Designated persons and the courts

The High Court has heard – and rejected – the first challenge under the UK’s post-Brexit sanctions framework. What does the judgment tell us? 

Rejecting a claim by LLC Synesis, a company designated under the UK’s Belarus sanctions regime, the court made some important observations about how such regimes work. In at least one important respect – the interaction of such claims with the European Court of Human Rights, which ministers’ decisions must consider under section 6 of the Human Rights Act 1998 – it seems to send a distinctly alarming signal.

The Sanctions and Anti-Money Laundering Act 2018 (SAMLA) empowers ministers to make sanctions regulations, which in turn enable the designation of individuals and entities they have ‘reasonable grounds to suspect’ fit certain criteria, triggering prohibitions that effectively freeze any assets of the designated person within their jurisdiction. It also provides a two-stage challenge process for designated persons, starting with a request to the minister to review the designation, and then a court review of that decision.

The criteria in the Belarus (Sanctions) (EU Exit) Regulations 2019 include anyone who ‘is or has been’ involved in (among other things) ‘the supply to Belarus of… technology which could contribute’ to human rights abuse and/or to ‘the repression of civil society or democratic opposition’.

Following hotly disputed election results, the European Union imposed sanctions targeting the Lukashenko regime, and in December 2020 it designated Synesis, a Belarusian technology company. A fortnight later, this was replaced in the UK by a designation by the foreign secretary, with a required statement of reasons. That statement cited Synesis’ supply to Belarus’ authorities of a facial recognition system, Kipod Technology, which is designed to search for specific individuals, and which the statement said ‘enhances the capacity of the Lukashenko regime to carry out human rights violations and repress civil society’.

Synesis applied under SAMLA for a ministerial review. Importantly, by the time the foreign secretary made her decision, Synesis had been replaced with a state-owned provider.

An amended statement of reasons acknowledged the fact that the relationship was now historical, but left the designation in place. Unfortunately for Synesis, the statement now also referred to claims that Kipod had in fact been used to locate a civil society activist, who had later been arrested and tortured.

Synesis did not deny that it had supplied Kipod to Belarus’ authorities, nor that it could (in theory) be used to find activists. It denied however that it had been so used, and claimed that the foreign secretary had acted irrationally in deciding that there were ‘reasonable grounds to suspect’ that it fit the criteria, and was a disproportionate interference with its ECHR rights.

The issue on which Mr Justice Jay’s judgment focused most attention was the nature of the requirement (common to all sanctions regulations) that the minister has ‘reasonable grounds to suspect’. Endorsing the approach of the Court of Appeal in MB (2006), which concerned terror suspects, he said that the minister’s task was to make a rational decision based on a ‘matrix of alleged facts’, and went on to deny that this amounted to any ‘standard of proof’, in contrast to courts’ findings of fact in civil and criminal cases.

Jay J stressed that the court was not to place itself in the minister’s shoes, but simply to assess whether the decision was rational and within the relevant legal powers. The judge’s approach departed from MB to this extent, which he noted concerned Human Rights Act points and was hard to reconcile with more recent authority, including Begum (2021) and QX (2022).

With all this in mind, it is perhaps unsurprising that Jay J decided not to overturn the decision. Noting the breadth of the criterion applied (‘is or has been involved… in the supply of technology which “could” contribute to repression’), he dismissed as simply irrelevant Synesis’ points that its supply had now stopped, and that the technology had not in fact so contributed.

What is more surprising is the way Jay J dealt with Synesis’ Human Rights Act argument. Barely articulated in the judgment, the issue is that any interference with its ECHR rights can only be justified if it has a rational connection with the purpose of the regulations. Conceivably, freezing the assets of a current provider of repression-enabling technology might serve the purposes of regulations aimed at tackling repression. But what of a former provider? Jay J did not engage with the point, saying briskly that as Synesis’ first argument had failed, the Human Rights Act argument failed as well.

The context of all this, of course, is the vastly increased number and impact of sanctions designations, particularly in connection with Russia. With even broader criteria, and increasing relevance, the issues for designated persons under that regime are acute.

UK sanctions lawyers’ hopes of a better standard of court review in SAMLA, as compared to the EU system, must be tempered with some realism. High Court judges should certainly be expected to follow the steer of SAMLA and recent authority on the deference to be granted to ministers in their decision making. But it seems they may need some reminding of the crucial importance of judicial scrutiny where measures have a real impact on ECHR rights.

John Binns is a partner at BCL Solicitors LLP. He advises DPs and others on UK sanctions