On 27 January 2010, the Supreme Court delivered its judgment in the case of HM Treasury v Ahmed and Others. The Court, in considering the UK's powers to freeze the assets of terrorists and those associated with Al-Qaida and the Taliban under the Terrorism Order 2006 (TO) and Al-Qaida and Taliban (United Nations Measures) Order 2006 (AQO) held that the powers contained in the TO, which provide that a person's assets can be frozen on the basis of "reasonable suspicion" without Parliamentary approval, went beyond the requirements imposed in the United Nations Act 1946. The Court found that Section 1 of the UN Act was designed to enable the UK to fulfil its obligations under the Charter of the United Nations to implement UN Security Council resolutions. By conferring an unlimited discretion on the Treasury as to how those resolutions, which it had a hand in making, were to be implemented was considered to be ultra vires. The Court also held by a majority of six to one (with Lord Brown dissenting) that Article 3 (1) (b) of the AQO must also be quashed on the basis that a person who had been designated under the AQO did not have the means to challenge a decision listing them as designated persons before an independent and impartial judge.
In response to the outcome of the case, HM Treasury requested the Court to grant a stay of its judgment and suspend the ruling for a short period in order to allow the Government to implement emergency legislation. The Court subsequently rejected this request.
Following this, the Terrorist Asset-Freezing (Temporary Provisions) Bill received Royal Assent on 10 February 2010. The Act makes provision for the temporary validity of the Terrorism (United Nations Measures) Order 2006, the Terrorism (United Nations Measures) Order 2001 and the Terrorism (United Nations Measures) Order 2009 and the Channel Islands Order, the Isle of Man Order and the Overseas Territories Order (collectively, the Terrorism Orders). The Act reinstates on a temporary basis the terrorist asset-freezing regime under the Terrorism Orders. From 10 February 2010 until 31 December 2010, directions made under the Terrorism Orders have effect and any further directions made under the Terrorism Orders may be made subject to the legal test being met. The Act also provides that all licences made under the Terrorism Orders may be granted.
In addition, the Act has the effect of validating retrospectively any actions taken by financial institutions and any other persons (other than the Treasury) to maintain existing freezing orders under or in reliance on the Terrorism Orders between 4 February and 10 February 2010.