten: Local government
  12. Chapter eleven: Parliamentary sovereignty within the European Union
  13. Chapter twelve: The governance of Scotland and Wales
  14. Chapter thirteen: Substantive grounds of judicial review 1: illegality, irrationality and proportionality
    1. Congreve v Home Office [1976] QB 629; [1976] 1 All ER 697.
    2. R v Secretary of State for Foreign Affairs, ex parte World Development Movement Ltd [1995] 1 All ER 611
    3. Padfield and Others v Minister of Agriculture Fisheries and Food and Others [1968] 1 All ER 694
    4. H Lavender and Son Ltd v Minister of Housing and Local Government [1970] 3 All ER 871
    5. British Oxygen Co Ltd v Minister of Technology [1970] 3 All ER 165
    6. Ministry of Agriculture and Fisheries v Matthews [1949] 2 All ER 724
    7. Robertson v Minister of Pensions [1948] 2 All ER 767
    8. Lever (Finance) Ltd v Westminster Corporation [1970] 3 All ER 496
    9. Western Fish Products Ltd v Penwith District Council and another [1981] 2 All ER 204
    10. R v London Borough of Hillingdon, ex parte Royco Homes Ltd [1974] 2 All ER 643
    11. Brind and others v Secretary of State for the Home Department [1991] 1 All ER 720
    12. R v Ministry of Defence, ex parte Smith [1996] 1 All ER 256; [1996] QB 517
  15. Chapter fourteen: Procedural grounds of judicial review
  16. Chapter fifteen: Challenging governmental decisions: the process
  17. Chapter sixteen: Locus standi
  18. Chapter seventeen: Human rights I: Traditional perspectives
  19. Chapter eighteen: Human rights II: Emergent principles
  20. Chapter nineteen: Human rights III: New substantive grounds of review
  21. Chapter twenty: Human rights IV: The Human Rights Act 1998
  22. Chapter twenty-one: Human rights V: The impact of The Human Rights Act 1998
  23. Chapter twenty-two: Human rights VI: Governmental powers of arrest and detention
  24. Chapter twenty-three: Leaving the European Union

R v Secretary of State for Foreign Affairs, ex parte World Development Movement Ltd [1995] 1 All ER 611

ROSE LJ: There is before the court an application by World Development Movement Ltd for judicial review of two decisions of the Secretary of State for Foreign Affairs in relation to aid to fund the Pergau dam in Malaysia. The initial decision to grant aid was made on or shortly before 8 July 1991. The application refers to 15 July, which was the date of a press release in relation to the matter, but nothing turns on the precise date.

In early 1994 there were proceedings in public before the House of Commons Public Accounts Committee and the Foreign Affairs Committee which led the applicants' solicitors to seek an assurance from the Secretary of State that no further funds would be furnished. On 29 April 1994 the Foreign Secretary refused to give such an assurance, and that is the second decision which is challenged.

By the notice of motion the applicants seek to have both decisions quashed and an order preventing further payments from being made. But it may be that the applicants will be content with a declaration that the July 1991 decision to make a grant was unlawful.

In the course of the hearing before this court there have been four issues: first, whether the applicants have standing to make the application; secondly, whether disclosure should be ordered of two minutes from Sir Tim Lankester, Permanent Secretary in the Overseas Development Administration (the ODA) to Baroness Chalker, the Minister of Overseas Development, dated 5 and 7 February 1991; thirdly, whether the July 1991 decision was lawful; fourthly, what is the appropriate relief, if any, taking delay into account. As to the second issue, the court refused disclosure during the hearing and indicated that reasons would be given later.

Before addressing the issues, it is necessary to set them in the context of the relevant legislation and the timetable of material events.

Section 1(1) of the Overseas Development and Co-operation Act 1980 is in these terms:

The Secretary of State shall have power, for the purpose of promoting the development or maintaining the economy of a country or territory outside the United Kingdom, or the welfare of its people, to furnish any person or body with assistance, whether financial, technical or of any other nature.....

The argument before this court has centred on whether the grant in question was 'for the purpose of promoting the development' of Malaysia.

The relevant history is that, during the 1960s, the Malaysian government identified on the Pergau River a potential site for a hydro-electric power station. In April 1988 an Australian company carried out a feasibility study for a dam there. In September 1988 two British companies, Balfour Beatty and GEC, indicated to the Department of Trade and Industry (the DTI) their interest in the site. In the autumn of 1988 the Malaysian Electricity Authority identified the Pergau site as a priority. In October 1988 the British consortium told the DTI that they would be seeking, in relation to Pergau, aid and trade provision (ATP) (which accounts for about 5% of the overseas aid fund disbursable under s 1 of the Act). In November 1988 the consortium submitted a formal application for ATP and gave 'indicative costs' totalling 315m to the ODA, and in January 1989 produced what was said by the National Audit Office to be a 'firm contract proposal' of 316m, with a United Kingdom content of 195m.

In early 1989 the DTI advised the ODA to send an appraisal mission to Malaysia. On 6 March 1989 the consortium repeated the figure of 316m. From 13 to 15 March 1989 an ODA appraisal mission was in Malaysia....

On 20 March the appraisal mission reported that, at the consortium's price of 316m, the economic viability of the project was 'marginal'....

