4.  The facts of the case, as submitted by the parties, may be summarised as follows.
5.  Nepalese Gurkha soldiers have served the Crown since 1815, initially as soldiers in the (British) Indian Army. Following Indian independence in 1947, six Gurkha regiments were transferred to the Indian Army, while four regiments became an integral part of the British Army. More than 200,000 Gurkha soldiers fought in the two world wars, and in the past fifty years they have served in Hong Kong, Malaysia, Borneo, Cyprus, the Falklands, Kosovo, Iraq and Afghanistan. They have served in a variety of roles, mainly in the infantry but also as engineers and in signals and logistics units.
6.  Today, they form the Brigade of Gurkhas (“the Brigade”), in which only Nepali nationals are eligible for service. The Brigade is not an operational brigade in the conventional sense; rather, it is an administrative entity which ensures that Gurkha units, into which all Gurkha soldiers are recruited and serve, are able to be integrated into – and form part of – other operational brigades in the British Army.
7.  The Brigade was originally based in the Far East, in the region formerly known as Malaya. In 1971 the Brigade’s base moved to Hong Kong. On completion of the handover of Hong Kong to China in July 1997, the home base moved to the United Kingdom. Consequently, the majority of Gurkhas are currently stationed in the United Kingdom, although since 1962 a section of the Brigade has been stationed in Brunei.
8.  Pursuant to a memorandum of understanding of 9 November 1947 (“the Tripartite Agreement”), the Governments of the United Kingdom, India and Nepal agreed that the salary of Gurkhas serving in the British Army would be set by reference to rates applied by India in respect of Indian soldiers so as to avoid competition between the Indian and British armies for Gurkha recruits. The Brigade’s basic pay was therefore set in accordance with the Indian Pay Code, although cost-of-living allowances were paid for service outside Nepal. These allowances used to be calculated by reference to local living expenses (for example, in Hong Kong or Brunei), but in 1997, when the Brigade’s home base moved to the United Kingdom, a “universal addition” was introduced to ensure that, whenever a Gurkha soldier was serving outside Nepal, his take-home pay would be similar to that of a non-Gurkha soldier in the British Army of comparable rank and experience. However, the “universal addition” was not treated as pensionable pay.
9.  Prior to 1 April 2006, Married Accompanied Service entitlement (that is, an entitlement for the soldier to be accompanied by wife and children) was for one married accompanied tour of between two and three years in the first fifteen years of service and for permanent accompanied service for Gurkhas ranked Colour Sergeant and above. However, with effect from 1 April 2006, those who had served for three years or more in the Brigade were entitled to Married Accompanied Service (in other words, they were entitled to be joined in the United Kingdom by their wives and children).
10.  Gurkha soldiers are required to retire after fifteen years’ service, subject to the possibility, dependent on rank, of one or more yearly extensions.
11.  In comparison, other soldiers in the British Army are entitled to serve for twenty-two years.
12.  Historically, Gurkha soldiers were discharged to Nepal and it was presumed that they would remain there during retirement.
(a)  The 2004 amendments to the Immigration Rules
13.  On 25 October 2004 the Immigration Rules (HC 394) were changed to permit Gurkha soldiers with at least four years’ service who retired on or after 1 July 1997 (the date that the Gurkha’s home base relocated to the United Kingdom) to apply for settlement in the United Kingdom. Approximately 90 per cent of the 2,230 eligible Gurkha soldiers have since applied successfully to settle in the United Kingdom with their qualifying dependants.
(b)  The 2009 amendments to the Immigration Rules
14.  On 21 May 2009 the Secretary of State for the Home Department announced a new policy under which all former Gurkhas who had served in the British Army for at least four years would be eligible for settlement in the United Kingdom. Approximately thirty-five per cent of those eligible have since applied for resettlement in the United Kingdom.
15.  The Tripartite Agreement provided that the pensions of Gurkhas serving in the British Army would also be set by reference to the rates applied by India to Indian soldiers.
(a)  The Gurkha Pension Scheme
16.  In 1949 the Gurkha Pension Scheme (“GPS”) was established by Royal Warrant and applied the former Indian Army Pensions Code to Gurkhas serving in the Brigade. Pension entitlements under the GPS were index-linked to the cost of living in Nepal as it was presumed that the Gurkhas would retire there. Pensions were immediately payable upon retirement and could not be deferred. A Gurkha who retired without having served fifteen years would be entitled to no pension whatsoever.
17.  In 1981 Gurkha pensions were reviewed and the rate payable was set at the highest rate applicable under the Indian Army pension arrangements.
