LLC Synesis v Secretary of State for Foreign, Commonwealth and Development Affairs
| Jurisdiction | England & Wales |
| Judge | Mr Justice Jay |
| Judgment Date | 14 March 2023 |
| Neutral Citation | [2023] EWHC 541 (Admin) |
| Court | King's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/3655/2022 |
[2023] EWHC 541 (Admin)
Mr Justice Jay
Case No: CO/3655/2022
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Alex Haines and Sophie O'Sullivan (instructed by Candey) for the Claimant
Sir James Eadie KC, Maya Lester KC and Jason Pobjoy (instructed by Government Legal Department) for the Defendant
Hearing dates: 2 nd and 3 rd March 2023
Approved Judgment
INTRODUCTION
For a number of years now, sanctions have been imposed by the international community on a targeted basis against sectoral interests, officials, individuals and companies in the Republic of Belarus. It is in the public domain that Belarus has been responsible for human rights abuses and electoral malpractices on a systematic basis, and the purpose of these sanctions is and has been to pressurise and to constrain the activities of those who are deemed to be bound up with this regime.
LLC Synesis (“the Claimant”) is a technology company established in 2007 in Minsk, Belarus. On 17 th December 2020 it was originally designated under the sanctions regime of the European Union under the name “JSC Synesis”. The USA has taken similar action. The terms of the EU designation were later changed for reasons of accuracy. On 31 st December 2020, at the end of the transition period following the withdrawal of the United Kingdom from the EU, the Claimant (still described as “JSC Synesis”) was designated by the Secretary of State for Foreign, Commonwealth and Development Affairs (“the Defendant”) under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 (2019 SI No 600) (“the 2019 Regulations”). Subsequently, the Claimant sought a Ministerial review of that designation. That took place; it was refused; and the Claimant now applies to this Court to set aside the Defendant's decision under section 38 of the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”).
I understand that this is the first application to reach the Administrative Court under this provision. Section 38(4) provides that the principles applicable to an application for judicial review must be applied to the current exercise. It follows, with respect to the Claimant, that this Court is not being asked to reinvent the wheel.
The claim raises issues as to the legal test the Defendant should apply in the exercise of his powers under the 2019 Regulations; the legal test to be applied by this Court under section 38(4); whether the decision at issue promoted the policies and objects of SAMLA; and, the proportionality of the decision.
I received a wealth of evidence and submissions, probably more than was necessary to resolve this application under section 38(4). I appreciate the importance of this case to both parties: to the Claimant, owing to the obvious ramifications of the decision on its business and reputation; and to the Defendant, as custodian of the public interest. Despite apparently polarised positions in some of the correspondence and pleadings, it became clear during the course of argument that the differences between the parties as to the applicable legal principles were nothing like as great. The real issue is whether the Defendant could rationally conclude that there were reasonable grounds to suspect that the Claimant was an “involved person” under the 2019 Regulations. That formulation is not to place entirely to one side the detailed legal submissions attractively advanced by Mr Alex Haines on the Claimant's behalf. It is simply a realistic identification of where the true battleground in this case exists.
The structure of this judgment is as follows:
(1) Essential Factual Background.
(2) The Legal Framework.
(3) The Evidence before the Defendant.
(4) The Defendant's Analysis of the Evidence.
(5) The Claimant's Further Evidence.
(6) The Claimant's Grounds.
(7) The Claimant's Submissions.
(8) Discussion and Conclusions.
ESSENTIAL FACTUAL BACKGROUND
I derive this from the Claimant's Statement of Facts and Grounds, the parties' skeleton arguments, and the witness statement of David Reed who is Director of the Sanctions Directorate of the Defendant.
The Claimant is a “business-to-business” company that specialises in software products and technology solutions for transport logistics, artificial intelligence and modern public security systems.
When the Claimant was designated in the UK on 31 st December 2020, the Statement of Reasons published on that date provided:
“JSC Synesis provides the “Kipod” video surveillance system to the Republican System for Monitoring Public Safety [“RSMPS”]. This system is utilised by the Ministry of Internal Affairs, including by security and police units. JSC Synesis therefore bears responsibility for providing support and technology to the Ministry of Internal Affairs that enhances the capacity of the Lukashenko regime to carry out human rights violations and repress civil society following the protests in the aftermath of the August 9 th elections.”
