Sanctioning the Relatives: How SAMLA Sanctions Became a Legal 'Grey Hole'

The Sanctions and Anti-Money Laundering Act 2018 furnished the post-Brexit United Kingdom with the legal architecture for an autonomous sanctions regime. The Act, which was intended to replicate in UK law the EU sanctions regime, was presented as a careful settlement. It conferred upon ministers a formidable power to freeze the assets of specific individuals, whilst also pairing that power with a set of procedural guarantees.

These comprised a right to ministerial review under section 23, and, ultimately, a right of recourse to the courts under section 38. On the face of it, the UK sanctions regime appeared balanced. On the one hand, the executive could act swiftly in the service of foreign policy and national security. On the other hand, the judiciary would stand ready to ensure that executive action complied with rule-of-law requirements.

The recent decision of the High Court in R (Ismailov) v Secretary of State for Foreign, Commonwealth and Development Affairs (No 2)invites us to ask whether that compromise has, in practice, been honoured. Once that case is placed within a wider context, the answer is a troubling one. What Ismailov reveals is the hollowing out of procedural rights through light-touch review that affords a wide margin of discretion to the executive.

This is an example of what legal theorist David Dyzenhaus has termed 'legal grey holes', to wit, areas in which there nominally exist procedural protections, but not of a kind sufficient to allow the executive's decisions to be effectively contested. On Dyzenhaus's account, a grey hole is in certain respects more pernicious than an outright 'black hole' of unreviewable discretion. This is precisely because it preserves 'façade of legality', whilst at the same time disabling its substance.

A designation by family relationship

The facts of Ismailov bring these features into stark relief. Sarvar Ismailov was designated for sanctions in July 2022 not on account of anything he himself had done, but because he happens to be the nephew of Alisher Usmanov, an industrialist allegedly associated with Vladimir Putin (which Usmanov denies).

The measures imposed upon him were, in the High Court's own terms, 'draconian'. His assets were frozen immediately, completely and indefinitely. He was thus subjected a particularly grave interference with his ECHR rights to property (Article 1 of the First Additional Protocol, henceforth 'A1P1') and private life (Article 8 ECHR) that can be inflicted, on the basis of a familial relationship he neither chose nor controlled, and an influence over his uncle (and, through him, to Vladimir Putin) that no evidence established he (or, indeed, his uncle) possessed.

Mr. Ismailov did precisely what the statutory scheme envisaged. He requested a ministerial review under section 23. The Minister confirmed his designation. Mr. Ismailov then brought a court review under section 38, advancing no fewer than seven distinct grounds, ranging from the proportionality of his designation under Articles 8 and A1P1 of the European Convention, through challenges to the legality and ultra vires of the underlying Regulations, to arguments concerning unlawful delegation, arbitrariness, and the Public Sector Equality Duty under section 149 of the Equality Act 2010. Each of these grounds was considered and rejected by the court.

The shape of the grey hole: proportionality

The reasons provided for the rejection should give us pause. Regarding Mr. Ismailov's ECHR rights, Saini J approached the proportionality question through the familiar four-stage framework, yet the low intensity of review effectively foreordained the outcome. Saini J accepted that the Secretary of State enjoyed a 'wide margin of appreciation' and, following Shvidler, stated that 'considerable respect' was owed because the minister was 'uniquely well placed' to determine whether the sanctions could achieve their purpose.

Accordingly, the 'fair balance' between the foreign-policy objective and the claimant's rights was resolved against the claimant on the basis of assessing the rational connection of the rights-interference to the pursuit of the objective through a set of 'incentivisations' [at para 141 of the judgment], all of which appear more speculative than based on specific efficacy-related evidence. In fact, one would be hard pressed to imagine which kinds of evidence, and which actions by the claimant, could be deemed sufficient to warrant the revocation of his designation.

All the elements of a grey hole in Dyzenhaus's sense thus seem to be present. The procedural right to proportionality review nominally exists and it is exercised, but the review itself is deferential to a degree such that, in the ordinary case, individual rights cannot be vindicated against the executive's wide discretionary powers. Moreover, Ismailov is hardly an outlier in this respect.

On the contrary, Saini J could comfortably situate his reasoning within a now-unbroken line of authority. Thus, in Khan, both the High Court and the Court of Appeal upheld the sanctioning of a woman on the basis of her marriage to an associate of the Russian state. In Shvidler, the designation of a British citizen by reason of his association with Roman Abramovich was sustained through the High Court, the Court of Appeal and, ultimately, the Supreme Court.

To these may be added the Belarusian sanctions sustained in Dana Astra. The courts have, to date, rejected every Convention-based challenge to a designation under the 2019 Regulations. And whilst a perfect record of executive success to various challenges does not logically imply the presence of a grey hole, it is a strong indication that the review on offer is not of a kind capable of altering outcomes.

Deference beyond proportionality

In Ismailov the deferential stance of the reviewing court extended well beyond proportionality. Confronted with an argument founded on the principle of legality, Saini J construed that principle in an extremely narrow — and arguably revisionary — way, drawing upon an extrajudicial lecture rather than binding authority to find that it can bite only when it is recognised by Parliament itself as a potentially relevant set of considerations.

Moreover, invited to scrutinise whether the designation power had been lawfully delegated, the High Court appeared to resurrect a presumption in favour of Carltona delegation that Adams had arguably unsettled. And pressed on the Public Sector Equality Duty, Saini J held not merely that the duty had been discharged, but that it simply did not apply to individual designations. At each turn, a doctrine that might have furnished a foothold for meaningful contestation was, instead, narrowed or disapplied.

Towards a more intensive review

None of this is to deny that sanctions serve legitimate ends, nor that foreign policy is a domain in which courts must tread carefully and with appropriate deference to the executive. Still, a sanctions regime that designates individuals by reason of their family relations and independently of actions they can conceivably take, that freezes their assets indefinitely, and that styles its own measures 'draconian', must, for rule of law reasons, answer to a standard of review commensurate with the gravity of the measures taken.

Where consequences are severe and the connection to wrongdoing attenuated or, as it was arguably in Ismailov, speculative, the appropriate rule of law response is a more searching standard of review. This would conceivably involve a genuine interrogation as to whether the 'draconian' measures are rationally connected to the aim invoked by the executive, together with a less 'light-touch' approach regarding the availability of less intrusive courses of action.

Lord Leggatt's dissent in Shvidler, which insisted that the executive should be afforded a wide margin of appreciation whilst criticising forcefully the idea that courts are thereby simply left with the task of rubber-stamping assertions made by the executive which amount to 'armchair theories' about various hoped-for (but not evidenced) consequences, already gestures towards this more demanding and rule-of-law compliant stance.

Restoring an intensity of review adequate to the draconian measures involved in sanctions regimes would thus transform a grey hole of unfettered, and potentially arbitrary, executive discretion into a normal domain governed by the usual and cherished rule of law values integral to the UK's, and indeed the West's, self-understanding.