Anisminic Ltd v Foreign Compensation Commission [1968] UKHL 6

Anisminic Ltd claimed compensation for their Egyptian mining property sequestrated during the Suez crisis. The Foreign Compensation Commission rejected their claim. The House of Lords held that the 'ouster clause' protecting the Commission's determinations from court challenge did not protect decisions made in excess of jurisdiction, establishing that tribunals cannot determine the limits of their own powers.

Facts

Anisminic Ltd owned a valuable manganese mining property in Egypt worth over £4,000,000. Following the Suez crisis in 1956, the Egyptian Government sequestrated British property under Proclamation No. 5. The property was subsequently sold by the sequestrator to an Egyptian organisation (T.E.D.O.). In November 1957, Anisminic negotiated an agreement with T.E.D.O. receiving £500,000.

Following the 1959 treaty between the UK and Egypt, whereby Egypt paid £27,500,000 compensation to the UK Government, Anisminic claimed to participate in this fund under the Foreign Compensation Act 1950 and the relevant Order in Council. The Foreign Compensation Commission rejected their main claim, holding that T.E.D.O. had become Anisminic’s ‘successor in title’ and, as T.E.D.O. was not a British national, the claim failed under Article 4(1)(b)(ii) of the Order.

Issues

The Ouster Clause

Section 4(4) of the Foreign Compensation Act 1950 provided that the Commission’s determination ‘shall not be called in question in any court of law.’ The key issue was whether this provision precluded the courts from examining whether the Commission had exceeded its jurisdiction.

Construction of Article 4

The central question was whether, on a true construction of Article 4 of the Order in Council, Anisminic (as the original owner claiming on their own behalf) needed to satisfy the Commission regarding any ‘successor in title’ and their nationality.

Judgment

The House of Lords (Lord Reid, Lord Pearce, Lord Wilberforce in the majority; Lord Morris of Borth-y-Gest and Lord Pearson dissenting) allowed the appeal.

On the Ouster Clause

Lord Reid held that the ouster clause did not protect a nullity:

It is a well established principle that a provision ousting the ordinary jurisdiction of the court must be construed strictly – meaning, I think, that, if such a provision is reasonably capable of having two meanings, that meaning shall be taken which preserves the ordinary jurisdiction of the court.

Lord Reid further stated:

There are no degrees of nullity. There are a number of reasons why the law will hold a purported decision to be a nullity. I do not see how it could be said that such a provision protects some kinds of nullity but not others.

Lord Pearce explained:

Lack of jurisdiction may arise in various ways. There may be an absence of those formalities or things which are conditions precedent to the tribunal having any jurisdiction to embark on an inquiry. Or the tribunal may at the end make an order that it has no jurisdiction to make. Or in the intervening stage, while engaged on a proper inquiry, the tribunal may depart from the rules of natural justice; or it may ask itself the wrong questions; or it may take into account matters which it was not directed to take into account.

On the Construction of Article 4

The majority held that ‘successor in title’ in the Order meant a universal successor (such as on death), not an assignee. Lord Reid reasoned:

I have great difficulty in seeing how in the circumstances there could be a successor in title of a person who is still in existence… There can only be a successor in title where the title of its original possessor has passed to another person, his successor, so that the original possessor of the title can no longer make a claim.

Lord Wilberforce stated:

In every case, whatever the character of a tribunal, however wide the range of questions remitted to it, however great the permissible margin of mistake, the essential point remains that the tribunal has a derived authority, derived, that is, from statute: at some point, and to be found from a consideration of the legislation, the field within which it operates is marked out and limited.

Implications

This case is a landmark decision in administrative law establishing that ouster clauses cannot protect decisions made in excess of jurisdiction. It confirmed that tribunals cannot determine the limits of their own powers – that remains a matter for the courts. The case significantly expanded the concept of jurisdictional error, holding that a tribunal acts without jurisdiction not only when it lacks power to enter upon an inquiry, but also when it asks itself the wrong questions or takes into account irrelevant matters during its inquiry. This decision fundamentally shaped the modern law of judicial review.

Verdict: Appeal allowed. The House of Lords restored the declaration made by Browne J. that the Commission’s provisional determination was a nullity and that the Commission was under a statutory duty to treat Anisminic’s claim as established.

Source: Anisminic Ltd v Foreign Compensation Commission [1968] UKHL 6