Lessons from the First Court Challenge to a Sanctions Listing under the UK’s Post-Brexit Framework
By: Udit Mahalingam
Corruption and gross human rights violations impose various burdens on countries. The effects of such actions disproportionately impact upon the poorest and most vulnerable communities in society. The absence of resilient institutions capable of addressing the root cause of these issues means that perpetrators often escape accountability and continue to operate openly with unrestricted access to the financial markets. As a consequence, targeted sanctions have emerged as a vital tool in the fight against impunity for such acts, striving to bridge the gaps in established accountability mechanisms. The efficacy of sanctions regimes in this context, as exemplified by the global response to Russia's invasion of Ukraine in February 2022, hinges upon collaborative efforts between governments and coordination amongst Civil Society Organisations (‘CSOs’).
In the United Kingdom, the Sanctions and Anti-Money Laundering Act 2018 ('SAMLA') provides the British Government with the power to make sanctions regulations following the UK's departure from the European Union. Notable examples of thematic regimes created under SAMLA include the Global Human Rights Sanctions Regulations 2020 and the Global Anti-Corruption Regulations 2021. In LLC Synesis v Secretary of State for Foreign, Commonwealth and Development Affairs  EWHC 541 (Admin), the High Court handed down judgement in what is believed to be the first application brought under s.38 of SAMLA to set aside a designation.
The judgement raises a number of key points that are likely to be of interest to CSOs seeking to make sanctions submissions to the FCDO, including under the Global Anti-Corruption Sanctions Regime.
Protestors arguing with security forces during a rally in Minsk, Belarus in the aftermath of the Belarusian Presidential Election on August 9th 2020. Photos: Human Rights Watch © 2020 AP Photo
LLC Synesis is a technology company that was established in 2007 in Minsk, Belarus. Due to the alleged involvement of its software products (including video surveillance systems and facial recognition technology) in enhancing human rights violations and civil society repression by the Belarussian Ministry of Internal Affairs, the company was designated under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019.
LLC Synesis had applied for review of the designation, but it was upheld by the Secretary of State. The company therefore applied to the Administrative Court to set aside the decision under s.38(4) of SAMLA on the primary ground that the Secretary of State’s decision was irrational. The application was refused.
The High Court’s Decision
For CSOs seeking to obtain sanctions against individuals or entities, the issues of real interest relate to the High Court’s insights on the following points: (i) the role of the courts in reviewing designations under SAMLA; and (ii) the statutory threshold (‘reasonable grounds of suspicion’) to be applied by decision-makers when making designations.
In delivering its judgement, the High Court observed that it would not “stand in the shoes” of the Secretary of State when reviewing a designation. Instead, its role was to examine whether the Secretary of State’s decision was “either based on no evidence” or fell foul of the core principles of judicial review (e.g. whether the decision was irrational) (§81). To that extent, the Court observed that the Secretary of State enjoyed a “broad” margin of appreciation when making sanctions designations, especially in a context requiring “the making of expert judgments in an area of government policy” (§82).
The High Court also stated that the Secretary of State was not limited to considering “evidence that would be admitted to a court of law”. Rather, they are entitled to take “hearsay”, “allegations” and “intelligence” into account and ascribe weight to such “weaker” evidence as and when they see fit. In any event, there must be facts or information present which would satisfy an “objective observer” (§80) and there is no standard of proof or finding of fact imported into the statutory threshold applied by the Secretary of State.
The key takeaways from LLC Synesis for CSOs seeking to request sanctions designations under SAMLA can be summarised as follows:
Designated individuals and entities will face significant obstacles when seeking to review listing decisions through the courts. This is made clear by the wide latitude enjoyed by the Secretary of State in collating and evaluating material to make sanctions designations.
Whilst decision-makers are not confined to considering evidence admissible in a court of law when making sanctions designations, the Secretary of State does have discretion to attach less weight to ‘weaker’ evidence should they deem it appropriate to do so. It is therefore vital that CSOs establish a solid and credible base of information in sanctions submissions so as to successfully secure a designation. This includes any evidence pertaining to: (a) the activity that justifies the application of sanctions; (b) the person/entity to be sanctioned; and (c) how the person/entity identified is involved in a sanctionable activity. Although LLC Synesis emphasises that designated parties face significant challenges in reviewing decisions through the courts, such issues will inevitably also affect CSOs should a weak factual or evidential base result in sanctions not being imposed on interested parties.
Regarding the types of evidence that can be utilised in sanctions submissions, the High Court referred extensively to the FCDO’s evidence pack in the instant case, which included information from LLC Synesis’ website, examples of news articles relating to their alleged conduct, and rebuttal evidence containing statements from Belarusian lawyers and an expert technical report. The use of publicly available and/or open source information is not unsurprising and is likely to be relevant in the anti-corruption context. Alleged sanctionable activity in this area is frequently disclosed through means such as public interest reporting from reputable media organisations.
To maximise the success of a sanctions submissions, it is imperative that evidence is accurate, derives from a varied and credible range of sources (e.g. news reports, expert opinions, official company records, etc.) and establishes a consistent fact pattern. The need for robustness in evidence collation is made all the more acute if submissions are assessed in conjunction with rebuttal evidence that challenges the veracity of allegations made by CSOs.
The ILP frequently publishes resources and provides training to CSOs seeking to better understand and use the UK Global Anti-Corruption Sanctions Regime. Further information on these resources is accessible here.