North Korea (United Nations Measures) (Overseas Territories) Order 2006 (S.I. 2006/3327)

1.1 The Committee draws the special attention of both Houses to this Order on the ground that it is defectively drafted in one significant area and in two other respects.

1.2 This Order gives effect in overseas territories to United Nations Security Council Resolution 1718(2006). That Resolution was adopted on 14 October 2006 and includes a requirement (without any deferment specified) that all states shall prevent the direct or indirect supply, sale or transfer of luxury goods (a term not further defined in the Resolution) to North Korea. Implementation of the Resolution, so far as territory of the European Union is concerned, awaits action by the Council of the European Union. For territory outside the Union implementation is a matter for the individual state responsible - hence the fact that these Regulations came into effect on 16 December 2006 significantly in advance of European Union legislation.

1.3 The Department's policy appears to be approximation so far as possible, in establishing what is comprised within the luxury goods concept, to the intended legislation of the European Union. In the current draft Council Regulation supplied, Article 4 and Annex III prohibit the supply and export of specified goods, the identification of which lacks the precision the Committee would expect to see in offence related provisions. Thus the list of prohibited goods contains numerous subjective descriptions, such as "high-quality" wines, cigars, leather articles and garments, "high-end" electronic items, and "luxury" perfumes, vehicles and clocks. A possibility of further definition is included in Article 13, which gives the Commission power to amend Annex III, in order to refine or adapt the list, or to add the reference numbers taken from the Combined Nomenclature as set out in Annex I to Regulation (EEC) No 2658/87, but there is no assurance that such a course will take place.

1.4 In choosing therefore to replicate the list in its present form, without the further definition that it could have chosen to include, the Foreign and Commonwealth Office necessarily accepted that level of imprecision. In addition, articles 4 and 5 of the Order prohibit the supply or export to North Korea of "prohibited luxury goods", defined in article 2(1) as the goods listed in Schedule 4 (which replicates Annex III to the draft Council Regulation) as amended from time to time - a formulation that on the surface appears wholly unnecessary. Article 3(d) requires the Governor (of the territory in question) to cause a list of prohibited luxury goods to be published in the gazette of the territory as necessary from time to time, and article 3 ends with the following:

"Declaring that the Governor may by notice in the gazette amend the list of prohibited luxury goods in Schedule 4 in accordance with any European Community Regulation giving effect to the Security Council Resolution."

1.5 The Committee was concerned that the Order purported to confer power on the Governor to amend the Order itself, and that the description of prohibited luxury goods was too vague to found the basis of criminal liability. Two memoranda from the Foreign and Commonwealth Office in response to the Committee's questions are printed at Appendix 1.

1.6 It is clear from the Department's response that, if Annex III to the draft Council Regulation is adopted without further precision so as to give effect to the Security Council Resolution within the EU, it will be the case in the United Kingdom that the prohibition of the export or supply of the goods in question goods will have direct effect notwithstanding the vagueness of the definition of such goods.

1.7 There are, however, difficulties which arise from the choice of accepting - for territory outside the European Union - the current draft of the Council Regulation as the basis of the prohibition in this Order. Within the EU, any decision of the European Court of Justice on the matter will provide authoritative guidance on the meaning of the expressions used in Annex III to the Regulation even if they are not further defined; such a decision will, however, have no direct bearing on the meaning of those expressions as they apply to the overseas territories by virtue of this Order. Moreover, as the draft Regulation has not yet been adopted, it may (if adopted at all) be in a different form.

1.8 It is also clear that the Department intended, not that the Governor of each territory should have power to amend Schedule 4 to the Order, but that he should have power instead to amend the list of prohibited luxury goods which applies in that territory. The way that the Order is drafted, however, is not appropriate to achieve that intention. The definition of "prohibited luxury goods", which expressly envisages the amendment of Schedule 4 without a further Order, together with the declaration in article 3, suggests that the Governor has been given that power.

1.9 The Department has indicated its willingness to amend the Order, and its intention to do so if and when the draft Council Regulation is adopted. The Committee welcomes this suggestion and hopes it may be helpful to suggest some amendments which the Department could make in order to reconcile intended policy with the precision called for where there is possibility of a criminal conviction.

1.10 "Prohibited luxury goods" could be defined as meaning the goods listed in the list published from time to time by the Governor in accordance with article 3(d), (perhaps as qualified by any ruling as specified below). Article 3(d) could impose an initial duty on the Governor to publish a list of the goods set out in Annex III to the Council Regulation (which is set out for information in Schedule 4), and a subsequent duty to publish a revised list to reflect any amendments made to that Annex. Provision could also be made to the effect that any expression used in the published list would have the same meaning as it has in Annex III (and that would incorporate any decisions of the European Court of Justice). Finally the Governor could be empowered, in case of any case where there was ambiguity, to communicate an individual ruling on the application of any person whose action might be prohibited as to whether the item to which the application related fell within the scope of prohibited luxury goods - though that would not be necessary if, by the time of adoption, the imprecision in the EU Council Regulation had been eliminated.

1.11 By introducing a list from an as yet unadopted draft Council Regulation without further definition, the Department has caused itself difficulties, which it has exacerbated by failure to give clear effect to its intention as to how the list might be amended. The Committee reports the definition of "prohibited luxury goods" in article 2(1) as read with article 3 for defective drafting for the reasons given above.

1.12 Article 2(1) of the Order also defines "export" as meaning shipment as stores. The Department acknowledges that definitions of "shipment" and "stores" ought also to have been included. Article 8 of the Order prohibits the procurement of restricted goods from North Korea. "Procurement" is defined in article 2(1) as procurement by any person or body to whom this Order applies ...". The Order does not contain a statement of the persons or bodies to which it applies, but article 1(5) specifies those who may commit an offence under the Order. The Department explains that the italicised words are intended to refer back to article 1(5), and offers to delete them when the Order is amended if they are unnecessary. In the Committee's view, the words are not only otiose but also potentially confusing, as the reader is likely to assume that they have some special meaning which they do not in fact have. The Committee accordingly reports article 2(1) for defective drafting in these two respects, as acknowledged by the Department.