England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Rolls Building Fetter Lane, London, EC4A 1NL
		06/05/2015

The Honourable Mr Justice Flaux:

Introduction and background

1. This is the judgment following the trial of three preliminary issues in the claim by Bank Mellat (to which I will refer as "the Bank") for damages under section 8 of the Human Rights Act 1998 ("the HRA") for loss and damage caused by the Financial Restrictions (Iran) Order 2009 ("the 2009 Order") made under section 62 and Schedule 7 of the Counter-Terrorism Act 2008. The 2009 Order came into force on 12 October 2009 and expired by effluxion of time on 11 October 2010. The effect of the 2009 Order was to shut the Bank out from the United Kingdom financial sector. As Lord Sumption put it in the Supreme Court in Bank Mellat v HM Treasury (No. 2) [2013] UKSC 39; [2014] 1 AC 700 at [9]:

"The object of the direction, as the Treasury acknowledges, was to shut the Bank out of the UK financial sector, and that has been its effect. Before the direction, the Bank had a substantial international business, much of it international trade finance transacted through London. In the year to March 2009, it issued letters of credit with an aggregate value of about US$11 billion, of which about a quarter represents letters of credit in respect of business transacted through the United Kingdom. The Bank's own estimate of its revenue losses is about US$25 million a year. In addition, the Bank has been prevented from drawing on 183 million euros of call and time deposits with its part-owned subsidiary in London. Important banking relationships have been lost to other banks. The judge found that since the direction, the bank has been unable to make profitable use of the goodwill which it had established in the United Kingdom, which was a "possession" for the purpose of article 1 of the First Protocol to the European Convention on Human Rights. He held that "on any view the effect has been substantial, and suffices to require all of the Bank's challenges to the Order to be addressed and determined." This much is not in dispute."

2. Section 63(2) of the Counter-Terrorism Act permits any person affected by the decision of the Treasury to make the Order to apply to the High Court to set it aside. By a Claim Form with attached Grounds of Complaint dated 20 November 2009, the Bank applied to set aside the 2009 Order. The Bank's challenge to the 2009 Order was both procedural and substantive. The basis for the procedural challenge was that the Treasury was required by domestic law and by the procedural requirements of Article 1 of the First Protocol to the European Convention on Human Rights (hereafter referred to as "A1P1") to give the Bank an opportunity to make representations before making the 2009 Order, but had failed to give the Bank that opportunity. The basis for the substantive challenge was that the 2009 Order was unlawful (i) because the statutory conditions for a direction requiring relevant persons to cease business with the Bank were not fulfilled and/or (ii) because it was incompatible with the Bank's rights under A1P1 and so unlawful under section 6 of the HRA. The Bank sought an Order setting aside the 2009 Order and damages for breach of the Bank's rights under the Human Rights Act. Mitting J ([2010] EWHC 1332 (QB); [2010] Lloyd's Rep (FC) 504) and a majority of the Court of Appeal ([2011] EWCA Civ 1; [2012] QB 101) refused the Bank's application to set aside the 2009 Order, holding both that it was lawful and that any procedural requirements had been satisfied (although Elias LJ dissented on the latter point).
3. Following a hearing before a nine judge Supreme Court, a majority of the Supreme Court held that the 2009 Order was unlawful and that the Treasury had failed to comply with the procedural requirements. For present purposes, it is not necessary to examine the procedural issue further, but the basis upon which the majority upheld the Bank's substantive challenge is relevant to the first preliminary issue, so I propose to set out a few passages from the judgment of Lord Sumption JSC (with whom Lady Hale, Lord Kerr, Lord Clarke and Lord Carnwath agreed on the substantive issue). At [19] of his judgment, Lord Sumption formulated the essential question raised by the Bank's substantive challenge in these terms:

"…the essential question raised by the Bank's substantive objections to the direction is whether the interruption of commercial dealings with Bank Mellat in the United Kingdom's financial markets bore some rational and proportionate relationship to the statutory purpose of hindering the pursuit by Iran of its weapons programmes."

4. Lord Sumption went on to discuss these requirements of rationality and proportionality at [20]-[21] in these terms:

20. The requirements of rationality and proportionality, as applied to decisions engaging the human rights of applicants, inevitably overlap. The classic formulation of the test is to be found in the advice of the Privy Council, delivered by Lord Clyde, in De Freitas v Permanent Secretary of Ministry of Agriculture, Fisheries, Lands and Housing [1999] 1 AC 69 at 80. But this decision, although it was a milestone in the development of the law, is now more important for the way in which it has been adapted and applied in the subsequent case-law, notably R (Daly) v Secretary of State for the Home Department [2001] 2 AC 532 (in particular the speech of Lord Steyn), R v Shayler [2003] 1 AC 247 at paras 57-59 (Lord Hope of Craighead), Huang v Secretary of State for the Home Department [2007] 2 AC 167 at para 19 (Lord Bingham of Cornhill) and R (Quila) v Secretary of State for the Home Department [2012] 1 AC 621 at para 45. Their effect can be sufficiently summarised for present purposes by saying that the question depends on an exacting analysis of the factual case advanced in defence of the measure, in order to determine (i) whether its objective is sufficiently important to justify the limitation of a fundamental right; (ii) whether it is rationally connected to the objective; (iii) whether a less intrusive measure could have been used; and (iv) whether, having regard to these matters and to the severity of the consequences, a fair balance has been struck between the rights of the individual and the interests of the community. These four requirements are logically separate, but in practice they inevitably overlap because the same facts are likely to be relevant to more than one of them. Before us, the only issue about them concerned (iii), since it was suggested that a measure would be disproportionate if any more limited measure was capable of achieving the objective…

21. None of this means that the court is to take over the function of the decision-maker, least of all in a case like this one. As Maurice Kay LJ observed in the Court of Appeal, this case lies in the area of foreign policy and national security which would once have been regarded as unsuitable for judicial scrutiny. The measures have been opened up to judicial scrutiny by the express terms of the Act because they may engage the rights of designated persons or others under the European Human Rights Convention. Even so, any assessment of the rationality and proportionality of a Schedule 7 direction must recognise that the nature of the issue requires the Treasury to be allowed a large margin of judgment. It is difficult to think of a public interest as important as nuclear non-proliferation. The potential consequences of nuclear proliferation are quite serious enough to justify a precautionary approach."

5. The core reasoning of his conclusion that the 2009 Order was irrational and disproportionate is to be found in passages at [25]-[27]:

"25. A measure may respond to a real problem but nevertheless be irrational or disproportionate by reason of its being discriminatory in some respect that is incapable of objective justification. The classic illustration is A v Secretary of State for the Home Department [2005] 2 AC 68, another case in which the executive was entitled to a wide margin of judgment for reasons very similar to those which I have acknowledged apply in the present case. The House of Lords was concerned with a derogation from the Convention permitting the detention of non-nationals whose presence in the United Kingdom was considered by the Home Secretary to be a risk to national security and who could not be deported. The House held that this was not a proportionate response to the terrorist threat which provoked it: see in particular paras 31, 43-44 (Lord Bingham of Cornhill), 132 (Lord Hope of Craighead), and 228 (Baroness Hale of Richmond)…

26. Every case turns on its own facts, and analogies with other decided cases can be misleading. The suppression of terrorism and the prevention of nuclear proliferation are comparable public interests, but the individual right to liberty engaged in A v Secretary of State for the Home Department can fairly be regarded as the most fundamental of all human rights other than the right to life and limb. The right to the peaceful enjoyment of business assets protected by article 1 of the First Protocol, is not in the same category of human values. But the principle is not fundamentally different.

27. I would not go so far as to say that the Schedule 7 direction in this case had no rational connection with the objective of frustrating as far as possible Iran's weapons programmes. On the footing that a precautionary approach is justified, the elimination of any Iranian bank from the United Kingdom's financial markets may well have added something to Iran's practical problem in financing transactions associated with those programmes, just as the incarceration of some potential terrorists under Part IV of the Crime and Security Act 2001 may have made some difference to the reduction of terrorism. But I think that the distinction between Bank Mellat and other Iranian banks which was at the heart of the case put to Parliament by ministers was an arbitrary and irrational distinction and that the measure as a whole was disproportionate. This is because once it is found that the problem is not specific to Bank Mellat but an inherent risk of banking, the risk posed by Bank Mellat's access to those markets is no different from that posed by the access which comparable banks continued to enjoy. Moreover, the discriminatory character of the direction must drastically reduce its effectiveness as a means of impeding the Iranian weapons programmes. As the Exchequer Secretary herself pointed out, "as long as all financial sanctions and relevant risk warnings are complied with, alternative banks may be used." Nothing in the Treasury's case explains why we should accept that it is necessary to eliminate Bank Mellat's business in London in order to achieve the objective of the statute, if the same objective can be sufficiently achieved in the case of comparable banks by requiring them to observe financial sanctions and relevant risk warnings. It may well be that other Iranian banks have not been found to number among their clients entities involved in Iran's nuclear and ballistic missile programmes. But it follows from the fact that this is a problem inherent in the conduct of international banking business that they are as likely to do so as Bank Mellat. The direction was irrational in its incidence and disproportionate to any contribution which it could rationally be expected to make to its objective. I conclude that that it was unlawful."