18.  In 1999, following a ministerial review, the rates applicable to the pensions of Gurkhas in the Brigade were increased by over 100 per cent, taking them over the scales set by the Indian Army. The rationale for the increase was that a Gurkha who retired from the Brigade to Nepal would not receive the benefit of various schemes which soldiers retiring from the Indian Army could access, such as the provision of certain medical facilities. The increase applied to all Gurkhas regardless of the date of discharge.
(b)  The Armed Forces Pension Scheme
19.  Non-Gurkha soldiers retiring from the British Army are entitled to pensions under either the Armed Forces Pensions Scheme 1975 (“AFPS 75”) or the Armed Forces Pensions Scheme 2005 (“AFPS 05”) depending on when they commenced service. Neither scheme is index‑linked with the cost of living in the soldier’s country of origin.
20.  Under the AFPS, soldiers are eligible for deferred pensions, payable at the age of 60, provided that they have rendered at least two years’ service before leaving the British Army. In order to receive an immediate pension officers are required to serve for sixteen years and all other ranks are required to serve for twenty-two years; however, in practice fewer than one fifth of non-Gurkha soldiers in the British Army serve for sufficiently long periods to be eligible for an immediate pension.
21.  The annual pension entitlement under the GPS is broadly equivalent – taking into account the adjustments made in 1981 and 1999 – to one-third of that under the AFPS.
(c)  Review of Gurkhas Terms and Conditions of Service
22.  Following the 2004 amendment to the Immigration Rules (see paragraph 13 above), the Secretary of State for Defence announced a review of the Gurkhas’ Terms and Conditions of Service. The review noted that the 2004 amendment to the Immigration Rules and the changes to Married Accompanied Service (see paragraph 9 above) had changed the traditional assumption that British Gurkhas would retire in Nepal, and pointed to a future in which they could be expected increasingly to regard the United Kingdom, rather than Nepal, as their family base. The Review Team therefore concluded that, the affordability issues notwithstanding, the major differences in Gurkha terms and conditions of service could no longer be justified on legal or moral grounds and recommended that they be modernised by bringing them largely into line with those available to the wider Army.
23.  With regard to pensions, the review concluded that on balance the GPS was more suitable than the AFPS to support the life-cycle of the great majority of Gurkhas up until July 1997. However, moving the Brigade’s base to the United Kingdom and the subsequent change to the Immigration Rules had altered the previously valid assumption that Gurkhas would retire in Nepal. For a Gurkha retiring to a second career in the United Kingdom, the GPS profile was
“clearly wrong, paying sums too small to be useful at a time when he does not need them and an inadequate pension at retirement age. As the life profile of the typical Gurkha approaches that of his UK/Commonwealth counterpart, there can be little to be said in favour of providing them with such different pension benefit profiles.”
24.  The report recommended that serving and retired members of the Brigade should be allowed to transfer from the GPS to either AFPS 75 or 05, depending on when they enlisted. Those who were already in the GPS and wished to remain in it could do so, but it would be closed with effect from April 2006.
(d)  The Gurkha Offer to Transfer
25.  In March 2007 the United Kingdom formulated the Gurkha Offer to Transfer (“GOTT”) and this was given effect in the Armed Forces (Gurkha Pension) Order 2007 (“the 2007 Order”). Gurkhas who retired before 1 July 1997 did not qualify for the GOTT. However, the GOTT enabled Gurkha soldiers who retired on or after 1 July 1997 to transfer from the GPS to either AFPS 75 or AFPS 05 depending on when they first enlisted in the British Army. The terms of any transfer were such that the accrued rights to a pension for service after 1 July 1997 would transfer into the AFPS scheme on a year-for-year basis.
26.  In respect of service rendered before 1 July 1997 the Explanatory Memorandum to the 2007 Order explained that
“although Gurkha service from 1 July 1997 is transferable on a one-for-one basis, Article 2 L4 provides that pre-1997 Gurkha service counts proportionately depending upon the rank of the transferee. This proportion is not arbitrary: it has been arrived at after careful calculation by the Government Actuary’s Department. It represents broadly the value of the pre-1997 benefits accrued in the GPS. A Gurkha transferring to either AFPS will be given fair pension value for his GPS service.”
27.  Under the actuarial calculation adopted by the Government, a year’s service before 1 July 1997 translated – in terms of pension entitlement – to the equivalent of between 23 and 36 per cent of the value of a year’s service of a non-Gurkha soldier of equivalent rank.
28.  The transition from the GPS to the AFPS for those opting to transfer who were already in receipt of a pension under the GPS did not deprive them of their existing GPS pension, which would continue to be paid. Transfer to the relevant AFPS occurred at 60 or 65, when they received the preserved pension. However, as they had been in receipt of the GPS pension from around the age of thirty-three, the capital value of the pension pot at retirement age would be reduced by the payments received under the GPS up to that date.
