UK Law and Practice Contributed by: John Binns, BCL Solicitors LLP
of 50% of shares or voting rights, the test is also made out where it is reasonable to expect the DP could (if they chose) cause the company’s affairs to be run in accordance with their wishes. The Court of Appeal prompted significant debate when it commented (in the case of Boris Mints v PJSC National Bank Trust ) that this broader test could be applied to any Russian company, given that the nature (it said) of Russia’s economy meant that its presi - dent (a DP) could take control of them if and when he wished. Within a few days, the FCDO and OFSI issued guidance stating that they did not adopt this approach, and that each case would be considered on its own merits. But while this effectively prevents OFSI enforcing a sanctions breach on the basis of the Mints test (and subsequent case law has sought to recast the test in terms of a “common sense” question of “who calls the shots” at the company), it remains to be seen whether there is still mileage in it (for instance, where a counterparty seeks to end a contract in reli - ance on it). More recently, a call for evidence has been conducted on the narrow issue of whether to retain the “hypothet - ical element” of the test. If that element were dropped, the test would instead be whether the company was in fact run in accordance with the DP’s wishes, rather than whether the DP could achieve that result if they wanted. No similar exercises have yet been carried out on two significant points of difference between the UK and EU regimes: first, the ownership thresh - old of “more than 50%” of shares (rather than “50% or more”); and, second, the question of aggregation. With respect to the latter, EU law enables the respec - tive shares of 2 DPs (A and B) to be aggregated, with sanctions triggered if the aggregated percentage meets the threshold; the UK threshold cannot be trig - gered in this way (though it would be if A and B held their shares pursuant to a joint arrangement, or if A held shares on behalf of B, or vice versa). 3.2 Future Developments Further designations and prohibitions (and the occa - sional delisting) may safely be expected in connection with Russia sanctions. More fundamentally, debates are ongoing (in the UK as elsewhere) on the potential for forfeiture of assets currently frozen under Russia
sanctions, potentially for the benefit of Ukraine’s war effort. Options include the use of fines or monetary penalties under the new reporting regime for DPs, and/or the application of proceeds of crime laws to secure the forfeiture of assets obtained through sanc - tions breaches or other unlawful conduct. Objections include the chilling effect on lawful foreign invest - ment if any new regime (or aggressive use of exist - ing regimes) is not seen to pay due regard to private property rights. The Sanctions and Anti-Money Laundering Act 2018 (SAMLA) provides for a procedure for DPs to chal - lenge their designations. Ministerial Review Importantly, a challenge cannot be taken directly to court in the first instance. The first step (under Sec - tion 23 of SAMLA) is to apply for a ministerial review, by which the minister responsible for taking designa - tion decisions under the relevant sanctions regulations will reconsider their decision. At this point, they will consider any relevant material before them, including any representations and material provided by the DP themselves. The question for the minister, therefore, is not whether the original designation was correct, but whether the DP ought to be designated at the time the review takes place. Court Review If the minister’s decision under this procedure is adverse to the DP, they will then be able to challenge that decision (that is, the decision resulting from the ministerial review) in the High Court (under Section 38 of SAMLA). The procedure is similar, and the grounds are the same, as for judicial review more generally: importantly, the court is not asked to make a fresh decision from scratch, but to consider whether the minister has made their decision in the right way and under the Human Rights Act 1998 (the HRA). The lat - ter includes consideration of whether the interference with the DP’s rights (including, for instance, their right to privacy and their right to free enjoyment of their 4. Delisting Challenges 4.1 Process
292 CHAMBERS.COM
Powered by FlippingBook