6. The Supreme Court ordered that "[t]he [Bank's] claim for damages be remitted to the Administrative Court of the Queen's Bench Division of the High Court for further directions". At a Case Management Conference in the Administrative Court before Collins J on 9 December 2013, the learned judge recommended that the case be transferred to the Commercial Court. On 21 February 2014, Field J accepted transfer of the case into the Commercial Court. At a Case Management Conference on 31 October 2014, Eder J ordered the trial of the first two preliminary issues of law, set out below. The third preliminary issue was agreed between the parties and incorporated in a Consent Order which was approved by Eder J.
7. Although the Court is not presently concerned with any of the factual issues surrounding the Bank's claim for damages, it will provide some perspective for at least the second and third preliminary issues if I quote the summary of the Bank's claim for damages as it was put in [9] of the Skeleton Argument of Counsel for the Bank:

"Prior to the Order, the Bank had a thriving and profitable international finance business. It had successfully implemented an aggressive growth strategy both in Iran and internationally, and was committed to building and expanding its operations in Europe. It held c.33 million accounts for c.19 million customers internationally, across c.2000 branches in Iran, Turkey and South Korea. It had subsidiaries in London, Malaysia and Armenia, and a substantial shareholding in a commercial bank in Germany. The Order destroyed the Bank's business in the UK and (in consequence, and as the Treasury intended) caused serious and irreparable damage to its business internationally. Suppliers such as Swift and Reuters withdrew their services. Customers and counterparties left the Bank en masse for its international competitors. To compound the position, the Treasury encouraged its international partners to pass 'copycat' restrictions, in many cases in materially identical form to the 2009 Order, to ensure that the Bank would be unable to mitigate its losses elsewhere. The overall result has been catastrophic. "

8. The detail of the claim for damages, which is estimated at some U.S. $4 billion, is set out in the Bank's Particulars of Claim as to Quantum. Claims are made for loss of profits in various categories (section D); loss of return on funds deposited with three subsidiaries, Persia International Bank Plc ("PIB") a United Kingdom bank in which the Bank holds a 60% shareholding, First East Export Bank Plc ("FEE") an offshore Malaysian bank which is a wholly owned subsidiary of the Bank and Europaisch-Iranische Handelsbank AG ("EIH") a German bank in which the Bank has a 26.3% shareholding (section E); loss of investment income and interest on Nostro and Vostro accounts with non-Iranian banks (section F); costs incurred (section G); losses in relation to the Bank's Seoul and Turkish branches (section H); and losses by reason of the substantial diminution in the earnings before taxation ("EBT") of the three subsidiaries PIB, FEE and EIH (section I). Even a cursory reading of that pleading reveals that, whilst claims are made for losses pursuant to transactions and arrangements which were in place at the time the 2009 Order was made, the preponderance of the claim is for future loss of earnings or profits of one kind or another.

The preliminary issues

9. The three preliminary issues for determination by the Court at this stage are as follows:

(1) Whether, in light of the judgment of the Supreme Court, it is open to the Defendant to contend that it did not act in a way which was incompatible with a Convention right and/or unlawful contrary to section 6(1) of the HRA.

(2) Whether, as a matter of law, it is open to the Defendant to contend that loss caused to the Claimant by a diminution in the EBT generated by its subsidiaries (as pleaded in paragraphs 109 to 113 of the Particulars of Claim) is irrecoverable.

(3) (a) Whether the only "possessions" of the Claimant within the meaning of A1P1 with which the 2009 Order could have interfered are (i) any "unperformed concluded transactions" as defined in paragraph 40.4.2 of the Amended Defence and (ii) marketable goodwill to the extent (if any) that it was represented by or referable to any such "unperformed concluded transactions".

(b) If not, whether the 2009 Order could in law have interfered with each of the categories of "possessions" identified in the Claimant's schedule served on 5 December 2014 pursuant to paragraph 4 of the Order of Eder J made on 31 October 2014.

The legal and statutory framework

10. Before considering the preliminary issues in more detail I propose to set out some of the legal and statutory framework by reference to which the preliminary issues fall to be determined.
11. As noted above, the Bank's application to set aside the 2009 Order was made under section 63 of the Counter-Terrorism Act 2008, which provides, so far as relevant, as follows:

"63Application to set aside financial restrictions decisionE+W+S+N.I.

This sectionnoteType=Explanatory Notes has no associated

(1)This section applies to any decision of the Treasury in connection with the exercise of any of their functions under—

…

(c)Schedule 7 to this Act (terrorist financing, money laundering and certain other activities: financial restrictions).

(2)Any person affected by the decision may apply to the High Court or, in Scotland, the Court of Session to set aside the decision.

(3)In determining whether the decision should be set aside the court shall apply the principles applicable on an application for judicial review.

(4)If the court decides that a decision should be set aside it may make any such order, or give any such relief, as may be made or given in proceedings for judicial review."

12. At one point in his oral submissions, Mr Steven Kovats QC submitted that because section 63(4) gave the Court power to grant any relief which could be granted in proceedings for judicial review, that included the power to award damages. However, the procedure for judicial review does not create any new free-standing right to claim damages, it simply recognises that, where a claim for damages exists in private law or under the HRA, it can be pursued in judicial review proceedings, provided that it is in addition to a claim for one of the prerogative remedies or an injunction or a declaration: see the note at 54.3.8 of the Civil Procedure and per Baroness Hale in R (Quark Fishing Ltd)v Foreign Secretary [2005] UKHL 57; [2006] 1 AC 529 at [96]:

"…. Our law does not recognise a right to claim damages for losses caused by unlawful administrative action (although compensation may sometimes be available to the victims of maladministration). There has to be a distinct cause of action in tort or under the Human Rights Act 1998. …."

13. Thus, section 63 of the 2008 Act does not create a right to statutory damages. In the absence of the identification of some private law cause of action which would sound in damages (for example a claim that the Treasury had committed a tort and it is not suggested that is this case) any claim for damages which a person affected by the 2009 Order has will be under section 8 of the HRA. It is indeed under that section that the Bank's present claim for damages is brought.
14. The relevant sections of the HRA provide as follows:

"6 Acts of public authorities.E+W+S+N.I.

(1)It is unlawful for a public authority to act in a way which is incompatible with a Convention right.

…

7 Proceedings.E+W+S+N.I.

(1)A person who claims that a public authority has acted (or proposes to act) in a way which is made unlawful by section 6(1) may—

(a) bring proceedings against the authority under this Act in the appropriate court or tribunal, or

(b) rely on the Convention right or rights concerned in any legal proceedings,

but only if he is (or would be) a victim of the unlawful act.

8 Judicial remedies.E+W+S+N.I.

(1) In relation to any act (or proposed act) of a public authority which the court finds is (or would be) unlawful, it may grant such relief or remedy, or make such order, within its powers as it considers just and appropriate.

(2) But damages may be awarded only by a court which has power to award damages, or to order the payment of compensation, in civil proceedings.

(3) No award of damages is to be made unless, taking account of all the circumstances of the case, including—

(a) any other relief or remedy granted, or order made, in relation to the act in question (by that or any other court), and

(b) the consequences of any decision (of that or any other court) in respect of that act,

the court is satisfied that the award is necessary to afford just satisfaction to the person in whose favour it is made.

(4) In determining—

(a) whether to award damages, or

(b) the amount of an award,

the court must take into account the principles applied by the European Court of Human Rights in relation to the award of compensation under Article 41 of the Convention.

(5) A public authority against which damages are awarded is to be treated—

…

(b) for the purposes of the Civil Liability (Contribution) Act 1978 as liable in respect of damage suffered by the person to whom the award is made.

(6)In this section—

"court" includes a tribunal;

"damages" means damages for an unlawful act of a public authority; and

"unlawful" means unlawful under section 6(1)."

15. A1P1 provides as follows:

"Protection of property

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

16. In his speech in R (Greenfield) v Secretary of State for the Home Department [2005] UKHL 14; [2005] 1 WLR 673 at [6] Lord Bingham of Cornhill, with whom the other members of the House of Lords agreed, said this about the approach to be adopted by the Courts to the award of damages under section 8 of the HRA:

"It is evident that under article 41 there are three pre-conditions to an award of just satisfaction: (1) that the Court should have found a violation; (2) that the domestic law of the member state should allow only partial reparation to be made; and (3) that it should be necessary to afford just satisfaction to the injured party. There are also pre-conditions to an award of damages by a domestic court under section 8: (1) that a finding of unlawfulness or prospective unlawfulness should be made based on breach or prospective breach by a public authority of a Convention right; (2) that the court should have power to award damages, or order the payment of compensation, in civil proceedings; (3) that the court should be satisfied, taking account of all the circumstances of the particular case, that an award of damages is necessary to afford just satisfaction to the person in whose favour it is made; and (4) that the court should consider an award of damages to be just and appropriate. It would seem to be clear that a domestic court may not award damages unless satisfied that it is necessary to do so, but if satisfied that it is necessary to do so it is hard to see how the court could consider it other than just and appropriate to do so. In deciding whether to award damages, and if so how much, the court is not strictly bound by the principles applied by the European Court in awarding compensation under article 41 of the Convention, but it must take those principles into account. It is, therefore, to Strasbourg that British courts must look for guidance on the award of damages."

17. The first precondition is one to which the first preliminary issue is directed, but assuming that precondition is satisfied (which, for reasons I will come on to, it clearly is), it is not suggested by the Treasury that the second and third are not satisfied. Indeed, [16] of the Order of Eder J records the statement by Leading Counsel for the Treasury in open court that the Treasury accepts that:

"if the 2009 Order caused the Claimant to suffer loss for which the Defendant is otherwise liable, it will not be open to the Defendant to contend that an award of damages is not necessary to afford just satisfaction to the Claimant within the meaning of section 8(3) of the Human Rights Act 1998."