29.  Nearly all serving Gurkhas elected to transfer to the AFPS (only 0.3 per cent elected to remain in the GPS). Of those who had retired, but remained eligible for transfer, approximately three per cent elected to remain in the GPS.
30.  The first applicant is a non-governmental unincorporated association that acts on behalf of 399 former members of the Brigade.
31.  The second applicant is a former Gurkha soldier who retired from the Brigade on 8 February 1997 after having accumulated fifteen years’ service. As he completed his service prior to 1 July 1997, he is ineligible to transfer any of his pensionable years to one of the AFPSs. His pension continues to be governed by the GPS and, as such, is valued at approximately fifty per cent of that which a British soldier of equivalent rank would receive for the same period and type of service.
32.  The third applicant is a former Gurkha soldier who retired from the Brigade on 31 July 2002 after having accumulated almost thirty-one years’ service. The last five years of service were transferred into the AFPS on a year-for-year basis. The preceding twenty-six years of service were transferred under an actuarial calculation pursuant to the 2007 Order. Under that calculation the pensionable value of each of his years of service was regarded as equivalent to approximately twenty-seven per cent of a pensionable year served by a British soldier of equivalent rank engaged in the same type of service.
33.  On 7 March 2008 the applicants issued an application for judicial review in the High Court challenging the legality of both (a) the decision that Gurkhas who retired prior to 1 July 1997 were not entitled to transfer their pension rights under the GPS into the AFPS and (b) the decision that, for those Gurkhas who retired after 1 July 1997, service before that date did not rank on a year-for-year basis. The challenge was advanced on three grounds: under the Race Relations Act 1976 (namely, that there had been a breach of a procedural duty to promote equality of opportunity); on grounds of irrationality; and under Article 1 of Protocol No. 1 read together with Article 14. In relation to the third ground, the applicants alleged that they were discriminated against in their entitlement to an army pension on the basis of their age and/or nationality. In particular, they argued that they were treated differently both from younger Gurkha soldiers who had (more) years of service after 1 July 1997 and from regular British Army soldiers.
34.  The applicants were granted permission to pursue their judicial review application. A hearing took place in October 2009. At the hearing the parties agreed that the 2009 change to the Immigration Rules (see paragraph 14 above) was irrelevant for the purpose of the proceedings.
35.  On 11 January 2010 the High Court dismissed the application on all three grounds. In respect of the age discrimination challenge the High Court relied on its earlier decision in R (Gurung) v. Ministry of Defence [2008] EWHC 1496 (Admin) (summarised at paragraphs 45 – 49 below), in which it held that the difference in treatment did not occur due to the difference in age but due to the dates at which service had been rendered. The judge in the present applicants’ case noted that
“when lines are drawn for any purpose by reference to dates the result may well include some indirect age discrimination.”
36.  In reaching this conclusion, the court rejected the argument – advanced by the applicants – that age discrimination should be treated as a “suspect” ground.
37.  In respect of the discrimination-on-grounds-of-nationality challenge the High Court considered that it was bound by R (Purja and Others) v. Ministry of Defence [2003] EWCA Civ 1345 (summarised at paragraphs 41 – 44 below), in which the Court of Appeal had ruled that Gurkhas with service before 1 July 1997 were in a markedly different position from other soldiers serving in the British Army before that date. The difference in pension arrangements reflected the different historical position of the Gurkhas. Although the High Court accepted that the 2004 change in the Immigration Rules (see paragraph 13 above) undermined some of the assumptions supporting the decision in Purja, it held that the changes did not affect the reasoning of the Court of Appeal as that reasoning applied to the calculation of pension entitlements which accrued before 1 July 1997. For all the reasons advanced by the High Court Judge in Gurung, the High Court considered that the choice of 1 July 1997 to mark the boundary for different treatment of accrued pension was a rational and reasonable one.
38.  The applicants were granted permission to appeal to the Court of Appeal. On appeal, their case was put exclusively by reference to Article 14 of the Convention read together with Article 1 of Protocol No. 1.
39.  On 13 October 2010 the Court of Appeal dismissed the applicants’ appeal. In respect of the discrimination-on-grounds-of-nationality claim the Court of Appeal, like the High Court, considered itself bound by the decision in Purja (cited above). In respect of the age-discrimination claim the court, relying on the Strasbourg Court’s judgment in Neill v. the United Kingdom, no. 56721/00, 29 January 2002, held that even if a relevant comparison could be drawn between older and younger Gurkhas, the Ministry of Defence could easily justify the difference in treatment.
40.  On 13 December 2010 the Supreme Court refused to grant the applicants permission to appeal.