UK Law and Practice Contributed by: John Binns, BCL Solicitors LLP
3. Recent and Future Legal Developments 3.1 Significant Court Decisions or Legal Developments The legislative, judicial and executive frameworks for sanctions in the UK have all undergone significant developments since Russia’s full-scale invasion of Ukraine in February 2022. Legislative Developments: Strengthening Sanctions From a legislative perspective, changes introduced by the Economic Crime (Transparency and Enforcement) Act 2022: • removed parliamentary scrutiny from sanctions regulations; • restricted damages available from successful chal - lenges to designations; • introduced strict liability monetary penalties for breaching financial sanctions; and • removed the specific requirement for designa - tions to be “appropriate” (though this is generally accepted to have had no effect, as designations still need to be “proportionate” under human rights law). More important than any of these, however, were the sweeping changes introduced by amendment to the Russia sanctions regulations, which brought within the scope of designations a huge range of individuals and entities that may have no involvement whatever in Russia’s actions in Ukraine, but which are involved in sectors of the Russian economy deemed to have economic or strategic significance. The use of this power to drive an exponential expansion of the list of designated persons has vastly increased the impact of sanctions in the years since then. Arguably as significant, though for now with less prac - tical consequence, was a further amendment to these regulations, adding an additional purpose of Russia sanctions: ‘to promote the payment of compensa - tion by Russia for damage, loss or injury suffered by Ukraine or on after 24 February 2022 as a result of Russia’s invasion of Ukraine’. In due course, this may
enable the continuation of sanctions after any resolu - tion of the conflict itself. Court Decisions: Designation Challenges This expansion contributed in turn to a wave of court decisions on designation challenges under Section 38 of the Sanctions and Anti-Money Laundering Act 2018 (SAMLA). The most significant of these was the Supreme Court’s decision in the case of Eugene Shvidler, whose challenge raised a significant issue on the meaning of proportionality in this context. The Supreme Court broadly endorsed the approach of the High Court and the Court of Appeal in directing that it was the proportionality of sanctions designations in general that fell to be measured against their policy aim, rather than (as Shvidler contended) the specific impact of sanctions on the individual applicant. While recognising the importance of those impacts, the Supreme Court (in its majority judgment) stressed the fact that designations had a cumulative effect, which the Foreign Secretary (given both their constitutional role in this context, and the institutional expertise of the FCDO) was better placed than the courts to deter - mine. (A strong dissenting judgment from Lord Leggatt has been widely praised by sanctions practitioners.) Since the Shvidler challenge, unsurprisingly few DPs have sought to challenge the decisions of the FCDO to maintain designations. Sarvar Ismailov, nephew of Alisher Usmanov and designated soon after his uncle on a single ground of “association” by that familial tie, was an exception: the High Court declined to accept Ismailov’s challenge of irrationality in respect of either the amending regulations (which made it possible to designate on this basis) or the decision to designate him specifically, saying among other things that it was rational to infer that Ismailov could exert pressure on his uncle. Enforcement: The Challenge of Ownership and Control One of the more difficult aspects of UK sanctions reg - ulations (and one where, not coincidentally, the UK’s laws differ from those of comparable jurisdictions) is the applicability of financial sanctions to companies (and other entities) that are “owned or controlled, directly or indirectly” by a DP. The UK’s regulations say that, in addition to the more straightforward tests
291 CHAMBERS.COM
Powered by FlippingBook