Synesis: An Important “First” for the UK Sanctions Regime


Last month, judgment was handed down in the case of LLC Synesis v Secretary of State for Foreign, Commonwealth and Development Affairs [2023] EWHC 541 Admin. This is the first application brought under section 38 of the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”) to set aside a government decision not to revoke or vary a UK sanctions designation. The claim raises issues as to the legal test that the government must apply when exercising its designation powers.

Factual background

The Claimant (LLC Synesis) is a technology company established in Belarus. It was designated under the US and EU sanctions regimes and, after the end of the Brexit transition period, the Secretary of State for Foreign, Commonwealth and Development Affairs (the “Secretary of State”) also designated the company under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 (2019 SI No. 600) (the “2019 Regulations”). 

LLC Synesis specialises in software products and technology solutions for transport logistics, artificial intelligence and modern public security systems. The Secretary of State’s stated reasons for designating the company was that its AI-powered video analytics and facial recognition could “find and track” individuals and thereby enhanced “the capacity of the Lukashenko regime to carry out human rights violations and repress civil society”.

In the first instance, LLC Synesis applied for a government review of that decision under section 23(1) of SAMLA. The company argued that it was wrongly designated because: (i) its technology did not contribute to human rights violations; (ii) the evidence relied upon by the Secretary of State did not refer to LLC Synesis at all; and (iii) there were no reasonable grounds to suspect that it was an “involved person” within the meaning of the 2019 Regulations (see below). In response, the Secretary of State maintained LLC Synesis’s sanctions designation concluding that LLC Synesis was involved in the supply of technology to Belarus which could contribute to human rights abuses. LLC Synesis then applied to the court for the Secretary of State’s decision to be set aside under section 38 of SAMLA.

Legal framework

Under SAMLA and the 2019 Regulations, the Secretary of State has the power to designate a person where it has “reasonable grounds to suspect” that the person is an “involved person”. An “involved person” is someone who is or has been involved in an activity specified in the 2019 Regulations, which includes the commission of a serious human rights abuses in Belarus (see regulation 6(2)), and being involved in the supply to Belarus of goods or technology which “could contribute to any such activity” (see regulation 6(3)).

The decision

The key issue that was determined by Mr Justice Jay was whether the Secretary of State could rationally conclude that there were reasonable grounds to suspect that LLC Syniverse was an “involved person” for the purpose of the 2019 Regulations.

The key points to note from the judgment are as follows:

  1. Whether there are “reasonable grounds to suspect” is a part objective and part subjective test.

  2. To meet the statutory threshold, the decision-maker must consider all the material or information known to him or her, or which ought to have been known following reasonable inquiry.

  3. The Secretary of State can cast the net quite widely in terms of material and information that it considers when making its decision. The Secretary of State could take into account allegations, hearsay or intelligence, and ascribe a weight to such “weaker” evidence as it deemed appropriate.

  4. To “suspect” does not import a standard of proof. No finding of fact is needed. Instead, all that is required is that the decision-maker assesses the available information, draws inferences from all the circumstances and, having undertaken that exercise, acquires a good faith state of mind thereafter.

  5. However, there must be facts or information present which would satisfy an objective observer.

  6. When conducting its review exercise purpose of section 38 of SAMLA, the court cannot stand in the shoes of the Secretary of State. Instead, its role was to examine whether the decision was based on no evidence or was irrational.

The court held that LLC Synesis submissions fell a long way short of demonstrating that was the case. In reaching his decision, Mr Justice Jay focused on the broad nature of the designation criteria under the 2019 Regulations, which included supplying technology which “could contribute” to human rights violations.

The case demonstrates the wide latitude that is afforded to the Secretary of State in collating and evaluating material to make its decision to designate a company, and the significant obstacles that a company will face to overturn that decision.