As Lord Bingham said, once an award of damages is regarded as "necessary", it is difficult to see how the court could consider that it was not just and reasonable to award damages, thereby satisfying the fourth precondition.

18. The principles adopted by the Strasbourg court from which the English courts should seek guidance and the approach to those principles which the English courts should adopt were usefully summarised in the judgment of the Court of Appeal (Lord Woolf CJ, Lord Phillips of Worth Matravers MR and Auld LJ) in Anufrijeva v Southwark London Borough Council [2003] EWCA Civ 1406; [2004] QB 1124 at [57]-[59]:

"57. Section 8(4) of the HRA requires the Court to take into account the principles applied by the ECtHR when deciding whether to award damages and the amount of an award. Both the decisions of that Court and the HRA make it plain that when damages are required to vindicate human rights and to achieve just satisfaction, damages should be awarded. Our approach to awarding damages in this jurisdiction should be no less liberal than those applied at Strasbourg or one of the purposes of the HRA will be defeated and claimants will still be put to the expense of having to go to Strasbourg to obtain just satisfaction. The difficulty lies in identifying from the Strasbourg jurisprudence clear and coherent principles governing the award of damages.

58. The Law Commission Report states: "Perhaps the most striking feature of the Strasbourg case-law… is the lack of clear principles as to when damages should be awarded and how they should be measured."(para. 3.4) The Law Commission correctly suggests that part of the explanation for this is the absence of a common approach to damages in the different jurisdictions. It also refers to the views of different commentators, including the statement of Karen Reid (A Practitioner's Guide to the ECHR p.398) "The emphasis is not on providing a mechanism for enriching successful applicants but on its role in making public and binding findings of applicable human rights standards." Lester and Pannick, Human Rights Law and Practice (1999) p 41 note 3 comment: "The case-law of the European Court of Human Rights lacks coherence, and advocates and judges are in danger of spending time attempting to identify principles that do not exist."

59. Despite these warnings it is possible to identify some basic principles the Court of Human Rights applies. The fundamental principle underlying the award of compensation is that the Court should achieve what it describes as restitutio in integrum. The applicant should, insofar as this is possible, be placed in the same position as if his Convention rights had not been infringed. Where the breach of a Convention right has clearly caused significant pecuniary loss, this will usually be assessed and awarded. The awards of compensation to homosexuals, discharged from the armed forces, in breach of Article 8, for loss of earnings and pension rights in Lustig-Prean and Beckett v United Kingdom (2001) 31 EHRR 601 and Smith and Grady v United Kingdom (2001) 31 EHRR 620 are good examples of this approach." (my emphasis in [57] and [59]).

19. The approach to be adopted by the courts in the United Kingdom in following the guidance of the Strasbourg Court was also summarised by Lord Reed JSC in R (Faulkner) v Secretary of State for Justice [2013] UKSC 23; [2013] 2 AC 254 at [39]:

"Three conclusions can be drawn from this discussion. First, at the present stage of the development of the remedy of damages under section 8 of the 1998 Act, courts should be guided, following the Greenfield case [2005] 1 WLR 673, primarily by any clear and consistent practice of the European court. Secondly, it should be borne in mind that awards by the European court reflect the real value of money in the country in question. The most reliable guidance as to the quantum of awards under section 8 will therefore be awards made by the European court in comparable cases brought by applicants from the UK or other countries with a similar cost of living. Thirdly, courts should resolve disputed issues of fact in the usual way even if the European court, in similar circumstances, would not do so."

The first preliminary issue

20. This preliminary issue arises because the Treasury wishes to contend that the finding made by the Supreme Court that the 2009 Order was unlawful was only of common law unlawfulness, not unlawful because the Treasury had acted in a way which was incompatible with a Convention right or contrary to section 6(1) of the HRA. The scope of the issue is much narrowed by the admission made in [40.2] of the Amended Defence to the Particulars of Claim as to Quantum. That now provides:

"40.2 It is denied that the Supreme Court found that HM Treasury's decision to make the 2009 Order was unlawful contrary to section 6(1) of the Human Rights Act 1998 or that, in making the 2009 Order, HM Treasury had acted in any way which was incompatible with a Convention right. It is, however, admitted that the effect of the Supreme Court's judgment is that the 2009 Order did not satisfy the conditions provided for by law and was therefore an unjustified interference with Bank Mellat's rights under Article 1 of Protocol 1 to the Convention insofar as Bank Mellat held relevant possessions in accordance with paragraph 40.4 below, and HM Treasury's decision to make the 2009 Order was unlawful contrary to section 6(1) of the Human Rights Act 1998 to that extent." (the underlining being the amendment)

21. In the light of that amendment, it might be questioned to what extent the first preliminary issue was still of any relevance, but as I understood it, the purpose of maintaining the position in the limited admission was to seek to limit the Bank's damages to interference with "possessions" within the meaning of A1P1 and, to that extent, the Treasury's position on this preliminary issue tied in with their position on the third preliminary issue to which I return below.
22. In support of his case that the Supreme Court had not decided unlawfulness other than at common law, Mr Kovats QC went through the various paragraphs from Lord Sumption's judgment which I have set out above, seeking to contend that he was only determining unlawfulness at common law. For example, he submitted that the references to rationality and proportionality in [20] were to those principles as applied in cases of judicial review generally, not a specific reference to the HRA.
23. Although as I said in argument, Mr Kovats QC put up a bravura performance on this point, ultimately I have concluded his argument is unsustainable. The Bank always put its substantive challenge on the two limbs set out at [2] above one of which was that the Order was incompatible with the Bank's rights under A1P1 and hence unlawful under section 6(1) of the HRA. Although Mitting J decided that the Order was lawful, he found that the effect of the Order was that the Bank had not been able to make profitable use of the goodwill which it had established in the United Kingdom which was undoubtedly a "possession" within A1P1. His finding at [2] was as follows:

"The effect of the Order has been that which was intended: to shut the bank out of the UK financial sector. There has been some debate about the extent of the impact on the bank's business. Mr Swift QC for the Treasury has submitted that much of the impact of the Order could have been mitigated by conducting replacement business in other markets. Mr Hormozi states that there has been significant reputational damage to the bank and that others, not directly affected by the Order, such as Reuters Dealing Services have withdrawn vital services from the bank outside the UK. Mr Swift has also submitted that the impact upon the bank's "possessions", for the purposes of Article 1 of the First Protocol to the ECHR (A1P1), has not been as great as the total impact upon its business. That may, in principle be right, but the effect has none the less been significant: since 12 October 2009, the bank has been unable to make profitable use of the goodwill which it has established in the United Kingdom – undoubtedly a possession for the purposes of A1P1. Accordingly, it has not been entitled to the peaceful enjoyment of that possession. It is unnecessary for me to determine the precise extent to which the bank's enjoyment of its possessions and its business have been affected by the Order. On any view, the effect has been substantial and suffices to require all of the bank's challenges to the Order to be addressed and determined."

24. In [9] of his judgment which I quoted at the outset of this judgment, Lord Sumption referred to this passage in the judgment of Mitting J and said that it was not in dispute, so Lord Sumption clearly had in mind that the Bank's case was that the 2009 Order was incompatible with its right to peaceful enjoyment of its possessions under A1P1 and hence unlawful under section 6(1) of the HRA. Furthermore, contrary to Mr Kovats QC's submissions, at [20] of his judgment, Lord Sumption is clearly referring to the principles of rationality and proportionality as they have been developed in human rights law. The first case he referred to, De Freitas was in fact a Privy Council case concerned with the constitutional rights of freedom of expression and peaceful assembly under the constitution of Antigua and Barbuda, so it was concerned with fundamental human rights of the same kind as under the ECHR. However the subsequent cases in the House of Lords and Supreme Court to which Lord Sumption refers are all concerned with the development of the principles recognised in De Freitas and their application to cases under the HRA.
25. That the Supreme Court is scrutinising the provisions of the Counter-Terrorism Act 2008 because they may engage the rights of designated persons or others under the ECHR is made explicit by the sentence in [21] of his judgment where Lord Sumption says: "The measures have been opened up to judicial scrutiny by the express terms of the [2008] Act because they may engage the rights of designated persons or others under the European Human Rights Convention." This becomes even clearer in [26] where he is considering the principles of rationality and proportionality as they were applied to the suppression of terrorism in A v Secretary of State for the Home Department [2004] UKHL 56; [2005] 2 AC 68 in the context of the individual right to liberty under the ECHR and applying the same principles expressly to the right to the peaceful enjoyment of business assets protected by A1P1. It could not be clearer that Lord Sumption considered the 2009 Order was unlawful because it was incompatible with that right under A1P1. It is simply not open to the Treasury to contend that it did not act in a way which was incompatible with a Convention right when a majority of the Supreme Court has decided that it did.

