House of Commons - Foreign Affairs

Select Committee on Foreign Affairs Seventh Report

V ADMINISTRATIVE PROCEDURES: CLAUSE 7

54. The Scott Report recommended that the new legislation should include "provision for government to prescribe procedures whereunder applications for export licences will be dealt with expeditiously and with fairness to exporters".[80] A number of possible features to be prescribed were set out, including the form of application, time limits for decision making, licensing by default, written reasons for refusal and an appeal procedure.

Government proposals etc

55. The 1996 Green Paper consulted on these proposals, and on other aspects of the system, including the "rating" system.[81] The 1998 White Paper stated that "there could be merit in setting out the basic elements of the licensing process in primary legislation but not detailed procedures", which were better included in secondary legislation or guidance.[82] Specifically, the White Paper stated that the Government proposed to "make reference in primary legislation to the right of an export licence applicant to appeal against a refusal to grant a licence".[83]

56. The Trade and Industry Committee Report saw little merit in licensing by default. It set out a number of administrative remedies for the frustration felt by those doing business with the Export Control Organisation. Its recommendation on a time limit for determination of appeals was accepted. [84]

Quadripartite Committee examination

57. In our February 2000 Report we called for publication of the details on appeals, including the time elapsed between receipt of information from the appellant and determination of the appeal. The Government accepted the basis of this recommendation. We also called for publication of more data on the administrative performance of the DTI in handling licence applications, and hoped for continuing improvement. [85]

58. In our July 2000 Report we expressed our concern at the evidence we had received from those who had appealed in 1998, and recommended several changes to appeal procedures, including the right of the appellant to participate. The Government Response told us that procedures had been introduced to allow appellants to present any new information or arguments in person.[86]

59. We devoted further detailed attention to appeals in our March 2001 Report. We set out, as we had in our earlier Report, the responses we had received from companies who had appealed against a refusal. We noted that in no case had the 30 working day time limit for determination been met, and recommended a rethink of that target. We also called for some procedure to enable companies to respond to the departments' doubts or concerns. [87]

60. Cm 5091 states that the draft Bill "will allow for procedures to be prescribed by means of secondary legislation as appropriate", but that it considers it desirable for detailed procedures to be set out in guidance as at present.[88] The only procedure referred to which will be in such secondary legislation is the process of appealing against a refusal;[89] the one area where in 1998 it was proposed to introduce primary legislation. The proposal to make written advice that an export did not require a licence — a NLR (no licence required) decision — legally binding has been dropped.[90] The Secretary of State told us that he had not considered putting administrative procedures on a statutory basis to be a priority.[91]

61. Both Lord Scott and the DMA expressed disappointment at the absence of proposals to put more of the licensing system on a statutory footing.[92] The DMA noted the breakthrough in the opportunity now offered to industry to talk direct to FCO desk officers. Refusals of licences are accompanied, within the constraints of security, by some sort of reasons, a matter on which the Scott Report laid some emphasis.[93] Lord Scott considered that the provision of reasons should be a requirement rather than a practice.[94]

62. There are still very long delays in reaching a decision on difficult licence applications. However, the Secretary of State was of the view that the worst delays were due not to administrative failures but to the need to get the necessary intelligence and other information to come to a well-informed decision.[95] The DMA suggested that an early refusal, triggering an appeal if necessary and thus an opportunity to provide direct input into the process, was better than a "protracted no".[96] A refusal also triggers a notification to other EU states, potentially preventing a competitor from such a state picking up the business. Although the idea of licence by default has in effect been dropped, Lord Scott told us that he had considered whether deemed refusals or deemed grants would be more effective in bringing on a decision.[97] The Secretary of State suggested that targets were now closer to being met, but accepted that delays for purely administrative reasons were not acceptable— " there is no excuse for 18 months, two years or three years".[98] He doubted if in practice an early refusal would be as welcome as suggested. We recommend a one-off review of all outstanding licence applications of over 18 months, and the provision to the Quadripartite Committee of the resultant list, together with an explanation for the delays. The length of delay in reaching a decision is in a small number of cases unacceptable. We recommend that serious thought should be given to a form of mechanism to trigger a decision where the delay has become excessive.

Judicial review

63. There may be a prospect of licensing decisions being more open than hitherto to judicial review. So long as decisions were taken on pure policy grounds, the grounds for challenge were lacking. As Ms Baxendale noted ,"it was very hard for anyone to challenge the decisions".[99] The Government has now published criteria for licensing. There is to be a statutory schedule of the purposes for which export controls may be applied, described in Cm 5091 as setting "definite parameters for legitimate Government action".

64. The Director-General of the DMA noted that companies were in a difficult position and did not want to rock the boat, but that " if there is a clear body of law then I guess that companies may respond with some sort of action..".[100] Lord Scott agreed that the existence of purposes might open up the possibility of challenge on the grounds of the grant or refusal of a licence as being outwith a scheduled purpose.[101] Ms Baxendale did expect more judicial reviews, whether or not successful.[102] The Secretary of State also accepted that the new statutory basis might make it easier for third parties, for example NGOs, to obtain judicial review of decisions.[103] Lord Scott was of the view that it would still be a problem for third parties to establish locus standi. [104] The Secretary of State noted the possibility of judicial review, and also told us that in making decisions he was always conscious of that possibility.[105]

Appeals

65. There is also a greater requirement than hitherto for transparently fair procedures for handling applications, and in particular appeals against decisions. The passage of the 1998 Human Rights Act has already been used successfully to challenge some broadly comparable Government administrative procedures. Lord Scott told us that "departmental adjudications really are not going to be satisfactory any more, particularly at the appellate stage.... The independence of the Appellate Body might be called into question...".[106] He was not sure that the recommendations he had made in 1996 would still be satisfactory, and suggested that the independence of the appellate Tribunal might be called into question.[107] We welcome the proposal to put the appeal procedure on some statutory footing, but consider that it will have to include some genuinely independent element. There would be advantage in putting this on the face of the Bill.

Human Rights Act certificate

66. The Secretary of State has signed a certificate under the Human Rights Act confirming his opinion that the provisions of the Bill are compatible with the Convention rights to the Act.[108] In view of the evidence we have received, the Secretary of State may wish to revisit his Human Rights Act certificate, particularly to the extent that it is intended to cover secondary legislation to be made under powers to be conferred on Ministers under the Bill.

80 K3.1 et seq Back

81 2.4.1-16 Back

82 4.1.1 Back

83 4.6.4 Back

84 HC 65, para 66; HC 270, page x Back

85 HC 225, paras 8, 20 etc and Cm 4799, pages 11 and 13 Back

86 HC 467, para 58 and Cm 4872, page 7 Back

87 HC 212, paras 45-48 Back