British Gurkha Welfare Society & Ors v Ministry of Defence - Gurkhas pension scheme arrangements are neither discriminatory nor irrational

The MoD's decision that in extending pension rights to Gurkha soldiers in the British Army, distinctions should be made in respect of service prior to, and post, 1 July 1997, was neither irrational nor discriminatory on grounds of age or nationality.

Pension and UK residence rights for Gurkhas have been major sources of litigation since the UK handed Hong Kong back to China in 1997 and the Brigade of Gurkhas moved to the UK. Various challenges and reviews have led to extensive changes to the rights enjoyed by Gurkha soldiers, particularly once they leave the British Army, as a search of these Webupdaters on "Gurkha" will show (subscriber versions only). 

This latest challenge was in connection with pension right changes. In 2007 the previous situation, whereby Gurkha pensions were completely separate to those of all others serving in the British Army, was changed. In the guise of the "Gurkha Offer to Transfer" (GOTT) Gurkhas obtained the right to transfer their pensions from the Gurkha Pension Scheme into the Armed Forces Pension Scheme - if, and only if, they had served after 1st July 1997. Years served after that date could be transferred on a year for year basis; years served prior to that date are transferred on an actuarial basis. 

The British Gurkha Welfare Society (BGWS) claimed that the MoD failed to equalise pension entitlement in respect of periods of service before 1st July 1997 as well as after. It challenged: (i) The decision that Gurkhas who retired prior to 1st July 1997 are not entitled to transfer their pension rights under the GPS into the AFPS, thereby denying them the right to enhance their existing pensions; and (ii) The decision for those Gurkhas who retired after 1 July 1997 and therefore can transfer their pension rights into the AFPS that the service before that date does not rank on a year for year basis, but rather on an actuarial basis.

The application by the BGWS for judicial review was under three heads:

• the GOTT and associated Order discriminate against Gurkhas on the basis of age and nationality (European Convention on Human Rights  Protocol 1 Art 1, in combination with Article 14);
• the GOTT and Order are irrational;
• the MoD failed to pay due regard to the need to promote equality of opportunity and good relations between people of different racial groups (Race Relations Act 1976 s.71).

The British Gurkha Welfare Society lost.

In the High Court, Burnett J carefully analysed the previous authorities (R (Purja & others) v Ministry of Defence [2003] EWCA Civ 1345 and R (Gurung) v Ministry of Defence [2008] EWHC 1496 (Admin)) and effectively concluded that they had already answered the questions raised now. Rejecting the first two heads of complaint, he said:

"Those who retired after 1997 with the qualifying service have acquired rights to live in the United Kingdom. The question is whether those changes have affected the reasoning of the Court of Appeal as it applies to the calculation of pension entitlements which accrued before 1 July 1997. In my judgment they do not. For all the reasons canvassed by Ouseley J in Gurung the choice of the date to mark the boundary for different treatment of accrued pension was a rational and reasonable one... the reasoning of Sullivan J and the Court of Appeal that historical differences in pay and pensions were justified before that date, continue to provide ample justification for the purposes of Article 14 for the distinction drawn by the GOTT and Order between pension accrued before and after 1 July 1997. In the context of nationality a stronger justification is required than in the context of age. That is so even though such discrimination as there is results from a complex historical background and evolution, rather than straightforward discrimination on grounds of nationality. Simon Brown LJ's reasoning remains good, in my view, even given the changed facts which allow those who retired after 1 July 1997 with the requisite service to settle in the United Kingdom. For the reasons which support the rationality of the policy and its proportionality in the context of indirect age discrimination, its rationality and proportionality survive scrutiny under Article 14 through the lens of nationality...

...The decision withstands scrutiny. Gurkhas with service before 1 July 1997 were in a different position from others serving in the British Army before that date. Such differentiation in pension arrangements reflected that different position. There is clear justification for drawing the distinction between the actuarial and year for year transfer of pension from the GPS to the AFPS for all the reasons already summarised when considering the policy in connection with the argument advanced by reference to age."

Perhaps "the sting in the tail" on this point was Burnett J's observation that there was an "internal inconsistency" in the BGWS's approach. The fact that the Brigade of Gurkhas can exist as it does is only due to the MOD applying a policy of discrimination against all nationalities other than the Nepalese. Gurkhas still have benefits unique in the British Army, such as retirement on immediate full pension after 15 years. The BGWS position seemed to be that the benefits derived from discrimination should be preserved, yet any apparent disadvantages should not be - yet all flow from the same historical context.

As for the Race Relation Act, consideration of all the evidence showed that the review leading to the GOTT took full account of the section 71 duty.

It was later reported that the Gurkha's have said they will appeal and take their case to the European Court of Human Rights if necessary.   See also Daily Telegraph 11th January 2010 "Gurkhas lose equal pensions battle".