Khan v Secretary of State: Establishing Proportionality in Sanctions Designations under SAMLA 2018

Introduction

In the case of Khan v Secretary of State for Foreign, Commonwealth and Development Affairs ([2025] EWCA Civ 41), the appellant, Anzhelika Khan, challenged her designation under the Russia (Sanctions) (EU Exit) Regulations 2019, enforced pursuant to the Sanctions and Anti-Money Laundering Act 2018 (SAMLA). The designation resulted in freezing her assets, significantly impacting her ability to provide for her family. The key issues revolved around the proportionality of her designation, the legal framework governing sanctions, and the effectiveness of the licensing scheme intended to mitigate hardships caused by such designations.

Summary of the Judgment

The England and Wales Court of Appeal dismissed Ms. Khan's appeal against the decision to maintain her designation. The court upheld the original judgment by Cockerill J, confirming that the designation was a proportionate interference with her rights under the European Convention on Human Rights (ECHR), specifically Article 8 (right to respect for private and family life) and Article 1 of the First Protocol (right to peaceful enjoyment of possessions).

The appellants' challenges focused on four primary grounds:

The Secretary of State failed to consider the likelihood that the designation would further the statutory purpose.
Regulation 6(2)(d) of the 2019 Regulations is incompatible with Articles 8 and 1 of the First Protocol.
The decision-making process did not adequately consider the best interests of her dependent children.
The licensing scheme is incompatible with the right of access to a court under Article 6 ECHR.

The appellate court systematically rejected each ground, emphasizing the adherence to the proportionality test, the adequacy of legal safeguards under SAMLA, and the reasonable connection between the designation measures and their objectives. Additionally, the court highlighted improvements in the licensing scheme post-designation, mitigating initial hardships faced by the appellant.

Analysis

Precedents Cited

The judgment extensively engaged with several key precedents:

Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997: Established that discretionary powers must be exercised in alignment with the statutory purpose, prohibiting actions that undermine or frustrate legislative objectives.
Bank Mellat v HM Treasury (No 2) [2013] UKSC 39: Refined the proportionality test, outlining four limbs to assess whether measures that limit rights are justified.
Dalston Projects Ltd and Others v Secretary of State for Transport [2024] EWCA Civ 172: Clarified the role of courts in reviewing proportionality, emphasizing a balance between deference to executive decisions and independent judicial assessment.
Ahmed and Others v HM Treasury [2010] UKSC 2: Addressed the legality of sanctions measures, highlighting the necessity of fair procedural safeguards and effective judicial remedies.
R (Bridges) v Chief Constable of South Wales Police [2020] EWCA Civ 1058: Reiterated the importance of legal safeguards to prevent arbitrary exercise of powers that interfere with Convention rights.
H (H) v Deputy Prosecutor of the Italian Republic, Genoa [2012] UKSC 25: Underlined that best interests of children are a primary consideration in decisions affecting them, influencing the interpretation of Article 8 ECHR.

These precedents informed the judicial reasoning, particularly in assessing the exercise of executive discretion, the necessity of proportionality, and the balance between state interests and individual rights.

Legal Reasoning

The court's legal reasoning centered on applying the proportionality test to the executive's designation decision:

Legitimate Aim: The sanctions aimed to pressure the Russian government to cease destabilizing activities in Ukraine, a legitimate and important objective.
Rational Connection: Regulation 6(2)(d) linked the designation of associates to the broader aims by targeting individuals who may facilitate or mitigate the impact of sanctions on principals.
Less Intrusive Means: The court recognized that less intrusive measures would be ineffective in achieving the sanctions' objectives, justifying the breadth of the designation powers.
Fair Balance: Although the designation significantly impacted Ms. Khan and her family, the court balanced this against the gravity of Russia's actions. The existence of a licensing scheme to mitigate hardship further supported the proportionality.

The Judge and the appellate court emphasized that the executive's discretion was adequately constrained by legal safeguards, reducing the risk of arbitrary or abusive designations. The court also found that procedural fairness was maintained through the availability of administrative reviews and judicial oversight.

Impact

This judgment has several significant implications:

Strengthening the Sanctions Regime: Upholding the designation powers under SAMLA reinforces the UK's commitment to employing sanctions as a tool for foreign policy and national security.
Judicial Review Standards: Clarifies the approach appellate courts should take in reviewing proportionality determinations, balancing deference to executive discretion with independent assessment of rights impacts.
Licensing Scheme Accountability: Highlights the necessity for efficient and accessible licensing mechanisms to mitigate undue hardships, influencing potential future reforms.
Human Rights Considerations: Illustrates the judiciary's role in safeguarding individual rights within broad legislative frameworks, ensuring measures are both effective and fair.

Future cases involving sanctions designations will likely reference this judgment for its comprehensive analysis of proportionality and the balance between state interests and individual rights.

Complex Concepts Simplified

Proportionality Test

The proportionality test assesses whether a measure that interferes with individual rights is justified. It involves four limbs:

Legitimate Aim: The measure must pursue a lawful and important objective.
Rational Connection: There must be a logical link between the measure and the objective.
Less Intrusive Means: The measure should be the least restrictive option available to achieve the objective.
Fair Balance: The benefits of the measure must outweigh the harm to individual rights.

Padfield Principle

Originating from Padfield v Minister of Agriculture, this principle mandates that discretionary powers must align with the statutory objectives. Any use of discretion that undermines the legislative purpose is unlawful, regardless of the intent behind it.

Regulation 6(2)(d) of the 2019 Regulations

This regulation defines who qualifies as an "associate" of a designated person, allowing the designation to extend beyond direct involvement to include family members or those who benefit financially. The court upheld its compatibility with ECHR rights, finding it rationally connected to the sanctions' objectives.

Licensing Scheme

The Office of Financial Sanctions Implementation (OFSI) administers a licensing scheme that permits designated individuals to access funds for basic necessities. While intended to mitigate hardships, the scheme was criticized for delays and inefficiencies, prompting subsequent reforms to introduce general licenses for immediate basic needs.

Conclusion

The Court of Appeal's decision in Khan v Secretary of State reaffirms the robustness of the UK's sanctions framework under SAMLA 2018. By meticulously applying the proportionality test and upholding the executive's discretion within defined legal safeguards, the court balanced national security interests with individual rights. This judgment underscores the judiciary's role in ensuring that broad legislative powers are exercised fairly and effectively, while also highlighting areas for procedural improvements, such as the licensing scheme's efficiency. Ultimately, the decision strengthens the legal foundation for sanctions as a tool of international policy, ensuring they are both potent and just.

The establishment of clear precedents and the reinforcement of judicial review standards provide a roadmap for future cases, ensuring that measures taken under similar regimes are scrutinized for their legality and proportionality. This case serves as a pivotal reference in the ongoing dialogue between state security measures and the protection of individual human rights.