In February 1990 the ODA completed a further economic appraisal and concluded that the Pergau project would, at 397m, be 'a very bad buy', and a burden on Malaysian consumers. In April an ODA economist minuted that, on all available estimates, which included a World Bank appraisal, Pergau appeared 'markedly uneconomic'. In October 1990 ODA concluded that Pergau would not be an economic proposition until the year 2005 at the earliest, and that Malaysian consumers would pay 100m more for their electricity over Pergau's 35-year life than if cheaper alternatives were pursued. Sir Tim Lankester was of the view that the Pergau project 'was unequivocally a bad one in economic terms'.

In January 1991 the ODA completed a further economic appraisal which priced the Pergau project at 417m, which would predicate ATP funding of 108m, and confirmed the conclusion that the project should be postponed. On 5 February 1991 Sir Tim Lankester sent a minute to the ODA minister advising against proceeding.... On 26 February the Foreign Secretary, against that advice, took the decision to approve ATP support for the Pergau project and gave the appropriate direction to Sir Tim Lankester on 4 July....

Mr Pleming [counsel for the WDM] submitted that the power conferred by s 1(1) of the 1980 Act is limited to the purpose imposed by the subsection, namely, in the present circumstances, for promoting development. This, he submitted, is concerned with the authorisation of assistance, not projects. The correct test is: did the Secretary of State decide to furnish the Malaysian government with financial assistance for the purpose of promoting development? Accordingly, he submitted, if aid is to be granted, projects have to be 'sound development projects'. The Pergau dam was not....

Before considering the way in which Mr Pleming developed his argument, it is convenient to set out the material parts of the Foreign Secretary's evidence on which he relied. The Foreign Secretary's affidavit deals with matters in the second half of para 2 and paras 3 and 4, all of which I will read:

2 In exercising these powers, careful consideration is therefore given to whether a proposal for assistance does indeed promote one or more of these purposes. Subject to this, I also regard it as perfectly proper(and indeed essential given my general responsibilities as Secretary of State(to take into account other wider political and economic considerations, such as the promotion of regional stability, good government, human rights or British commercial interests.

3 Throughout the decision-making process in which I was involved, I considered that I was dealing with a development project, that is to say a project whose purpose was to help Malaysia to carry out its plans for addressing its energy needs and thus promote that country's economic development. This was fundamental to my thinking.

4. In reaching a decision on the provision of assistance, I also had to take into account two additional considerations. On the one hand, I was aware that formal offers of financial support had already been made(and renewed(to the Malaysian Government, which clearly regarded this project as a key element of their programme for addressing their substantial power requirements. I took the view that the withdrawal of the offer to provide assistance would affect the United Kingdom's credibility as a reliable friend and trading partner and have adverse and far-reaching consequences for our political and commercial relations with Malaysia....

Mr Pleming submitted that, in the light of that material, the Foreign Secretary was motivated by purposes which were not permitted by the statute, that his decision was made in reliance upon irrelevant facts and matters and in defiance of relevant considerations and advice, in particular to the effect that the project was not sound economic development and was not made for a purpose within s.1. The crucial question, as it seems to me, is whether there was, indeed, a purpose within the 1980 Act....It is not suggested, points out Mr Pleming, by the Foreign Secretary in his affidavit, that Sir Tim Lankester's opinion and advice were other than correct. The provision of ATP for a purpose known by the government not to be 'sound economic development', submitted Mr Pleming, could not be within s 1, and in the absence of any evidence that financial assistance would be likely to promote development, there is no room for any wider perspective, such as that which the Foreign Secretary refers to having taken into consideration. The reason or motive, submitted Mr Pleming, was political or diplomatic, namely that the Prime Minister had given an undertaking in March 1989 that Britain would provide ATP support, and to go back on that word would be detrimental to the interests of Britain, British companies and British workers. Section 1, submitted Mr Pleming, confers no power to make decisions on such a basis....

As to the absence of the word 'sound' from s 1(1), it seems to me that if Parliament had intended to confer a power to disburse money for unsound developmental purposes, it could have been expected to say so expressly. And I am comforted in this view by the way in which the successive ministers, guidelines, governments and white papers identified by Mr Pleming have, over the years and without exception, construed the power as relating to economically sound development. That also, judging from his minutes, was the view of Sir Tim Lankester in 1991, when he alone advised the Foreign Secretary....

Accordingly, where, as here, the contemplated development is, on the evidence, so economically unsound that there is no economic argument in favour of the case, it is not, in my judgment, possible to draw any material distinction between questions of propriety and regularity on the one hand and questions of economy and efficiency of public expenditure on the other. It may not be surprising that no suggestion of illegality was made by any official, or that the Secretary of State was not advised that there would, or might be, any illegality. No legal advice was ever sought.

The Secretary of State is, of course, generally speaking, fully entitled when making decisions to take into account political and economic considerations such as the promotion of regional stability, good government, human rights and British commercial interests. In the present case, the political impossibility of withdrawing the 1989 offer has been recognised since mid-April of that year, and had there in 1991 been a developmental promotion purpose within s 1 of the 1980 Act, it would have been entirely proper for the Foreign Secretary to have taken into account also the impact which withdrawing the 1989 offer would have had both on the United Kingdom's credibility as a reliable friend and trading partner and on political and commercial relations with Malaysia. But for the reasons given, I am of the view, on the evidence before this court, that there was, in July 1991, no such purpose within the section. It follows that the July 1991 decision was, in my judgment, unlawful.