This article was written by Timothy Otty QC, Isabel Buchanan and Celia Rooney.
On 6 July 2020, the UK announced that 49 persons had been sanctioned by the FCO for “their responsibility in some [of] the worst human rights abuses in recent memory”. The sanctioned group was comprised of Russian officials involved in the death of Sergei Magnitsky, Saudi nationals involved in the death of Jamal Khashoggi, Myanmar generals involved in abuse of the Rohingya and two organisations involved in abuses in North Korea’s gulags.
Those persons are the first to be designated and sanctioned by the UK under the Global Human Rights Sanctions Regulations 2020 (the Regulations) – a UK-specific sanctions regime, that stands apart from the EU- and UN-wide measures in which the UK participates. The Regulations were made under the Sanctions and Anti-Money Laundering Act 2018 (the Act) and came into force on 6 July 2020.
In this short article, we briefly consider the designation process under the Regulations and two issues arising from that, namely: (1) whether an individual can request another person’s designation, and if so what challenges may be brought if the Foreign Secretary refuses properly to engage with any such request; and (2) what avenues of challenge exist to designation decisions themselves. Effectively, how do you get a person on or off the list?
The designation criteria are set out at reg. 6 of the Regulations. In brief summary, reg. 6 provides that the Secretary of State can only designate a person if there are reasonable grounds to believe that that person is an “involved person”, and designation is appropriate (reg. 6(1)). An involved person is, inter alia, a person who has been involved in activities which violate the human rights set out at reg. 4(2) (reg. 6(2)), namely the right to life, the prohibition on torture and CIDT, and the prohibition on slavery, servitude and forced or compulsory labour.
Alongside the Regulations, the FCO has published a policy paper on “consideration of designations”, which sets out “factors relevant to whether a person may be designated” (the Designation Policy). The Foreign Secretary has stated that this Policy will provide “maximum transparency” in relation to the process of designation, and has reiterated that due process will be followed in relation to designations. The Policy provides, in brief summary, that when considering designation under the Regulations, the Government (HMG) “will have regard to all relevant considerations”, which may include (1) the need to prioritise decisions in accordance with HMG’s human rights priorities; (2) the nature of the victim, with HMG “likely to give particular attention to activities that are carried out in relation to individuals who seek to obtain, exercise, defend or promote human rights”; (3) the seriousness of the conduct; (4) any collective international action, with HMG “likely to give particular consideration to cases where international partners have adopted, or propose to adopt, sanctions”; (5) whether the actor is non-state, with HMG “likely to give particular attention to non-state actors who have acquired a significant degree of control, authority and organisation over people or an area”; (6) the status of the relevant person, with HMG preferring designations with the greatest impact in providing accountability; and, (7) the effectiveness of other measures, with HMG “likely to give particular attention to cases where the relevant jurisdiction’s law enforcement authorities have been unable or unwilling to hold those responsible for human rights violations or abuses to account”.
Requests for designation and consequent challenges
The list of 49 persons is laudable, but not comprehensive, and one question raised by the Regulations and the process of designation is whether interested individuals can request that the FCO consider a person for designation. Two statements by the FCO suggest that they will consider such requests.
- First, the FCO has published an information note for NGOs and civil society which is said to be designed to “support understanding of the regime for those who may wish to submit information to the FCO concerning specific designations” (emphasis added). The note identifies the information the FCO requires in considering a designation, and provides an email address for use by “any person or organisation” who wishes to submit information to the FCO in that regard. However, it states that the FCO will be “unable to provide comments, updates or feedback on proposed designations, evidence or other information that has been submitted”.
- Secondly, in the Designation Policy, the FCO has committed to take into account all relevant considerations when making a designation decision.
It appears that interested persons can, therefore, submit information directly to the FCO and request that designation of a specific person be considered; and when considering that designation, the FCO will have to take into account all relevant considerations (i.e. all relevant information provided to it).
Although the FCO has said that it will not comment on designations once an individual has submitted information, this does not necessarily protect the FCO from challenge in relation to its response to these requests. The default position under the Regulations is that designations are published (reg. 8(2)(b)). In many cases, therefore, an individual who has submitted information will know whether that submission resulted in a designation. If it did not, the individual can seek to challenge the FCO’s failure to designate (or consider the material) on public law grounds.
Specific provision for such challenge is made at s.38 of the Act, which states that any person affected by the decision of an appropriate Minister in connection with that Minister’s functions under either Part 1 of the Act or the Regulations may apply to the High Court for the decision to be set aside (ss.38(1)(d), (2), (3)(b)). In determining that application, the Court must apply the principles applicable on an application for judicial review, and the Court may give such relief as it could in an application for judicial review (ss.38(4), (5)).
Challenges to designation
While individuals, NGOs and human rights organisation may well campaign to have names added to the list, a second source of litigation arising from the Regulations will also come from those persons who seek to challenge their designation and inclusion. Quite aside from the obvious stigma associated with inclusion on the sanctions list, designations are made for one or both of two purposes: (i) the freezing of assets (regs. 11 to 15) and/or (ii) immigration restrictions (reg. 17). Taking each in turn:
- If a person is designated with asset-related restrictions, it is a criminal offence for the designated person or any other person, knowingly or with reasonable grounds of suspicion, to deal with the designated person’s funds or economic resources (reg. 11(3), read with reg. 11(8)) or for any other person to make funds (or other economic resources) available to, or for the benefit of, the designated person (regs. 12 to 14).
