LLC Synesis v Secretary of State for Foreign, Commonwealth And Development Affairs

Factual and Procedural Background

Sanctions have been imposed by the international community against sectoral interests, officials, individuals, and companies in the Republic of Belarus due to systematic human rights abuses and electoral malpractices attributed to the Belarusian regime. The Claimant, a technology company established in Minsk in 2007, was designated under the European Union sanctions regime in December 2020 and subsequently designated by the Defendant under the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 ("the 2019 Regulations"). The Claimant sought and was refused a Ministerial review of this designation and now applies to the Court under section 38 of the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA") to set aside the Defendant's decision.

The Claimant specializes in software products and technology solutions, including the "Kipod" video surveillance system, which was provided to the Belarusian Republican System for Monitoring Public Safety ("RSMPS"). The system is used by the Belarus Ministry of Internal Affairs and law enforcement agencies. The basis for designation was that the Claimant, through its subsidiary, supplied technology that enhanced the regime's capacity to repress civil society and commit human rights violations, exemplified by the tracking, arrest, and torture of a civil society activist following the 2020 elections.

The Claimant challenged the designation on grounds including the limited use and capability of the technology, the irrelevance of evidence relating to human rights violations that did not specifically implicate the Claimant, and the absence of reasonable grounds to suspect involvement under the 2019 Regulations. The Defendant conducted a review, including examination of evidence relied upon by the EU, and upheld the designation.

Legal Issues Presented

1. What is the appropriate legal test the Defendant must apply under the 2019 Regulations when designating a person?
2. What standard of review should the Court apply under section 38(4) of SAMLA in reviewing the Defendant's decision?
3. Whether the designation decision promoted the policies and objects of SAMLA.
4. Whether the designation decision was proportionate.
5. Whether the Defendant had reasonable grounds to suspect the Claimant was an "involved person" under the 2019 Regulations.

Arguments of the Parties

Appellant's Arguments

• The Defendant applied the wrong standard of proof, relying improperly on a lowered standard associated with terrorism cases.
• The Defendant's decision was irrational, based on speculation, rumour, and unsubstantiated assertions rather than a sufficiently solid factual basis.
• The Claimant’s provision of the Kipod system was limited in scope and did not contribute to the proscribed activities under the 2019 Regulations.
• The evidence relating to human rights abuses did not specifically implicate the Claimant and was therefore irrelevant.
• The Defendant reversed the burden of proof by requiring the Claimant to prove a negative.
• The designation was ultra vires because the Defendant exceeded statutory powers and frustrated the purposes of SAMLA and the 2019 Regulations.
• The designation was disproportionate and not rationally connected to a legitimate aim given the limited use and capabilities of the technology.

Respondent's Arguments

• The Defendant had reasonable grounds to suspect the Claimant was involved as defined by the 2019 Regulations, including through supply of technology that could contribute to serious human rights violations or repression.
• The standard of proof required is not the civil standard but an objective assessment of whether reasonable grounds to suspect exist, which does not require proof of facts beyond reasonable doubt or balance of probabilities.
• Evidence, including hearsay and multiple layers of information, is admissible and the weight is for the decision-maker to assess.
• The Defendant’s evaluation of the evidence was rational and credible, including the use of the Kipod system by the Belarusian authorities to track and repress civil society activists.
• The designation was proportionate and advanced the statutory purposes despite the removal of the appropriateness criterion by subsequent legislation.
• The Court must apply a deferential standard of review, intervening only if the decision was irrational or unsupported by evidence.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began by distinguishing the statutory threshold of "reasonable grounds to suspect" from the standard of judicial review. The threshold requires a state of mind that is partly objective and partly subjective, encompassing consideration of all material or information known or reasonably obtainable by the decision-maker, including hearsay and intelligence. The Court emphasized that this threshold does not impose a standard of proof akin to civil proceedings but requires a rational evaluation leading to a genuine suspicion.

The Court rejected the Claimant's submission that the "matrix of alleged facts" approach from terrorism cases was inapplicable, finding it a useful concept to assess the totality of material and inferences. It also rejected the argument that the Defendant reversed the burden of proof or relied on speculation.

The Court considered the evidence concerning the Kipod system's functionality and use, accepting that the technology could contribute to repression of civil society and human rights abuses, even if not used for mass surveillance. The Defendant was entitled to rely on credible evidence, including news reports and expert testimony, to conclude reasonable grounds existed.

The Court noted that the Defendant properly considered proportionality, including the impact on the Claimant, and that the removal of the appropriateness criterion by later legislation had little practical effect in this case. The Court applied a deferential Wednesbury standard of review, recognizing the broad margin of appreciation in government policy matters involving expert judgment.

Consequently, the Court found no irrationality or lack of evidence supporting the Defendant's decision and dismissed the Claimant's grounds challenging the designation.

Holding and Implications

The Court's final decision is to DISMISS the Claimant's application to set aside the designation under section 38 of SAMLA.

This decision upholds the Defendant's designation of the Claimant as an "involved person" under the 2019 Regulations on the basis of reasonable grounds to suspect involvement in activities contributing to serious human rights violations and repression in Belarus. The ruling confirms the applicability of a deferential standard of review in sanctions cases and clarifies the interpretation of "reasonable grounds to suspect" as an evaluative threshold rather than a standard of proof. The decision directly affects the parties by maintaining the Claimant's designation and associated sanctions but does not establish new precedent beyond the application of existing legal principles to the facts of this case.