The UK High Court has ruled that the UK government acted unlawfully when it prohibited local government pension scheme funds from divesting in countries contrary to UK defence and foreign policy.
The Palestine Solidarity Campaign successfully challenged the government ban on local government pension scheme funds from divesting in countries contrary to defence and foreign policy. Statutory guidance was published in September 2016 which prohibited authorities from using pension funds to boycott foreign nations other than where formal legal embargoes where in place. The High Court ruled that the Government acted unlawfully by seeking to restrict "ethical" boycotts of Israel. High Court Judge Sir Ross Cranston handed down the judgment, stating that the statutory guidance was not in the interests of managing and administrating local government, rather it reflected 'broader political considerations, including a desire to advance UK foreign and defence policy, to protect UK defence industries and to ensure community cohesion.' He went on the comment that certain non-financial factors could not be taken into account, even if there was no risk of financial detriment or public opposition. He stated ‘Yet the same decision would be permissible if the non-financial factors taken into account concerned other matters, for example, public health, the environment, or treatment of the workforce.’ He went on to summarise that ‘the Secretary of State has not justified the distinction drawn between these and other non-financial cases by reference to a pensions' purpose. In issuing the challenged part of the guidance he has acted for an unauthorised purpose and therefore unlawfully.’ The judge granted the judicial review based on this ground.
For a copy of the judgement please click here.
For further commentary on the decision please click here and here.