The second preliminary issue

26. The second preliminary issue concerns the so-called rule against reflective loss and whether that is applicable under the Strasbourg jurisprudence. The Bank's pleaded case at [109] to [113] of the Particulars of Claim as to Quantum is that, but for the 2009 Order, the Bank had a reasonable and legitimate expectation that the EBT of each of the three subsidiaries would have grown year on year, increasing the value of the Bank's shareholdings and/or the annual return it received, that by reason of the 2009 Order, the EBT generated by each of the subsidiaries has been substantially diminished and the Bank has suffered a loss comprising at least a substantial diminution in dividend payments. The pleading then sets out the Bank's best particulars of the loss of EBT: "sustained by the Subsidiaries".
27. Mr Kovats QC submits that this pleaded case is a classic example of reflective loss, loss claimed by a shareholder which is merely reflective of a loss suffered by the company. As a matter of English law, that loss is not recoverable by the shareholder save in a case where, by reason of the relevant wrongdoing, the company is unable to pursue its claim against the wrongdoer. The classic statement of the rule and of the limits upon it is that of Lord Bingham of Cornhill in Johnson v Gore Wood [2002] 2 AC 1 at 35-36:

"The[se] authorities support the following propositions. (1) Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder's shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the company's assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss. So much is clear from Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 particularly at pp 222-223, Heron International, particularly at pp 261-262, George Fischer, particularly at pp 266 and 270-271, Gerber and Stein v Blake, particularly at pp 726-729. (2) Where a company suffers loss but has no cause of action to sue to recover that loss, the shareholder in the company may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of the shareholding. This is supported by Lee v Sheard [1956] QB 192, 195-196, George Fischer and Gerber. (3) Where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other. I take this to be the effect of Lee v Sheard, at pp 195-196, Heron International, particularly at p 262, R P Howard, particularly at p 123, Gerber and Stein v Blake , particularly at p 726. I do not think the observations of Leggatt LJ in Barings at p 435b and of the Court of Appeal of New Zealand in Christensen v Scott at p 280, lines 25-35, can be reconciled with this statement of principle."

28. So far as FEE and EIH are concerned, Mr Kovats QC accepted that although the Bank's claim appeared to be one for reflective loss and thus caught by this principle, it could not presently be said that those subsidiaries would have had a cause of action to recover their losses from the Treasury. That issue could not be determined at this stage because it requires a fact-sensitive enquiry which can only be conducted at trial. Accordingly the preliminary issue was not pursued in relation to those subsidiaries.
29. However, in relation to PIB, Mr Kovats QC submitted that it could have brought a claim against the Treasury under sections 7 and 8 of the HRA and the fact that it had not done so or that any claim would now be time barred (because the one year time limit for claims under section 7(5)) is irrelevant: see Kazakhstan Kagazy v Zhunus [2014] EWCA Civ 381; [2014] 1 CLC 451 at [30] per Longmore LJ). In the circumstances, in so far as the claims at [109] to [113] of the Particulars of Claim related to losses suffered by PIB, he submitted that they should be struck out.
30. Mr Brindle QC for the Bank challenged that conclusion on two grounds: (i) that PIB had never had a claim against the Treasury under sections 7 and 8 of the HRA and (ii) that the rule against reflective loss had no place in the Strasbourg jurisprudence. So far as the first ground is concerned, Mr Brindle QC submitted that, as the closing words of section 7(1) of the HRA made clear, only someone who was a "victim" of the unlawful act could bring proceedings under the Act. The concept of a "victim" in the Strasbourg jurisprudence was of someone who was a direct victim of the unlawful act, which PIB was not. Only the Bank itself was a direct victim.
31. In support of that proposition, Mr Brindle QC relied upon the decision of the European Court of Human Rights ("the European Court") in Olczak v Poland (7 November 2002). In that case, the applicant had acquired a 45% shareholding in the Lublin First Commercial Bank in 1992. The National Bank of Poland appointed a Board of Receivers over the Lublin Bank. The Board of Receivers took various measures with a view to the restructuring of the Lublin Bank which included the cancellation of certain shares, including most of the applicant's shares, the effect of which was that the applicant's shareholding was reduced to 0.4%. I will need to return to this case in relation to Mr Brindle QC's second ground, in particular in relation to its treatment of the earlier and difficult decision of the European Court in Agrotexim v Greece. For the present, it is only necessary to record that at [58] the Court in Olczak distinguished that earlier case in these terms:

"However, the Court observes, firstly, that the present case can be distinguished from Agrotexim in one important way: the nature of the measures taken in the latter case, i.e. the prohibition to build and the institution of expropriation proceedings were such that it was the company itself which was the direct victim.  In the present case, the measures complained of consisted of the cancellation of certain shares, including those belonging to the applicant; they were thus directly aimed at the applicant's rights as a shareholder. Accordingly, it was the applicant's rights protected by Article 1 of Protocol No. 1 which were directly affected.  Moreover, in the Agrotexim case the measures complained of were to the detriment of the company, whereas in the present case their purpose was, on the contrary, to prevent the bank from becoming insolvent. Consequently, the bank was to benefit from them, whereas the applicant's interests suffered. "

32. The Court then went on to conclude at [61]-[62] that the applicant could claim "victim" status under A1P1 because he was the person directly affected by the unlawful act, that being the requirement to be a victim under Article 25 of the Convention:

"61. The Court observes that in the present case, the shares held initially by the applicant represented approximately 45 per cent of the bank's equity capital. Following measures of the Board of Receivers appointed by the National Bank of Poland, the applicant's shareholding decreased to 0,4 per cent. As a result, the value of the shares in real terms was very seriously reduced. The applicant undeniably lost his property as a result of these measures. Moreover, the applicant's powers resulting from his ownership of shares and his powers to influence the company and to vote have decreased seriously. It must be recalled in this connection that the term "victim" used in Article 25 of the Convention denotes the person directly affected by the act or omission which is at issue (Eckle v. Germany judgment of 15 July 1982, Series A no. 51, p. 30, § 66), in specie the applicant.

62. The Court accordingly concludes that in the present case the applicant, as a shareholder in a public company, may claim victim status regarding his complaint under Article 1 of Protocol No. 1."

33. Accordingly, it seems to me that Mr Brindle QC is right that only someone who is directly affected by the unlawful act has victim status for the purposes of A1P1 and, therefore, only the direct victim can claim under sections 7 and 8 of the HRA. In the present case, the direct victim of the 2009 Order which the Supreme Court has found to be unlawful was the Bank. PIB was only a victim in a secondary sense, in that it was a "relevant person" within the meaning of Schedule 7 of the Counter-Terrorism Act which was directed not to do business with the "designated person", the Bank, against whose business the 2009 Order was directly targeted. In the circumstances, I do not consider that PIB could have brought a claim against the Treasury under sections 7 and 8 of the HRA.
34. At one point in oral argument, as I have already said, Mr Kovats QC suggested that because PIB as a "person affected by" the 2009 Order could have applied to set aside that Order under section 63(2) of the Counter-Terrorism Act and because the court would have the same powers to grant relief as in a case of judicial review, those powers included the power to award damages, so that the rule against reflective loss applied here because PIB would have had a claim to damages under section 63(2). However, that point is misconceived. Unlike section 8 of the HRA, the Counter-Terrorism Act does not create any statutory right to damages. Accordingly, absent an entitlement to claim damages under section 8 of the HRA, PIB would only have had a right to claim damages if it could demonstrate some private law cause of action, which it could not on the facts of this case. It follows that section 63(2) does not avail the Treasury on this preliminary issue and the rule against reflective loss is inapplicable so far as the Bank's claim relates to PIB.
35. In those circumstances, it is not strictly necessary to consider Mr Brindle QC's second ground, but I propose to do so since the point was fully argued. Mr Brindle QC submitted that the rule against reflective loss has no place in the Strasbourg jurisprudence and that once the threshold requirement that the Bank was a "victim" was satisfied, there was no limitation to the pecuniary loss for which "just satisfaction" or restitutio in integrum would be awarded by the European Court. By contrast Mr Kovats QC submitted that the Strasbourg case law did recognise a rule against reflective loss. They both relied upon the decision in Agrotexim v Greece (1996) EHRR 250. Accordingly, it is necessary to look at that case in some detail.
36. In Agrotexim the applicant companies were shareholders in the Fix Brewery. To overcome its financial problems, the brewery wanted to develop two of its sites but Athens Council adopted measures with a view to expropriating the land. The brewery company was wound up. The applicants alleged violations of Article 6 and of A1P1. The European Commission of Human Rights decided that the complaints were admissible and that there had been a violation of A1P1, because the measures taken by the Council constituted an unjustified interference with the applicants' right to peaceful enjoyment of their possessions. Before the European Court, the Greek Government contended that the applicants lacked the status of "victim" within Article 25 of the Convention. At [62] of the judgment, the European Court noted the nature of the complaint by the applicants:

"The Court notes at the outset that the applicant companies did not complain of a violation of the rights vested in them as shareholders of Fix Brewery, such as the right to attend the general meeting and to vote. Their complaint was based exclusively on the proposition that the alleged violation of the Brewery's right to the peaceful enjoyment of its possessions had adversely affected their own financial interests because of the resulting fall in the value of their shares. They considered that the financial losses sustained by the company and the latter's rights were to be regarded as their own, and that they were therefore victims, albeit indirectly, of the alleged violation. In sum, they sought to have the company's corporate veil pierced in their favour."

37. The Court then referred at [64] to the fact that the Commission had appeared to accept that, where a violation of a company's rights protected by A1P1 results in a fall in the value of the shares, there is automatically an infringement of the shareholders' rights under A1P1. The Court considered this would establish an unacceptable criterion for according shareholders locus standi to complain of a violation of the company's rights under A1P1. The Court went on to refer to the possibility of differences of opinion between different shareholders or between shareholders and the directors and how the Commission's approach would run the risk of creating difficulties in determining who was entitled to apply to the Strasbourg institutions. The Court continued at [65]-[66]:

"The Commission's view would also engender considerable problems concerning the requirement of exhaustion of domestic remedies. It may be assumed that in the majority of national legal systems shareholders do not normally have the right to bring an action for damages in respect of an act or an omission that is prejudicial to "their" company. It would accordingly be unreasonable to require them to do so before complaining of such an act or omission before the Convention institutions. Nor could, conversely, a company be required to exhaust domestic remedies itself, because the shareholders are of course not empowered to take such proceedings on behalf of "their" company.

