Now the Law Commission is considering introducing such a system in New Zealand:
The Law Commission has released A New Crown Civil Proceedings Act for New Zealand, its Issues Paper on reforming the Crown Proceedings Act 1950. The Issues Paper proposes a new statute to replace the Crown Proceedings Act 1950.
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An important topic covered in the Issues Paper is the Crown’s ability to refuse to disclose certain information during litigation because of reasons of national security. The Commission is raising a number of options, including the possibility of court hearings in which material might be relied on by the Crown but not fully disclosed to the other side.
Sir Grant says “The Commission seeks views as to the appropriate way to balance the needs of justice that require all relevant material be revealed on the one hand, and on the other the legitimate national security concern that some things simply cannot be revealed.”
The issues paper is here; chapter 7 is the relevant section. While they present five options, ranging from repeal of s27 Crown Proceedings Act (which would give a consistent, though imperfect, regime under the Evidence Act), to full-on UK-style secret "justice", its clear that they're pushing for a solution more towards the latter end. At minimum they seem to favour an absolute, unreviewable ability for the crown to withhold documents on national security, defence, and international relations grounds - a privilege which overseas has been used to cover up government wrongdoing and deny justice to victims of torture.
We need to protect our courts from this toxic foreign invasion of secrecy, and prevent America's "war on terror" from fundamentally corrupting our justice system. Submissions on the issues paper are due by 1 August 2014; you can submit by email here.