Economic Activity of Public Bodies (Overseas Matters) Bill

The Bill was introduced to Parliament on 19 June and it might be some time in 2024 when it is finalised and receives royal assent.  The Bill seeks to deliver the Conservative Government’s manifesto commitment to “ban public bodies from imposing their own direct or indirect boycotts, disinvestment or sanctions campaigns against foreign countries”.  Meanwhile, opposition MPs and some Conservative MPs have expressed concerns that the Bill might prohibit action in response to human rights abuses in other countries.

The key provisions consist of:

• A prohibition in relation to procurement or investment decisions.  The prohibition applies to specified “decision-makers” and prevents them from having regard to a consideration that relates to a country or territory outside the UK in a way that would cause a reasonable observer of the decision-making process to conclude that the decision was influenced by political or moral disapproval of foreign state conduct.  The disapproval can be that of the decision-maker, or anyone seeking to persuade the decision-maker to act in a certain way.  “Foreign state conduct” means the conduct or policy of the government or, or any other public authority in, a foreign territory.
• A prohibition on such decision-makers publishing statements indicating that they:
  • intend to act in a way that contravenes the prohibition on procurement or investment decisions.
  • would intend to act in such a way if it were lawful to do so.

The prohibitions apply to procurement and investment decisions in relation to which the decision-maker is subject to section 6 of the Human Rights Act 1998.  This is potentially wide enough to apply to higher education institutions, depending on their particular circumstances and the specific decision being made.

A “procurement decision” is a decision about a contract for the supply of goods, services or works to the decision-maker.

An “investment decision” is a decision about:

• the acquisition by the decision-maker of an asset wholly or principally for purposes of investment, or
• the management, retention or disposal by the decision-maker of an asset held wholly or principally for such purposes.

“Asset” includes any property or rights capable of being held for the purposes of investment.

There are a number of exceptions under the Act and Ministers may create further exceptions using regulations.  The exceptions firstly include decisions of certain specified bodies and functions – broadly, security and intelligence services, defence contracts and pension schemes.  Broadly, further exceptions apply to considerations:

• reasonably considered relevant to the financial value or practical utility of the goods, services, works or asset in question (or arrangements under contemplation with respect to any of those matters);
• reasonably considered relevant to UK national security;
• reasonably considered relevant to whether the decision (or anything done further to it) would place the UK in breach of its international law obligations;
• that relate to specified bribery matters/offences;
• that relate to labour-related misconduct (including specified modern slavery and human trafficking offences);
• that relate to competition law infringements;
• that relate to environmental misconduct.  This is defined with reference to conduct that amounted to offences in the UK or elsewhere provided it also caused, or had the potential to cause, significant harm to the environment, including the life and health of plants and animals.

The Bill appoints the Office for Students as the “enforcement authority” in respect of registered English higher education providers.  It will have various enforcement powers, including the power to issue monetary penalty notices for contraventions.  The level of maximum monetary penalties will be set in regulations yet to be published. 

The restrictions in the Bill may also be enforced in judicial review proceedings, or in similar High Court proceedings if the decision or statement is not otherwise amenable to judicial review.

The Bill also contains provisions that certain powers in the Procurement Bill (expected to receive royal assent later in 2023) are subject to the prohibition in the “EAPB(OM)” Bill. These are the powers on contracting authorities to disregard or exclude tenders from overseas suppliers that are not covered by an international trade agreement on procurement, and the powers in relation to “excludable suppliers” where the exclusion ground relied upon is professional misconduct (as set out in paragraph 11 of Schedule 7 to the Procurement Bill).

The draft explanatory notes which accompany the Bill include an assertion that the prohibition in the Bill “is not intended to prohibit a higher education institution from deciding to terminate a collaboration with a foreign university on the grounds of academic freedom, if they deem it necessary in line with their statutory duties in Part A1 of the Higher Education and Research Act 2017 or other legislation”.

If enacted the Bill will form another regime for higher education institutions to take into account when appropriate.  It remains to be seen whether further amendments will be made during the parliamentary process, or whether a likely general election in 2024 might affect the Bill’s implementation.