66. Concerned to reduce such risks and difficulties the Court considers that the piercing of the "corporate veil" or the disregarding of a company's legal personality will be justified only in exceptional circumstances, in particular where it is clearly established that it is impossible for the company to apply to the Convention institutions through the organs set up under its articles of incorporation or – in the event of liquidation - through its liquidators. The Supreme Courts of certain member States of the Council of Europe have taken the same line. This principle has also been confirmed with regard to the diplomatic protection of companies by the International Court of Justice (Barcelona Traction, Light and Power Company Limited, judgment of 5 February 1970, Reports of judgments, advisory opinions and orders 1970, pp. 39 and 41, paras. 56-58 and 66)."

38. The Court went on to hold at [71] that it was not clearly established that, at the time when the application was lodged with the Commission, it was not possible for the brewery company to apply through its liquidators to the Strasbourg institutions in respect of the alleged violation of A1P1. It followed that the applicant companies were not entitled to apply to those institutions. That conclusion seems to me to bear a distinct resemblance to the scope of the rule against reflective loss in English law.
39. However, Mr Brindle QC argued that the European Court was only dealing with the threshold issue as to whether the applicant shareholders were "victims". It did not follow that where the applicant before the European Court could establish that it was a "victim" for other reasons (as the Bank could here because it had suffered interference with its possessions which went beyond diminution in the value of its shareholdings in its subsidiaries) then there was no further limitation of the damages recoverable to achieve just compensation by reference to the rule against recoverable loss. Ingenious though this argument is, I cannot accept it.
40. In my judgment, the analysis of the European Court in Agrotexim which I have quoted above, with its emphasis on the impermissibility of piercing the corporate veil save in exceptional circumstances, goes beyond the specific issue of the locus standi to bring an application in Strasbourg with which the Court was concerned. Where the corporate veil cannot be pierced, it is not just a question of the claim being the company's claim, which only the company can bring, not the shareholders, but also the relevant loss by diminution in the value of the shares is the company's loss, not the shareholders' loss. Contrary to Mr Brindle QC's submissions, the status of that loss does not change merely because, by virtue of matters other than the diminution in the value of the shares, the shareholder in the position of the Bank here can satisfy the threshold test of being a "victim".
41. Agrotexim has been recognised as authority for the application of the rule against reflective loss or its equivalent in the Strasbourg jurisprudence in subsequent cases. I agree with Mr Kovats QC that this is clear from Olczak v Poland (2002), to which I have already referred. At [57] of the judgment, having summarised the effect of the decision in Agrotexim, the European Court said:

"In that judgment the Court concluded that "the piercing of the "corporate veil" or the disregarding of a company's legal personality will be justified only in exceptional circumstances, in particular where it is clearly established that it is impossible for the company to apply to the Convention institutions through the organs set up under its articles of incorporation or, in the event of liquidation, through its liquidators"".

42. The Court then went on to emphasise the important distinction between that case and the case before it, to which I have already referred, namely that in Olczak the measures consisted of the cancellation of the applicant's shares. Accordingly, the measures were directly aimed at him as a shareholder, so that his rights under A1P1 were directly affected. The Court then stated at [59]:

"59.  Secondly, as regards the distinction between the shareholder's interests and those of the company, it should be recalled that the concept of the public company is founded on a firm distinction between the rights of the company and those of its shareholders. Only the company, endowed with legal personality, can take action in respect of corporate matters. A wrong done to the company can indirectly cause prejudice to its shareholders, but this does not imply that both are entitled to claim compensation. Whenever a shareholder's interests are harmed by a measure directed at the company, it is up to the latter to take appropriate action. An act infringing only the company's rights does not involve responsibility towards the shareholders, even if their interests are affected. Such responsibility arises only if the act complained of is aimed at the rights of the shareholder as such (International Court of Justice, Barcelona Traction, Light and Power Company Limited, judgment of 5 February 1970, Reports of judgments, advisory opinions and orders 1970, pp. 39 and 41, paras. 56-58 and 66), or if the company has been wound up."

43. It seems to me that that paragraph is a further recognition that, before the European Court, it is only the company and not the shareholder which can claim in respect of a diminution in the value of the shareholding, save in those cases where the relevant executive act of which complaint is made is aimed at the rights of the shareholder as such or where it is not possible for the company to bring the complaint (see [71] of the judgment in Agrotexim), exceptions which broadly reflect the exceptions to the rule against reflective loss in English law set out in the speech of Lord Bingham in Johnson v Gore Wood quoted above.
44. The Bank relied upon the decision of the European Court in Khamdov v Russia (2009) 49 E.H.H.R. 13. In that case the applicant and his brother had registered a limited liability company, Nedra and ran a bakery business in Bratskoye. He and his brother were co-owners of real estate which was assigned by lease to Nedra and consisted of a plot of land, a house owned by the applicant, a house owned by his brother, and industrial buildings and equipment, including a mill, bakery and storage facilities, also assigned to Nedra. The applicant's brother did not participate in the proceedings but had given the applicant a general power of attorney. For a period, the applicant and his brother were driven off the estate by Chechen rebel fighters, but returned in September 1999. The following month, the Russian government launched a counter offensive against the rebels and the applicant again left the property. When he tried to return, he was prevented from doing so by the police. The property was occupied by the Russian authorities, who refused to leave it whilst the hostilities were ongoing. Although he regained possession of his property in April 2001, the Russian authorities remained in occupation of the remainder of the estate until June 2002. The applicant commenced proceedings in the Russian courts claiming compensation, but his claim was rejected, as was his appeal.
45. Before the European Court, the applicant alleged violations of Articles 6, 8 and 13 of the Convention and of A1P1. The European Court considered the application of A1P1 at [119] to [126] of its judgment. At [121] it stated that because the applicant lodged the application only in his own name, he could rely on A1P1 only so far as his own possessions were concerned. He could not claim to be the owner of the entire estate and, in particular, his brother's house was not one of his possessions. The Court then went on to consider the position of the land and industrial premises which had been formally assigned to the Nedra company and whether the applicant had locus standi to lodge the application in his own name rather than that of the company. At [123] it reiterated what had been said in the earlier cases, that it would only be possible to disregard a company's legal personality in exceptional circumstances, but said that the sole owner of a company can claim to be a "victim" within the meaning of the Convention:

"The Court reiterates that where the acts or omissions complained of affect a company, the application should be brought by that company. Disregarding a company's legal personality as regards the question of being a "victim" will be justified only in exceptional circumstances (see Capital Bank AD v. Bulgaria (dec.), no. 49429/99, 9 September 2004; Camberrow MM5 AD v. Bulgaria (dec.), no. 50357/99, 1 April 2004; G.J. v. Luxembourg, no. 21156/93, § 23, 26 October 2000; and Agrotexim and Others v. Greece, judgment of 24 October 1995, Series A no. 330, p. 25, § 66). On the other hand, the sole owner of a company can claim to be a "victim" within the meaning of Article 34 of the Convention in so far as the impugned measures taken in respect of his company are concerned, because in the case of a sole owner there is no risk of differences of opinion among shareholders or between shareholders and a board of directors as to the reality of infringement of Convention rights or to the most appropriate way of reacting to such infringement (see Ankarcrona v. Sweden (dec.), no. 35178/97, 27 June 2000; Dyrwold v. Sweden, no. 12259/86, Commission decision of 7 September 1990; or, more recently, Nosov v. Russia (dec.), no. 30877/02, 20 October 2005)."

46. At [124]-[125], the Court found that the applicant and his brother were the sole co-owners of the company and that the brother clearly supported the application, since he had given the power of attorney, so that the applicant and his brother did not have competing interests. It followed that the applicant could claim to be a "victim" of the alleged violation of A1P1 as regards the measures taken against the plot of land and industrial premises assigned to the company. In other words, this case is an example of an exceptional situation where shareholders who were the sole owners of the company to which the land was leased could be victims for the purposes of A1P1.
47. However, I agree with Mr Kovats QC that this case does not support Mr Brindle QC's proposition that once the applicant has satisfied the "victim" threshold, he can recover damages at large in respect of the diminution in the value of the shareholding. On the contrary, when the European Court came on to consider the damages recoverable by the applicant, it held at [191] that the applicant could recover nothing in respect of his brother's property and only 50% of the compensation for damage caused to the land and industrial premises on the basis that he and his brother were equal co-owners:

"The Court refers at the outset to its above finding that the property owned exclusively by the applicant's brother, and namely the latter's house, cannot constitute the applicant's possessions (see paragraph 121 above). The applicant's brother not being a party to the Strasbourg proceedings, the Court will not grant any claims made with regard to his property. The Court further notes that it has accepted above that the land and the industrial premises assigned to the Nedra company may be regarded as part of the applicant's possessions, since the applicant was one of only two founders and owners of the said company, and the other co-owner did not object to the applicant's bringing proceedings before the Court. On the other hand, the fact that there are two co-owners of the property in question makes it clear that the applicant, on his own, cannot claim the whole amount of compensation as regards the occupation of, and the damage caused to, the land and the industrial premises. In the absence of any indication to the contrary, the Court finds that the brothers own the company in equal shares, and will award the applicant 50% of the amount which, following the Court's assessment, is found to constitute full compensation in this respect."

