Court of Appeal finds the National Crime Agency’s refusal to investigate human rights abuse-linked cotton imports from the Uyghur region unlawful
23 July 2024
R (World Uyghur Congress) v National Crime Agency [2024] EWCA Civ 715
This landmark decision was a successful appeal from the judgment of Dove J ([2023] EWHC 88 (Admin)) on the single issue of whether the National Crime Agency (“NCA”) misdirected itself when reaching the decision (i) not to investigate alleged offences under Part 7 of the Proceeds of Crime Act 2002 (“POCA”) and (ii) not to commence a civil recovery investigation under Part 5, in respect of certain cotton products brought into the UK alleged to be the product of forced labour and other human rights abuses.
The Appellant contended that when taking those decisions the Defendant had laboured under two fundamental misapprehensions, namely (i) that it is necessary to identify specific product as criminal property before commencing an investigation; and (ii) that the presence within the supply chain of a person who can rely on the exemption under section 329(2)(c) of POCA has the effect of “cleansing” criminal property so as to preclude its recovery, or the recovery of the proceeds of sale.
The court noted that it was well established that the decisions of an independent prosecutor or investigator would only be disturbed in highly exceptional circumstances: see R (Corner House Research) v Serious Fraud Office (2008) UKHL 60 at paragraphs 30-32. However, the discretion of decision makers was not unfettered; they must direct themselves correctly in law.
The challenge in this case was not advanced on Wednesbury principals. Rather, it was based on the alleged errors and misdirection in law. The Appellant contended that the Judge had nonetheless proceeded to deal with the matter on the basis that it was a rationality challenge. It was also contended that the Judge had reached the wrong conclusions insofar as he did address the substance of the challenge.
The NCA contended that it did not make the first error of law alleged, on a proper reading of the decision letter. It accepted the second error had been made but contended that it was immaterial and did not affect the substance or validity of its reasoning, namely that there was insufficient evidence from which to develop an investigation which had any prospect of bearing fruit. The Appellant accepted if that was the NCA’s reasoning, they would have been entitled to take that view.
Accordingly, this appeal turned on close analysis and the correct interpretation of the decision letter.
Sir James Eadie KC on behalf of the NCA frankly accepted that as a matter of law it would be wrong to refuse to commence an investigation under POCA because criminal property could not be identified at that time. Indeed, he contended that it would have been so obviously absurd to approach matters on the basis that that you needed to know the outcome of the investigation before taking a decision to commence it, it was highly improbable that the NCA had taken that approach.
Whilst recognising this as a powerful forensic point, the Court nonetheless concluded that, on the face of the decision letter, that was indeed the approach that was taken, and it was a clear misdirection in law.
Moreover, the Court did not agree that the second error within the decision letter was immaterial. That was the identification of a hypothetical individual within the supply chain who could rely on the exemption under section 329(2)(c) of POCA, which provides that a person will not commit an offence under section 329(1) “if he acquired or used or had possession of the property for adequate consideration”. In their view, this error appeared to play an important part in the decision-maker’s line of reasoning.
The judgment also noted that it was common ground there was a “diverse, substantial and growing body of evidence that serious human rights abuses are occurring in the XUAR cotton industry on a large scale”. Further that products derived from forced labour of the proceeds of sale could amount to “criminal property” for the purposes of Part 5 of POCA and “recoverable property” for the purposes of Part 7.
The Court agreed, and it seemed to be accepted by the parties, that the Judge had never directly identified the question whether the position expressed by the NCA in correspondence amount to an error of law.
It held that there was legitimate concern that the judgment endorsed the proposition that there is a need to establish criminal conduct or criminal property before an investigation under POCA can begin. In particular, the Court noted the submissions of the Intervenor “Spotlight on Corruption” that the judgment, if left undisturbed, would discourage the NCA, the police and other UK investigative bodies from commencing investigations into corruption, particularly where it occurs overseas, in the absence of concrete evidence of particular crimes carried out by particular persons. Spotlight also raised concerns at the suggestion that criminal liability or civil recovery was precluded where the proceeds of crime passed through several hands where adequate consideration was paid.
The Court confirmed that the proposition that, where the importer pays market value, they will not be tainted, was wrong in law. To the extent that the Judge accepted that at any point in a supply chain stretching many thousands of miles, the chain could be broken merely by using adequate consideration in any of the transactions involved, he was wrong to do so.
The Court held that there was force in the Appellant’s submission that the Judge had treated the challenge as if it were on the grounds of irrationality. More importantly, it was clear that the NCA had misdirected itself based on the two errors of law identified by the Appellant. The question of whether to carry out an investigation under Part 7 or part 5 of POCA was accordingly remitted to the NCA for reconsideration.
This judgment has significant implications for those trading in goods known or suspected to have been produced using forced labour or other human rights abuses, who may face investigation and prosecution even where adequate consideration has been paid. It has been hailed as a victory for those subjected to forced labour and human rights abuses.
Shaheen Rahman KC is a barrister at 1 Crown Office Row Chambers
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