Sergey Glandin, an expert on compliance and sanctions law from the law firm BGP Litigation, believes that an important precedent has been set and explains how the court's decision may affect the consideration of other similar cases.
Immediately after Brexit in London, work began on new national legislation, which was supposed to replace EU norms. This also applied to the subject of restrictive measures and sanctions against third countries and their residents: already at the end of 2016, the bill “On Sanctions and Combating Money Laundering” (SAMLA) was submitted to Parliament. Opinions in both houses of parliament were divided approximately equally: one wanted to keep the European rules in force, as they are best suited to the protection of human rights; others, looking back at the United States, advocated turning sanctions into a tool for ensuring national security and a tool for achieving foreign policy goals, where human rights should be given an important, but not the main role. The law was adopted in the spring of 2018 and became a hybrid between these two approaches.
Based on the law, regulations on sanctions against certain countries began to be adopted, and in mid-2019, Regulation No. 855 on sanctions against Russia appeared. Its purpose was declared to be “to encourage Russia to stop actions that destabilize Ukraine, undermine or threaten its territorial integrity, sovereignty or independence.”
The decision to impose personal sanctions is made by the relevant minister or the secretary of state in charge. The construction of the norm is interesting: by default, the minister does not have the right to impose personal sanctions until he is convinced that the person is really involved in violations that can be countered by sanctions, and his inclusion in the sanctions list will help achieve the goals stated in the regulation. At the same time, when imposing sanctions, the possible adverse consequences for the person involved from being included in the list should also be taken into account.
circumstances of the case
Russian billionaire Roman Abramovich was on the UK sanctions list on March 10, 2022. After 12 days, his longtime partner Yevgeny Shvidler ended up there, and on May 5, sanctions were imposed against the metallurgical company EVRAZ plc, whose shareholders include Abramovich and Shvidler. In all three cases, the sanctions were initiated by the Ministry of Foreign Affairs and International Development (FCDO). An attempt by Shvidler's lawyers to get him removed from the sanctions list as part of an administrative procedure failed. On November 11, 2022, along with a negative response, the applicant’s lawyers were given a new justification for the sanctions: Yevgeny Shvidler is a business partner of Roman Abramovich, he has long maintained close ties with him and receives material benefits with his help. In addition, Shvidler enjoys indirect support from the Russian government through EVRAZ, a company operating in a strategic sector of the economy.
The plaintiff's lawyers decided not to challenge the legality of the decision taken by the Minister, but focused on proving the disproportionateness of the measures taken, their grave consequences and discriminatory nature, the negative effect on family members and the violation of various human rights, the main of which is respect for private property, guaranteed by the European Convention on the Protection of Human Rights human (ECHR).
For example, British private schools expelled the children of Yevgeny Shvidler after the imposition of sanctions against him. Because of this, he, along with his children - US citizens, had to move to the United States, where they could continue their education. However, the move led to the separation of children from their mother, who does not have an American passport.
In addition, the plaintiff's lawyers insisted that he had no ties to Vladimir Putin, whom Shvidler last saw in 2007, and that he was not involved in Russian politics in any way. The statement of claim also contained a request to recognize the sanctions as an example of discrimination based on origin, since members of the EVRAZ board of directors who were not born in the USSR were not subject to any sanctions, unlike Shvidler.
Reasons for the decision
London High Court Judge Neil Garnam, with his questions to the parties of the case, set a kind of standard for the consideration of such disputes in the future and determined the appropriate standard of proof in them:
Were there grounds for imposing sanctions? In other words, did the plaintiff receive financial or material benefit from Mr. Abramovich and was he otherwise associated with him in the sense provided for in Regulation No. 855?
Are the contested measures related to the goal that the government wants to achieve by imposing sanctions?
Could less burdensome measures have been taken against the plaintiff?
Has a fair balance been reached between the rights of the plaintiff and the public interests of the state and society?
Was there discrimination in the imposition of sanctions?
The law allows for the imposition of sanctions due to association with a certain person, who in turn is associated with the Russian leadership. It was Abramovich who appointed the plaintiff to EVRAZ. Their acquaintance and business ties, which lasted for decades, were not disputed by the parties. All this was enough to dismiss the claim. The second reason for the refusal was the receipt by the plaintiff of a salary at EVRAZ, which the judge considered receiving material benefits from Abramovich.
The judge upheld the logic set out in the refusal of the administrative review: the inclusion of the plaintiff on the list would force him to put pressure on Abramovich to induce President Putin to stop or limit Russia's actions in Ukraine.
The decision, taken by the court on August 18, allows us to draw a number of conclusions that those who wish to lift UK sanctions can take into account:
the British court went along the American, not the European path: the balance is shifted in favor of public law interests and the goals of the country's sanctions policy to the detriment of human rights, even the rights of a British citizen and his children;
the possession of a British passport is not a protection against the imposition of sanctions and does not increase the chances of their removal;
reaffirmed the right of the UK Foreign Office to impose, administer and lift sanctions at its own discretion;
statements in support of Ukraine or calls for peace will not play any role if the connection of the sanctioned person with the Russian authorities or work in a corporation closely associated with Russia is proved, even if we are talking about events of a fairly distant past.
At the same time, it is important to remember that, contrary to American norms, the British SAMLA law and the regulations adopted on its basis do not guarantee the lifting of sanctions, even if the person on the sanctions list changes his behavior. The legislator considered that he had protected individuals and legal entities with a simple construction: “The minister is not entitled to impose sanctions until he is convinced that his target is an implicated person ...” However, in the Shvidler case, the court did not examine the question of whether the imposition of sanctions against the plaintiff was appropriate , taking into account the really significant and adverse consequences for him from the sanctions.
And one moment. The literal meaning of the expressions used in SAMLA does give the right to impose sanctions for past events or behavior that took place in the past. In the United States, this works great, but the United States does not participate in the ECHR or its analogues. But the UK is a member of the convention, and it is subject to the entire array of case law on the interpretation of the articles of the convention, suggesting that when considering administrative cases, which include cases on the imposition or removal of sanctions, it should be established that the violation is happening now, and has not happened sometime in the past.