First Known Challenge To UK Sanctions Designation Fails

• Published date: 30 March 2023
• Subject Matter: Government, Public Sector, International Law, Money Laundering, Export Controls & Trade & Investment Sanctions
• Law Firm: Astraea Group
• Author: Rory Mulchrone

The High Court (Jay J) has recently handed down judgment in what is believed to be the first application brought under section 38 of the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA") to set aside a designation made by the Secretary of State.

In LLC Synesis v Secretary of State for Foreign, Commonwealth and Development Affairs [2023] EWHC 541 (Admin), the Claimant was a Belarusian company which made software systems, including surveillance systems, used by the Belarusian regime. It had been sanctioned by the EU in 2020.

Following the end of the Brexit transitional period, the Secretary of State had designated the Claimant under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019, including on the basis that it "bears responsibility for providing support and technology to the Ministry of Internal Affairs that enhances the capacity of the Lukashenko regime to carry out human rights violations and repress civil society". In particular, the Secretary of State had relied on concerns that the Claimant's technology had been used to track down a civil society activist, who was subsequently detained and tortured.

The Claimant had applied for review of the designation but it was upheld by the Secretary of State. The Claimant therefore applied to the Court under section 38. The application was refused.

Having considered the relevant facts, the legal framework and the parties' respective submissions, the judge held that a distinction needed to be drawn between the statutory threshold - "reasonable grounds to suspect" - and the standard of review applied by the Court. The former required a state of mind rather than a state of affairs. The threshold was part objective and part subjective, otherwise the word "reasonable" would be otiose. The latter - the standard of review - required no more and no less than the application of well-established principles.

The decision-maker had to consider all the material or information known to him or that ought to have been within his knowledge following reasonable inquiry. This was not limited to evidence that would be admitted in a court of law. The net went far wider and could include hearsay, multiple hearsay, allegations and intelligence. The weight to be ascribed to such matters was for the decision-maker to assess, bearing in mind its inherent quality.

Importantly, the "reasonable grounds to suspect" criterion did not import any standard of proof. To suspect did not require a finding of a fact. It entailed...