LLC Synesis v Secretary of State for Foreign Commonwealth & Development Affairs
The Administrative Court recently considered the first challenge to proper designation under the sanctions regime, following LLC Synesis’s (“Synesis”) unsuccessful application for a Ministerial review. Jay J provides a useful outline of the legal test and approach to be taken by the Secretary of State for Foreign Commonwealth and Development Affairs (“SoS”) under s.38 of the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”) and of the court on a judicial review. The court also considered the 2019 Regulations (regarding sanctions against Belarus) and the approach to proportionality.
The case concerned Synesis’s provision to the Belarus government of AI based recognition software to identify individuals captured on cctv and to find and track them. Synesis’s IT could identify 200,000 people per second by comparing an uploaded image with the video footage and could be used to find missing persons but also activists and protestors against the government. There was information that it had actually been used in the arrest of an activist in hiding who had been gassed on arrest and tortured. The SoS designated Synesis as a person subject to sanctions in December 2020.
The Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”) framework
SAMLA provides the power to make sanctions regulations following the UK leaving the EU, s.11 authorising the Minister to designate a person where he has reasonable grounds to suspect that person of being “an involved person”. An involved person is one who is or has been involved in a specified activity, is owned or controlled by such a person, is acting on behalf of or at the direction of such a person or is a member of or associated with such a person (s.11(3)). When designating a person, the Minister must provide a “statement to reasons” briefly setting out the matters he knows, or has reasonable grounds to suspect, which have led to the designation. There is a right to request revocation of the designation (s.23) and to a challenge in court (s.38).
The Regulations
The government made regulations in 2019 against Belarus, the purpose of which was to encourage the Government of Belarus to refrain from the repression of civil society, to comply with human rights law and respect human rights, including to respect the right not to be subjected to torture, inhuman or degrading treatment or punishment, and to afford human rights defenders freedom of expression and association (Reg 4). The designation criteria are set out in the regulations. By Reg 6 a person is “an involved person” if he “is or has been involved in …the commission of a serious human rights violation or abuse in Belarus” [or] the repression of civil society or democratic opposition in Belarus…” and “being involved” encompasses in whatever way, and includes providing support, or the supply of technology for any proscribed actions. Although SAMLA originally included a further condition that the designation must be appropriate, that criterion has since been removed by s.58 of the Economic Crime (Transparency and Enforcement) Act 2022. Nonetheless, the exercise of the discretion must be reasonable.
All sanctions regulations should be interpreted as a piece of domestic legislation but, bearing in mind the Explanatory Notes to SAMLA, it is expected that such interpretation will be harmonious with the EU regime. The UK’s review arrangements are compliant with a designated person’s Articles 6 and 8 ECHR rights.
Legal Challenges
In challenging the designation, Synesis sought the Sanctions Designation Form and Sanctions Designation Form Evidence Pack which the SoS had considered. These were provided with numerous supporting exhibits and updated by reference to the evidence pack relied upon by the EU to justify their separate designation. The Ministerial Review rejected Synesis’s application for revocation. The next step was the Administrative Court. Further material and witness statements were provided by both sides and considered by the Court.
The Court’s Conclusions
At heart, the issue for the court was whether the SoS could rationally conclude that there were reasonable grounds to suspect that Synesis was an “involved person” under the 2019 Regulations. The Court found that it could. The SoS’s state of mind had to be that there were reasonable grounds to suspect Synesis’s involvement, having considered all material or information that he knew or ought to have known on reasonable enquiry. Information or material is far wider than evidence and may include allegations, multiple hearsay and even intelligence. This is because sanctions are in the public interest and in line with the UK’s international obligations; it is also to acknowledge that overseas entities operating outside our jurisdiction may mean strict evidence is less readily available. The standard of proof had no place in the exercise; rather, it entails the assessment or evaluation of the material and information, the drawing of inferences from the circumstances in the round, and the ultimate acquisition in good faith of the relevant state of mind. Jay J also concluded (unsurprisingly) that the Administrative Court was not to substitute its own opinion for that of the SoS but to examine whether his decision was irrational or based on no evidence. The Judge accepted that the courts must allow a broad margin of appreciation in the context of sanctions’ designations since they involve making expert judgements in an area of government policy.
Conclusions from the case
· In challenging a sanctions designation, the SoS must conclude on a bona fide evaluation of all material and information that there are reasonable grounds to suspect the person was an “involved person” within the definition of the particular regulation.
· Any such involvement can be ongoing or in the past.
· It is inapt to import the burden or standard of proof. The exercise is one of bona fide evaluation of all material and information, the drawing of inferences and in good faith acquiring the appropriate state of mind.
· Material or information relied upon need not be evidential but its weight must be considered.
· In the 2019 Regulations concerning Belarus, anyone whose involvement in the supply of goods or technology which could contribute to proscribed activity may be designated. The SoS does not have to have reasonable grounds to suspect that the goods or technology did contribute to the proscribed activity; the fact that they could is sufficient.
· The designated person has the right to seek a revocation of the designation by the Minister. Thereafter, the designated person may challenge the designation through the courts.
· The Administrative Court’s function is to apply the principles applicable in judicial review and to assess whether the SoS’s determination was rational or based on no evidence. It is not to stand in the shoes of the Minister.
· Since March 2022, there is no requirement for the designation to be appropriate (after the Economic Crime (Transparency and Enforcement) Act 2022). Insofar as proportionality remains a consideration, that is for the Minister to consider and, if his conclusion was not unreasonable, the court will not interfere.
23 March 2023