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 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. The concept of risk was forward-looking; the notion of proof on the balance of probabilities was simply inapposite. It was in the public interest, and consistent with the UK's international obligations to enable punitive and restrictive measures of this sort to be applied even if a civil court would not be satisfied on the same material. Parliament had recognised that, when it came to entities such as the Claimant, based and operating outside the jurisdiction in circumstances where evidence might not be readily available, proof of a fact to the civil standard might be difficult. In a nutshell: "A police officer may lawfully act on reasonable grounds to suspect that something has either happened or is happening, and so may the Defendant".
As to the standard of review, the Court could not stand in the shoes of the Defendant. Instead, the Court's role was to examine whether the Defendant's decision was either based on no evidence or was irrational. The Court had to apply the Wednesbury test but the Claimant's submissions, in the judge's view, fell a long way short of demonstrating a Wednesbury error. It would be naïve if not disingenuous to imagine that the system in question had only been used to track and trace the lost and the vulnerable. To the extent relevant, proportionality had been considered and the conclusion reached was not unreasonable.
This significant and timely decision shows that the Courts will afford considerable latitude to those making decisions on sanctions designations in the public interest. There is no requirement to establish any suspicions, whether on a balance of probabilities or otherwise. When assessing an impugned decision, it appears that the Court will apply traditional public law principles and not interfere unless satisfied that the decision under challenge is Wednesbury unreasonable.
Click here to access Jay J's judgment.
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