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The High Court has dismissed an application to set aside a sanctions designation issued by the Secretary of State for Foreign, Commonwealth and Development Affairs. This was the first challenge to be brought under section 38 of the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”).

The Claimant is a technology company established in 2007 in Minsk, Belarus. On 31 December 2020, it was designated by the Defendant under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 on the grounds that its software products, which include video surveillance systems and facial recognition technology, had been employed by the Belarussian Ministry of Internal Affairs and thereby “enhance[d] the capacity of the Lukashenko regime to carry out human rights violations and repress civil society.” Pursuant to s.23(1) of SAMLA, the Claimant exercised its right to seek a Ministerial review of that designation. It was unsuccessful. The Claimant then applied to the Administrative Court to set aside the decision under s.38(4) of SAMLA.

The Claimant’s primary ground of challenge was that the Defendant’s decision was irrational.

In dismissing the application, Jay J held that there was a distinction between the statutory threshold (“reasonable grounds to suspect”) and the standard of review applied by the Court.

As regards the statutory threshold, the Court held that (1) the decision-maker is “not limited to evidence that would be admitted to a court of law,” and the decision-maker is entitled to take “hearsay,” “allegations” and “intelligence” into account; and (2) the “‘reasonable grounds to suspectcriterion does not import any standard of proof. To suspect does not require the finding of fact. It entails the assessment or evaluation of the available information and material, the drawing of inferences from all the circumstances, and then the acquisition in good faith of a state of mind once that exercise has been completed” (§73).

As regards the standard of review, the Court could not “stand in the shoes of the Defendant” when conducting this review exercise under section 38 of SAMLA. Instead, “the Court’s role is to examine whether the Defendant’s decision was either based on no evidence or was irrational” (§81). In this regard, the Defendant’s “margin of appreciation” is “broad,” especially in a context that involves “the making of expert judgments in an area of government policy” (§82).

Applying these principles, the Court held that the Claimant’s submissions fell “a long way short of demonstrating a Wednesbury error” (§85). The Court also rejected the separate grounds of challenge based on vires and proportionality, on the basis that they were largely parasitic on the irrationality ground.

The full judgment can be found here.

Sir James Eadie KC, Maya Lester KC and Jason Pobjoy, instructed by the Government Legal Department, acted for the Secretary of State for Foreign and Commonwealth Affairs.

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