Author: Syedur Rahman
26 August 2022
2 min read
In the latest piece for Rahman Ravelli’s Sanctions Monitor, Syed Rahman details a billionaire’s unsuccessful attempt to obtain a review of the sanctions imposed on him. He also outlines the issues involved in sanctions challenges.
The US government has declined to answer a Russian industrialist’s petition for the Supreme Court to review the sanctions against him.
Oleg Deripaska accused the US Department of the Treasury of wrongfully sanctioning him for allegedly supporting his home country’s annexation of Crimea. His attorney filed a 130-page petition to the Supreme Court, which argued that upholding sanctions against him would “ensure unfettered Executive power in imposing economic sanctions."
But in filing last month, US Solicitor General Elizabeth Prolegar notified the court that the government waived its right to respond, unless the court requested it to do so.
Deripaska’s counsel had argued before a district court in Washington DC that sanctions designations imposed on him were arbitrary. They stated that the Treasury Department’s Office of Foreign Asset Controls (OFAC) had failed to prove that he was acting as an agent of Russia’s President Putin or any other senior official.
But Judge Amit Mehta rejected Deripaska’s arguments. This decision was upheld by a DC appeals court in March.
OFAC had announced sanctions against Deripaska in April 2018, pursuant to executive orders issued by former President Barack Obama, in response to Russia's annexation of Crimea. Deripaska, as the founder of Basic Element - one of Russia’s largest industrial groups – was among 24 individuals and 15 companies sanctioned for allegedly aiding President Vladimir Putin’s “malign activity across the globe."
The US government’s lack of response to Deripaska’s petition can be viewed as a sign that it has no doubt about OFAC’s reasons for sanctioning the billionaire or the evidence on which those reasons were based.
Challenging designation decisions is extremely difficult, due to the relatively low standard of criteria required for the original decision to be made.
To take the UK as an example, the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) gives powers to the “appropriate minister” - defined as the relevant Secretary of State or HM Treasury - to make regulations imposing sanctions. Such a minister can make regulations when the minister considers it appropriate for the following purposes:
The UK sanctions regime states that the test is “reasonable grounds to suspect”, which is considered the appropriate evidentiary threshold. There have, nevertheless, been instances of successful petitions.
It is important that the right approach is taken when any challenge to sanctions is made. It is an exercise that requires detailed consideration of the issues and careful strategising.
From a UK perspective, the key difference between the pre and post- Brexit sanctions regimes is the way in which those that are subject to sanction can challenge their designation. Under the pre-Brexit regime, persons designated under EU sanctions were only able to challenge their designation at EU level (and to a limited extent, UN level). Yet SAMLA, which was devised for the UK’s post-Brexit regime, permits individuals and entities to challenge their listings in the UK or to request the UK’s assistance to secure their removal from a UN list.
SAMLA provides a designated person the right to ask the government to revoke or vary their designation (s23(1). They may do this if, for example, they believe they have been misidentified or that the designation does not meet the required evidential threshold which is set out in S11(2A) and 12(5) of SAMLA.
When considering an application brought under s38 of SAMLA, the courts will apply the legal principle of judicial review. Damages can be awarded but the court must be satisfied that the decision concerned was made in bad faith.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.