On 7 th April 2021 the Claimant notified the Defendant of its intention to seek revocation of this designation by Ministerial review in accordance with section 23(1) (b) of SAMLA. The Claimant sought copies of the supporting evidence. Those were provided by the Defendant on 30 th June 2021, and included the Sanctions Designation Form (“the SDF”), the Sanctions Designation Form Evidence Pack (“the SDFE”), and three annexes containing many exhibits.
On 18 th January 2022 the Claimant formally applied for a Ministerial review. This application was accompanied by nine annexes comprising expert reports and witness statements. There were three essential bases for the application:
(1) Although it was accepted that the Claimant provided the “Kipod” system through its subsidiary 24x7 Panoptes (“Panoptes”), the functions and use by the RSMPS were specific, limited and defined, with limited technical capability and physical presence, and did not contribute to any relevant activity as set out in regulation 6 of the 2019 Regulations. It follows that the requirements of section 11(2) of SAMLA were not fulfilled.
(2) The Defendant's evidence in respect of human rights violations and repression of civil society and democratic opposition by the Lukashenko regime did not refer to the Claimant in any way, and were accordingly irrelevant to the designation decision.
(3) In accordance with both SAMLA and the 2019 Regulations, where there are no reasonable grounds to suspect that the Claimant has been an “involved person”, the legislative purposes have not been met and the designation cannot be justified.
In short, it was contended that the Defendant's basis for designating the Claimant was “wrong, having been founded on vague, unsubstantiated and incorrect assertions”.
The procedure adopted by the Defendant in connection with this review has been explained by Mr Reed. The Claimant's material was reviewed and further open-source checks were carried out. The Defendant also obtained a copy of the evidence pack relied on by the EU to justify its designation, and updated the SDF and the SDFE. Officials produced an Administrative Review Form; a case meeting took place on 17 th May 2022 at which it was decided to uphold the designation; and a submission was sent to Ministers on 5 th July 2022 with a recommendation to that effect.
On 7 th July 2022 the Defendant notified the Claimant of his decision, and enclosed an updated SDF and an updated SDFE. I will be referring to these in due course. The revised published Statement of Reasons provided as follows:
“LLC Synesis (“Synesis”), including through its former wholly-owned subsidiary, LLC 24x7 Panoptes (“Panoptes”), has supplied the Kipod Technology (“Kipod”) to the Republic of Belarus for use with the “Republican System for Monitoring Public Safety” (“RSMPS”), which is a video surveillance and monitoring system. The RSMPS is used by the Belarus Ministry of Internal Affairs, as the State body authorised to coordinate the use of the RSMPS, and law enforcement agencies, including by security and police units. Kipod is a key part of the RSMPS.
The RSMPS, relying on Kipod, has provided the Ministry of Internal Affairs and law enforcement agencies with the capability inter alia, to track down civil society and pro-democracy activists, in order to repress them. Further, that capability has been so used. For example, following the elections on 9 August 2020, Nikolay Dedok, a civil society activist who was in hiding was tracked down by the RSMPS using the Kipod system. He was subsequently detained and tortured.
Synesis has therefore been involved in the commission of a serious human rights violation or abuse in Belarus and/or the repression of civil society or democratic opposition in Belarus as Synesis has been responsible for and/or has provided support for, either or both such activities; and/or that Synesis has been involved in the supply to Belarus of technology which could contribute to either or both such activities.”
THE LEGAL FRAMEWORK
The power to make sanctions regulations, in the light of the UK's exit from the EU, is to be found in SAMLA. At the material time SAMLA provided as follows:
“ 1 Power to make sanctions regulations
(1) An appropriate Minister may make sanctions regulations where that Minister considers that it is appropriate to make the regulations –
…
(c) for a purpose within subsection (2).
(2) A purpose is within this subsection if the appropriate Minister making the regulations considers that carrying out that purpose would –
…
(f) provide accountability for or be a deterrent to gross violations of human rights, or otherwise promote –
(i) compliance with international human rights law, or
(ii) respect for...
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