48. It seems to me that, by analogy with that reasoning, in the present case, even though the Bank can demonstrate that it is a "victim" by reference to interference with enjoyment of its possessions, such as goodwill, the European Court would not proceed to award damages which would not otherwise be recoverable because the relevant loss was not the Bank's loss, as would be the case of diminution in the value of the shares in the subsidiaries, which is the subsidiaries' loss not the Bank's loss.
49. Furthermore, the conclusion which I have reached, that Agrotexim and the later cases in the European Court do recognise a restriction on the damages recoverable which is equivalent to the rule in English law that reflective loss is not generally recoverable, is supported by the decision of Neuberger J (as he then was) in Humberclyde Finance Group Ltd v Hicks [2001] EWHC 700 (Ch). In that case there was an application by the defendants to the counterclaim to strike out the claim by the counterclaimant who was a shareholder in the relevant company. It was argued on his behalf that application of the decision in Johnson v Gore Wood in that case would represent a violation of A1P1, on the basis that a diminution in the value of his shares was an interference with his rights of property. In rejecting that argument, the learned judge held at [45] of his judgment that in Agrotexim, the European Court had taken the same general view as the House of Lords in Johnson v Gore Wood:

"It is clear from the judgment in Agrotexim 21 ECHR 250 at paragraph 64, that the Human Rights Court took the same general view as the House of Lords in Johnson, in that it held that the fact that an alleged violation of the company's rights leads to diminution in the value of a shareholder's shares does not infringe the shareholder's rights in respect of those shares. Accordingly, Mr Cogley accepts that, even on his case, the jurisprudence of the Human Rights Court as developed in Agrotexim 21 ECHR 250 and in SJ [2000] BPRI 1020, only gives Mr Hicks cause for complaint if there is "a factual or legal impossibility preventing the Company from suing for the loss". In my judgment, it is at that point that his argument based on the Convention falls down. It is true that, in one sense, it is factually impossible for the Company to sue for any loss it may have suffered as a result of the defendants' alleged activities, but that would be true in any case where the company had already successfully or unsuccessfully brought proceedings or settled proceedings. For instance, in Johnson; it would have been impossible for the company to sue, because it had compromised its claim; in another case, it might be impossible for the company to sue because its claim had been dismissed or struck out. It cannot be right that, in such a case, the shareholder would be entitled to sue for his reflective loss pursuant to the Convention."

50. Finally on this part of the second preliminary issue, I should refer to the decision of the International Court of Justice in the Barcelona Traction case, which was relied upon by the European Court in both Agrotexim and Olczak. In that case the Belgian Government claimed reparation from the Spanish Government for damage allegedly suffered by Belgian nationals who were shareholders in the Barcelona Traction company, a company incorporated in Canada which produced and distributed electric power in Catalonia. It was alleged that acts by the Spanish Government against the company had violated international law. Preliminary objection was taken by the Spanish Government that the general principles of international law do not recognise that the national State of shareholders may make a claim on their behalf in reliance on allegedly unlawful damage suffered by the company which possesses the nationality of a third State, there Canada.
51. In upholding that objection the Court referred (at [56] to [58] and [66], the paragraphs cited by the European Court) to the fact that the independent existence of a corporate entity was not absolute, hence the concept in exceptional circumstances of piercing the corporate veil, but held that there were no exceptional circumstances in that case, since it was not impossible for the company to bring a claim. At [88] the Court held that where there was: "a question of an unlawful act committed against a company representing foreign capital, the general rule of international law authorises the national State of the company alone to make a claim". Whilst it is true that this case is concerned primarily with the locus standi of the Belgian Government to bring a claim on behalf of the Belgian shareholders in the company, it is clear that the rationale of the decision that it had no locus was that any claim in respect of the diminution in the value of the shareholding in the company was the company's claim and not the shareholders' claim. It was in that context that the European Court in Olczak cited the Barcelona Traction case.
52. In my judgment, the Strasbourg jurisprudence does recognise that, as a general rule, a rule equivalent to the English law rule against recovery of reflective loss, unless there are exceptional circumstances, such as that the company cannot bring a claim against the wrongdoer. Thus, I am against Mr Brindle QC on his second ground for submitting that the rule against reflective loss has no application in the present case. However, since I have found in favour of the Bank on Mr Brindle QC's first ground as regards the shareholding in PIB namely that PIB could not have brought a claim against the Treasury under the HRA or at common law, for the purposes of the Strasbourg jurisprudence there were exceptional circumstances in this case. It follows that (subject to the outcome of the third preliminary issue) the Bank is free to pursue a claim in these proceedings for diminution in the value of its shareholding in PIB and that the Treasury's application to strike out that claim is refused.

The third preliminary issue

53. The third preliminary issue as drafted does not really seem to me to encapsulate what was really in dispute between the parties before me. In essence, the opposing contentions of the parties on the third preliminary issue can be summarised as follows. For the Bank, Mr Brindle QC submits that once liability has been established, as it has been by the decision of the Supreme Court, on the basis that the 2009 Order was an unjustified interference with the Bank's rights to peaceful enjoyment of its possessions under A1P1, there is no scope for limiting the damages recoverable by reference to what might technically amount to a "possession". He submits that as the Court of Appeal in Anufrieja recognised, the fundamental principle underlying the award of compensation in the Strasbourg jurisprudence which this Court should apply is that there should be restitutio in integrum which will include in an appropriate case consequential losses or future losses (what the Strasbourg jurisprudence and civil law systems term lucrum cessans) if the recovery of those losses is necessary to achieve just satisfaction.
54. On the other hand, Mr Kovats QC submits that damages are only recoverable in respect of what amounts to "possessions" within the meaning of A1P1 and that this is the effect of the Strasbourg jurisprudence both in and of itself and as interpreted by the English courts. In particular, he submits that the European Court has consistently said that future loss of income (of which a substantial proportion of the Bank's claims in these proceedings are comprised) does not amount to a "possession" within A1P1. Mr Brindle QC submits that the case law on which the Treasury relies is principally concerned with the threshold question of liability: whether there has been unjustified interference with a possession, not with whether there is some limitation on the scope of damages recoverable once liability is established.
55. In order to consider these rival contentions in more detail, it is necessary to examine the Strasbourg cases, then the English cases which have applied and interpreted the Strasbourg jurisprudence. Before doing so, it is worth standing back and considering the question raised by the third preliminary issue as a matter of principle. As Mitting J found there has been interference with the Bank's possessions, specifically the goodwill it had built up in this country and, as is the effect of the decision of the Supreme Court, that interference is unjustified, so that liability is unjustified. That unjustified interference had a wide ranging effect on the Bank's business, both at the time of the 2009 Order and subsequently, in terms not only of damage to the goodwill but future loss of profits and other consequential losses, as indeed was intended by the Treasury to be the effect of the 2009 Order. On the basis that the fundamental principle underlying the award of compensation is restitutio in integrum or just satisfaction, one would expect such consequential losses to be recoverable, provided that it can be said that they were caused by the relevant unjustified interference with the Bank's possessions, unless there is some rule of law which precludes their recovery. In other words, if consequential losses are recoverable in principle under the Strasbourg jurisprudence, one would expect that the damages or compensation recoverable would not be limited in some way to direct loss of or damage to the possessions, given that the whole concept of consequential losses is a wider one. Obviously, the issue of causation, whether the consequential losses claimed were caused by the unlawful interference with the Bank's possessions, specifically the goodwill it had built up in this country, is a fact-sensitive issue for determination at the full trial.
56. In that context, Mr Brindle QC relied upon the decision of the European Court in Papamichalopoulos v Greece (1995) 21 E.H.H.R. 439. That was a claim for just satisfaction by fourteen applicants whom the Court had earlier held to be the victims of a breach of A1P1, in that the Greek Government had consistently failed to make reparation to them of land seized unlawfully by the State and occupied by the Navy during the regime of the colonels in 1967. At the time of seizure, the land in question had not been developed and it consisted of farms and fallow fields. By the time of the proceedings, it had been fully developed, with buildings erected and trees and shrubs planted. It had become a holiday village for naval officers and their families. Before the European Court, the applicants claimed primarily the return of their land (including the buildings erected on it) and an award of compensation for loss of use of the land calculated as 6% of the current value for 27 years, some 26 billion dr. In the alternative, they claimed the current value of the land and buildings (some 16 billion dr) and an award of compensation for loss of use of the land (the 26 billion dr).
57. The European Court emphasised the need for restitution in kind or its financial equivalent in circumstances where the expropriation of the land was unlawful and had persisted for 28 years, ignoring the decisions of the national courts. At [38] the European Court held that the return of the land would put the applicants as far as possible in an equivalent situation to the one they would have been in, had it not been for the breach of A1P1 and the award of the buildings would fully compensate them for the consequences of loss of enjoyment. The Court held at [39] that, if the government did not return the land and the buildings to the applicants within 6 months, they were to pay the applicants, for damage and loss of enjoyment since 1967, the current value of the land, increased by the appreciation brought about by the existence of the buildings and their construction cost.
58. Although, as with many of the judgments of the European Court on the award of damages, there is little in the way of analysis, and a broad brush approach is adopted, the award of damages for loss of enjoyment is clearly one for consequential loss and, indeed, as at the date of expropriation, future loss of income from the land.
59. Centro Europa v Italy [2012] ECHR 974 is a decision of the Grand Chamber of the European Court. In 1999, the Italian authorities granted the applicant company a licence for nationwide terrestrial television broadcasting. The licence referred to the national frequency allocation plan, but that was never implemented and various transitional schemes benefited existing channels. As a consequence, even though it had a licence, the applicant was unable to broadcast until 2009 as it had not been allocated any frequencies. The applicant had received some compensation from the Italian courts but contended that the compensation awarded did not reflect the full value of its "possession".
60. The first question the European Court had to consider was whether the applicant had a "possession" within the meaning of A1P1. The Government contended that the licence awarded had not conferred any entitlement to have frequencies allocated, so the applicant had not had a legitimate expectation of obtaining any frequencies. The European Court rejected that contention. At [172] it held that A1P1 only applied to existing possessions, so future income could not be considered to be "possessions" unless it has already been earned or is definitely payable. However, at [173] it held that in certain circumstances, a "legitimate expectation" of obtaining an asset could also enjoy the protection of A1P1, specifically where it is allied to a proprietary interest.
61. The European Court went on to hold that the applicant had a legitimate expectation of obtaining frequencies which constituted a "possession" within the meaning of A1P1:

