Asset-freezing orders 'unlawful'

A judge said they were made using Orders in Council which were not subject to normal parliamentary scrutiny.

He said it was now time for Parliament to be consulted on proper steps that could be taken to stop the funding of terrorist acts - but still protect human rights as far as was possible. Later the Treasury said it would appeal over the landmark ruling.

The current asset-freezing orders which Mr Justice Collins, sitting at London's High Court, said should be quashed will remain in place pending the appeal.

Both the Treasury and Home Secretary Jacqui Smith expressed "disappointment" with the ruling, but human rights lawyers said it was of "the highest constitutional importance".

Shadow home secretary David Davis said it had "left in tatters the asset-freezing strategy designed by Gordon Brown when Chancellor".

The judge allowed challenges by five men deprived of the right to control their own property and money because they were suspected of "facilitating acts of terrorism". The five, who are allowed only enough money to meet their basic expenses, denied terrorist links.

Although never charged with criminal offences, the five were designated under the provisions of two Orders in Council.

Each Order was laid before Parliament under the provision of the 1946 UN Act the day after it was made and came into force on the following day. The Orders were used to apply UN Security Council resolutions aimed at suppressing the financing of terrorist acts. But the judge said they were "not lawful".

A Home Office spokesman said around 60 individuals resident in the UK had assets of some £656,000 currently frozen, and some 50 could be affected by the ruling, the rest being subject to international freezing orders.