Last month, judgment was handed down in the case of LLC Synesis v Secretary of State for Foreign, Commonwealth and Development Affairs  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.
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.
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 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:
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.