"177 The Court … notes that, as it has previously held, the withdrawal of a licence to carry on business activities amounts to interference with the right to peaceful enjoyment of possessions as enshrined in Article 1 of Protocol No. 1 to the Convention (see Tre Traktörer AB v. Sweden, 7 July 1989, § 53, Series A no. 159; Capital Bank AD v. Bulgaria, no. 49429/99, § 130, ECHR 2005-XII; Rosenzweig and Bonded Warehouses Ltd v. Poland, no. 51728/99, § 49, 28 July 2005; and Bimer S.A. v. Moldova, no. 15084/03, § 49, 10 July 2007). Although the licence was not in fact withdrawn in the instant case, the Court considers that, without the allocation of broadcasting frequencies, it was deprived of its substance.

178 The Court thus considers that the interests associated with exploiting the licence constituted property interests attracting the protection of Article 1 of Protocol No. 1 (see, mutatis mutandis, Tre Traktörer AB, cited above, § 53).

179 It therefore finds that the applicant company's legitimate expectation, which was linked to property interests such as the operation of an analogue television network by virtue of the licence, had a sufficient basis to constitute a substantive interest and hence a "possession" within the meaning of the rule laid down in the first sentence of Article 1 of Protocol No. 1, which is therefore applicable in the present case (see, mutatis mutandis, Stretch v. the United Kingdom, no. 44277/98, §§ 32-35, 24 June 2003, and Bozcaada Kimisis Teodoku Rum Ortodoks Kilisesi Vakfi v. Turkey (no. 2), nos. 7646/03, 37665/03, 37992/03, 37993/03, 37996/03, 37998/03, 37999/03 and 38000/03, § 50, 6 October 2009)."

62. The applicant's claim for pecuniary damage included a claim for loss of earnings, on the basis of the profits achieved by the channel which retained the broadcasting frequencies which should have gone to the applicant, and on the basis that the applicant had been illegally kept out of the market for a considerable time, which had also harmed its brand and reputation. It claimed some 2 billion Euros in respect of loss of earnings and also claimed 10 million Euros in respect of non-pecuniary damage. The Italian Government claimed that the claims for pecuniary damage were excessive and speculative. It is striking, in the light of the way the Treasury puts its case, that the Italian Government did not seek to argue that the claim for loss of earnings, which all post-dated the grant of the licence, was irrecoverable because such lost earnings were not "possessions". The European Court had already decided the issue of "possessions" against the Government.
63. At [218] to [220] of the judgment the European Court dealt with the claim for pecuniary losses in these terms:

"As to the alleged loss of earnings, the Court finds that the applicant company did indeed suffer a loss of this nature as a result of its inability to derive any profit whatsoever from the licence over a period of many years. It considers, however, that the circumstances of the case do not lend themselves to a precise assessment of pecuniary damage, since this type of damage involves many uncertain factors, making it impossible to calculate the exact amounts capable of affording fair compensation.

219 Without speculating on the profits which the applicant company would have achieved if the violations of the Convention had not occurred and if it had been able to broadcast from 2001, the Court observes that the company suffered a real loss of opportunities (see, mutatis mutandis, Gaweda, cited above, § 54). It should also be noted that the applicant company intended to embark on an entirely new commercial venture, the potential success of which was dependent on a variety of factors whose assessment falls outside the Court's jurisdiction. It notes in this connection that where a loss of earnings (lucrum cessans) is alleged, it must be conclusively established and must not be based on mere conjecture or probability.

220 In those circumstances, the Court considers it appropriate to award a lump sum in compensation for the losses sustained and the loss of earnings resulting from the impossibility of making use of the licence. It must also take into account the fact that the applicant company was awarded compensation at domestic level in respect of part of the period concerned (see paragraph 48 above)."

64. The European Court went on to find that the violation of, inter alia, A1P1, had caused the applicant prolonged uncertainty in the conduct of its business and feelings of helplessness and frustration. At [222], taking account of the factors it had identified and making its assessment on an equitable basis, the Court awarded an aggregate sum of €10 million covering all heads of damage. Of course, it is noteworthy that the Court only awarded in total an amount equivalent to the claim for non-pecuniary loss, but the reluctance to award more was not because the Court did not consider that damages for loss of earnings was not recoverable in principle, but because it considered that the element of loss of opportunity was too speculative, not "conclusively established" but based on "mere conjecture or probability". In other words, consequential losses, including loss of future profits, will be recoverable provided that those losses were caused by the relevant unlawful interference with the applicant's possessions.
65. The European Court also awarded a lump sum for both pecuniary and non-pecuniary losses in the recent case of Vekony v Hungary [2015] ECHR 5. The applicant's family ran a grocery which sold alcohol and tobacco under an excise licence. In July 2013 a law came into force under which the sale of tobacco became a state monopoly and only traders licensed through a concession tender could sell tobacco. The applicant applied for a concession which was not granted so that his family business had to stop selling tobacco. The European Court found that the former licence which guaranteed an important share of the applicant's turnover was a "possession" for the purposes of A1P1, following Centro Europa. Having found that there had been a violation of A1P1, the Court went on to consider the question of damages. The claim was modest, €10,000 in respect of pecuniary loss, being the applicant's global estimate for lost business and €5,000 for non-pecuniary damage. At [41] of the judgment, the European Court awarded an aggregate sum of €15,000, reasoning as follows:

"41.  Without speculating on the profits which the applicant would have achieved if the violation of the Convention had not occurred, the Court observes that he suffered a real loss of business. It therefore considers it appropriate to award a lump sum in compensation for the loss of future earnings. In addition, the Court considers that the violation it has found of Article 1 of Protocol No. 1 in the instant case must have caused the applicant prolonged uncertainty in the conduct of its business and feelings of helplessness and frustration, entailing some non-pecuniary damage.

Thus, the Court considers it reasonable, making its assessment on the basis of equity, to award the applicant an aggregate sum of EUR 15,000, covering all heads of damage (see, mutatis mutandis, Centro Europa 7, cited above, §§ 219 to 222)."

66. In a Joint Concurring Opinion of two of the judges, the damages for pecuniary loss are dealt with at [11] in these terms:

"11.  Finally, as regards compensation for pecuniary damage, we emphasise that the sum granted to the applicant is intended to compensate for the loss of profit from selling tobacco products during a transition period that may be regarded as reasonable, allowing the applicant sufficient time to adjust to the new situation arising as a consequence of the new legislation."

67. Thus, so far as the decisions of the European Court are concerned, it seems to me that Mr Brindle QC is right that once it is established that there has been an unlawful interference with the applicant's "possessions" so as to establish a violation of A1P1, damages are recoverable for whatever loss and damage can be established as having been suffered as a consequence of the unlawful interference, including consequential losses such as loss of future earnings or profits, not constrained by whether what is claimed by way of loss is itself a "possession", but only by whether the loss claimed was caused by the unlawful interference with the relevant "possessions" which the court has found.
68. Mr Kovats QC relied upon a number of English authorities in support of his submission that the damages recoverable are limited by reference to whether what is claimed constitutes a "possession" as defined. In particular, he relied upon the decision of Kenneth Parker QC as he then was in R (Nicholds) v Security Industry Authority [2006] EWHC 1792 (Admin); [2007] 1 WLR 2067, of the Court of Appeal in R (Malik) v Waltham Forest NHS Trust [2007] EWCA Civ 265; [2007] 1 WLR 2092 and of the House of Lords in R (Countryside Alliance) v Attorney General [2007] UKHL 52; [2008] 1 AC 719.
69. Fortunately for the length of this judgment, it is not necessary to refer to those cases in detail, since they were fully analysed a matter of days ago by Lord Dyson MR in the Court of Appeal in The Department for Energy and Climate Change v Breyer Group PLC [2015] EWCA Civ 408 at [32] to [39]. Lord Dyson summarised the principles to be derived from the Strasbourg and English case law at [23]:

"The following principles can be extracted from the case law: (i) loss of future income is not a possession protected by A1P1; (ii) loss of marketable goodwill may be a possession protected by A1P1; (iii) a number of factors may point towards the loss being goodwill rather than the capacity to earn future profits: these include marketability and whether the accounts and arrangements of the claimant are organised in such a way as to allow for future cash flows to be capitalised; (iv) goodwill may be a possession if it has been built up in the past and has a present day value (as distinct from something which is only referable to events which may or may not happen in the future): and thus (v) if there is interference which causes a loss of marketable goodwill at the time of the interference, and if that can be capitalised, then it is prima facie protected by A1P1."