- A person designated for immigration purposes is an excluded person under 8B of the Immigration Act 1971, and must therefore be refused leave to enter or remain in the UK.
Under section 23(1) of the Act, a designated person may seek the variation or revocation of a designation. If a request for variation or revocation is made and refused, a designated person will not be able to make a further request unless and until he or she is able to raise a “significant matter which has not previously been considered by the Minister” on any first application (s.23(2)).
The Government’s Explanatory Notes for the Act suggest that s.23 is designed “to allow access to quick redress” (para. 85). The timeframes and procedures are, pursuant to s.33 of the Act, the subject of secondary legislation. The Sanctions Review Procedure (EU Exit) Regulations 2018 (the Procedural Regulations) thus make detailed provision for the content of any request under s.23 and, in accordance with s.33(2)(a) of the Act, require the Minister to make any decision “as soon as reasonably practicable” (reg.7). The Minister must provide detailed reasons for the decision, save insofar as this is precluded by the interests of national security, international relations, reasons “connected with” the prevention or detection of serious crime (in the UK or abroad), or the interests of justice (reg.8). The Regulations do not, however, authorise the Minister to provide no reasons at all (see further, s.33(3) of the Act).
The Government has issued guidance on de-listing, entitled “Making a sanctions challenge: how to seek a variation or revocation of a sanctions designation” (the Delisting Guidance). The Delisting Guidance, for the most part, mirrors the procedural and evidential requirements of the Procedural Regulations (and identifies a prescriptive ‘Sanctions Challenge Form’ in order to ensure that those requirements are met).
The Delisting Guidance envisages two scenarios in which a designated person might apply for a variation or revocation of his or her designation, namely (i) if the reasons for the designation, or the details contained in any designation, are incorrect; and/or (ii) if the designation is “inappropriate having regard to the purpose of the regime or the likely significant effects of the designation”. The wording of the Act is, of course, not so limited; nor do the Procedural Regulations attempt to prescribe the grounds of challenge under s.23 of the Act in this way.
Notably, under s.22(3), the Minister must revoke a designation if certain “required conditions” are not met. As outlined above, where a person is named on the sanctions list, the Minister must have reasonable grounds to suspect that person is an “involved person” and the designation must be appropriate, having regard to the purpose of the Regulations and the likely significant effects of the designation. Where a designation is made in respect of persons of a specified description, the Minister must in addition ensure that a reasonable person would know whether he or she was caught by the description. A designation on such terms will only be permissible where persons cannot be identified by name.
A decision not to vary or revoke a designation under s.23 of the Act can be challenged under s.38(1)(a). The (somewhat convoluted) wording of section 38(1) appears to be designed to exclude judicial review of a designation decision unless and until a person so designated has exhausted the statutory routes of challenge under Chapter 2 of the Act (including s.23). The Court will determine any such challenge applying the ordinary public law principles applicable on any application for judicial review (s.38(4)). The usual limits on the availability of damages in such proceedings will apply; albeit that the Act makes express provisions for the award of damages if a designation was made negligently or in bad faith (s.39(2)).
The UK has, at long last, taken its first step in bringing sanctions home. The success of that project, however, will be judged both by the efficacy of the new Regulations, in sanctioning the most abhorrent violations of human rights, and by its ability to safeguard fairness and due process, recognising the very onerous consequences of designation.
Judicial review claims concerning sanctions are familiar to the UK courts. While existing sanctions regimes have been implemented primarily at EU level, the fact that an impugned sanctions decision formed part of an ‘EU act’ has never shielded it from domestic remedies: see, for example, R (Bredenkamp) v Secretary of State for Foreign and Commonwealth Affairs  2 CMLR 10, at . Nor, in the past, has the fact that a decision involved engagement in a collective intergovernmental process, as with the UN regime, precluded domestic challenges: see, for example, A v HM Treasury  EWCA Civ 1187 and Youssef v Secretary of State for Foreign and Commonwealth Affairs  UKSC 3.
The new Regulations may nonetheless give rise to a fresh wave of litigation in the UK courts. Sanctions litigation has, to date, been exceptionally heavy and complex. The serious subject matter, and complex financial implications of designation, mean that such cases are, by their nature, significant. But the new domestic regime may provide a swifter, less burdensome, route to a remedy for potential litigants.
Tim Otty QC was Counsel for the Applicants in the Bredenkamp and Youssef cases referred to above as well as numerous other domestic and international sanctions cases. He is recognised in Band 1 of the legal directories as a leading expert in sanctions matters.
Isabel Buchanan is a junior tenant at Blackstone Chambers. She has a broad public, public international and commercial practice, a particular interest in issues arising from the imposition of sanctions and experience of acting and advising in cases concerning both the application of international sanctions and immigration and asset freezing matters more generally.
Celia Rooney is also a junior tenant in Blackstone Chambers. She has a broad public and commercial practice, with a particular interest and experience in asset freezing, unexplained asset orders, financial sanctions, and the regulatory restrictions associated with ‘politically exposed persons’.