70. What is immediately striking, both from that summary of the principles established by the cases and from his analysis of those cases, is that Lord Dyson is not dealing with damages, but with the threshold question as to what constitutes a "possession" for the purposes of determining whether there has been a violation of A1P1. The summary says nothing about what damages are recoverable for loss of marketable goodwill once it has been determined (as it has been in the present case for the reasons set out above in relation to the first preliminary issue) that there was such loss of marketable goodwill which was protected by A1P1. Lord Dyson deals elsewhere in his judgment with the issue of the damages flowing from the interference with possessions at [101] to [107]. I will return to that part of his judgment below.
71. Mr Kovats QC relied upon two other recent English cases. First, the decision of the Divisional Court (Laws LJ and Cranston J) in R (London Criminal Courts Solicitors Association) v The Lord Chancellor [2015] EWHC 295 (Admin). There, one of the challenges to the changes being made by the Government to the provision of criminal legal aid services by solicitors was that the solicitors would have to give up some of their goodwill to stay in the scheme and that would constitute an unlawful interference with their possessions in violation of A1P1. Laws LJ dismissed that argument at [90]-[93]:

"90 Mr Coppel submits that the November decision violates A1P1 because it interferes with the goodwill of the practices of criminal legal aid firms. Their goodwill is in their own client work. It is said that the decision to limit the number of DPW contracts to 527 threatens to destroy the goodwill of many firms. The firms which do not obtain such contracts will fall into financial difficulty because they will be deprived of the opportunity to act as duty solicitor and many will close. Even firms which do obtain DPW contracts will be expected, on the Lord Chancellor's modelling, to give up (on average) 50% of their own client work, and that is a further interference with their possessions.

91 I consider that this argument is misconceived. Legal aid contracts are time-limited. The current contracts, which began in 2010, were of three years duration but have been extended until June 2015. There is no right to be awarded a legal aid contract in any fresh round. Though it is clear that in principle business goodwill may constitute a possession for the purpose of A1P1, the interest of a business in future trade cannot be dressed up as goodwill if it is in substance an interest in future income: Malik v United Kingdom (Application No.23780/08).

92 The distinction between goodwill and future income was discussed by Lord Bingham in R (on the application of Countryside Alliance and others) v Her Majesty's Attorney General [2007] UKHL 52, [2008] 1 AC 719 at paragraph 21:

'Strasbourg jurisprudence has drawn a distinction between goodwill which may be a possession for purposes of article 1 of the First Protocol and future income, not yet earned and to which no enforceable claim exists, which may not: see, for instance, Ian Edgar (Liverpool) Ltd v United Kingdom Reports of Judgments and Decisions 2000-I, p 465; Wendenburg v Germany (2003) 36 EHRR CD 154, 169…'

Lady Hale said this in the same case at paragraph 128:

'There is no Convention right to continue to enjoy a particular level of trade. There is no Convention right to retain one's job beyond the 'right to a job' which is recognised by domestic law … All sorts of laws may reduce demand for particular services and thus affect the profits of the self-employed or the job security of employed people. They do not in my view usually have to be justified under [A1P1], although that should not be difficult."

See also Breyer Group plc v Department of Energy and Climate Change [2014] EWHC 2257 (QB), per Coulson J at paragraphs 63-75.

93 Moreover as matters presently stand it cannot be said which firms will be successful in bidding for a duty provider contract, and which, if any, will go out of business if unsuccessful. Thus on the claimants' own argument it is not shown that any particular firm has a case to make under A1P1. But as I have said, the argument is in my judgment misconceived."

72. Once again, in my judgment, the Divisional Court was dealing with the threshold question as to whether there had been any interference with "possessions" at all, not what damages would be recoverable in the event the Court decided there had been an unlawful interference with those possessions. The overall decision in that case was upheld by the Court of Appeal ([2015] EWCA Civ 230) but nothing was said on this point.
73. Finally, Mr Kovats QC relied upon the decision of the Court of Appeal in R (Ingenious Media Holdings PLC) v Her Majesty's Revenue & Customs [2015] EWCA Civ 173. That case concerned a newspaper interview with the Permanent Secretary for Tax about film finance tax avoidance schemes and specifically schemes promoted by the claimant and its CEO, Mr McKenna. One of the claimant's complaints was that HMRC had breached A1P1 in that what had been said had led to a loss of custom in the sense of a loss of taxpayers investing in the claimant's schemes. However, as Sir Robin Jacob giving the leading judgment said at [62], that is a loss of future income and no more. He then went on to cite both Strasbourg (Denimark v UK [2000] 30 EHRR 133) and English authority (the decision of the Court of Appeal in Malik) for the principle that mere loss of future income is not an interference with "possessions" within the meaning of A1P1 ([62] to [68] of the judgment). However, as is clear from [61] and [62] of the judgment, the Court was dealing with what was described as the first point: "whether or not the first sentence of A1P1 was engaged at all", which the Court decided it was not, in other words the threshold question. It was not concerned at all with the issue as to what damages would be recoverable in the event that there was an unlawful interference with possessions within the meaning of A1P1.
74. Returning to how the issue of damages was dealt with in Breyer, one of the preliminary issues before the judge at first instance, Coulson J, was: "If [the interference with possessions was not justified] whether the claimants are entitled in principle to an award of damages, assessed by reference to their loss of profits caused by the defendants' interference with their A1P1 possessions". As the learned judge recorded at [151] of his judgment, there was broad agreement between the parties that the trial of preliminary issues could not go very far in determining the precise entitlement of the claimants in relation to damages because such matters are inevitably fact-sensitive.
75. Coulson J set out the relevant principles at [152]:

"In my view, the following principles are beyond argument:

(a) Damages for wrongful interference under A1P1 may only be awarded if a court is satisfied that they are necessary to give just satisfaction to the claimant having regard to, inter alia any other relief granted (see HRA, Section 8(3)).

(b) Damages in such a case are assessed on the basis of restitutio in integrum (Anufrijeva v Southwark London Borough Council [2004] QB 1124, approved in R (Greenfield) v Secretary of State for the Home Department [2005] UKHL 14).

(c) Damages will generally not be awarded unless the court is satisfied that the loss was demonstrably and directly caused by the violation of A1P1: see Kingsley v United Kingdom [2002] 35 EHRR 10.

(d) The usual approach will be to put the applicant in the position it would have been had the violation not occurred, even if precisely calculating the sums necessary to make full reparation might be impossible: see Basarbaood v Bulgaria (Application No. 77660/01, 20 January 2011)."

76. At [159] he set out his conclusion in these terms:

"Whilst a particular claimant's entitlement to damages will ultimately turn on the facts, I consider that, as a matter of general principle, these claimants will be able to recover damages for the wrongful interference with their possessions. Those possessions are, of course, those limited by my analysis in Section 6 above."

In other words, damages would only be recoverable for wrongful interference with what the judge had concluded constituted "possessions" within the meaning of A1P1, the particular signed contracts and elements of goodwill which he had concluded constituted "possessions". However, he did not go further and decide whether, for example, loss of profits caused by interference with the possessions in question would or would not be recoverable.

77. In the Court of Appeal, Lord Dyson MR was even less inclined to decide what damages would be recoverable after a full trial. The Department for Energy and Climate Change ("DECC") appealed the judge's conclusion that they were precluded from relying on the argument that any effect on the claimants' concluded contracts arose from their own commercial decisions rather than the DECC proposal to bring forward the qualifying date for the feed-in tariff scheme, which was the proposal which the Court had found was unlawful. Lord Dyson MR's view was clearly that all such questions would depend upon the evidence at trial. He said at [107] of his judgment:

"As the judge recognised, the question of whether DECC's conduct did indeed render the claimants' businesses unviable is a question of fact which will need to be determined on the evidence at trial. I doubt the utility of determining that the claimants are in principle entitled to an award of damages assessed by reference to this loss of profits when, as is common ground, the entitlement to damages will ultimately depend on the facts of each case. It seems to me that the judge's decision on this issue is unexceptionable, but of little value. The judge was right to reject DECC's argument that every claim must fail because the losses were caused by the claimants' commercial decisions. It will all depend on the facts."

78. It seems to me that that is a salutary reminder to this Court that it would be wrong to lay down prescriptions at this stage (before any evidence has been heard) as to what damages will be recoverable by the Bank for the unlawful interference with their possessions. Whilst it is correct that the possessions with which there was unlawful interference cannot include future loss of profits, rather than the goodwill which the Bank had built up in this country, which Mitting J has found was a "possession", the issue as to what damages are recoverable for that unlawful interference with the Bank's possessions will depend, not upon an artificial restriction to the effect that, for example, the loss of future profits claimed could not itself be a "possession", but upon issues of causation. Those issues of causation will include whether it can be established that the damages claimed were "demonstrably and directly caused by the violation of A1P1" (see per Coulson J in Breyer at [152 (c)]), which is an issue for the full trial, not to be determined at the preliminary issue stage. For present purposes, it is only necessary to record that to the extent that, by the third preliminary issue, the Treasury sought to limit at this stage the damages recoverable by the Bank, I find against the Treasury.