Tag: russian sanctions

First Binding Decision on UK Sanctions ‘Control Test’
The issue of whether a non-sanctioned company is subject to a freezing order because a designated person who has been sanctioned under the Russia Sanctions Regulations ‘controls’ the entity has recently received a binding court decision in Litasco SA v Der Mond Oil and Gas Africa SA & Locafrique Holdings SA [2023] EWHC 2866 (Comm) (“Litasco SA”).

Sitting in the High Court, Mr Justice Foxton found a middle ground between the narrow test suggested in the High Court case of PJSC National Bank Trust and another v Mints and others [2023] EWHC 118 (Comm) (“Mints”) and the broad test proposed by the Court of Appeal in the subsequent appeal of the aforementioned decision.

Facts of Litasco SA v Der Mond Oil and Gas Africa SA & Locafrique Holdings SA

Litasco SA, a Swiss oil marketing and trading company wholly owned by the Russian oil company Lukoil PJSC, sought a summary judgment against Der Mond Oil and Gas Africa SA, along with its parent company, Locafrique Holdings SA, The dispute arose from a contract entered into in April 2021 between Litasco SA and Der Mond, where Litasco SA agreed to supply Nigerian crude oil to Der Mond. An addendum on 7 November 2022, modified the contract’s obligations. Der Mond faced allegations of failing to meet certain payment obligations, leading Litasco SA to issuing proceedings for the outstanding amount.

Der Mond presented several defences, invoking sanctions and force majeure clauses contained in the addendum. Additionally, Der Mond contended that, despite neither Litasco SA nor Lukoil being designated persons under the UK sanctions regime, it was prohibited from making payments to Litasco SA under regulation 12 of the Russia Sanctions Regulations because Litasco SA should be treated as a designated person due to it being controlled by one or more designated persons, including Mr Alekperov, Lukoil’s founder and CEO until April 2022, and President Vladimer Putin.

The applicable law concerning the UK Sanctions ‘control test’

Regulation 12 of the Russia Sanctions Regulations provides that neither a person nor entity can make funds available directly or indirectly to a designated person, which includes a person owned or controlled, directly or indirectly, by a designated person.

Regulation 7 of the aforementioned regulations addresses the concept of ‘ownership or control.’ Ownership criteria are met if a designated person holds over 50% of the shares or voting rights or has the authority to appoint or remove most of the board of directors. An entity is considered to be controlled by a designated person if, considering all circumstances, it is reasonable to expect that the designated person could ensure the entity’s affairs are conducted according to their wishes.

In a recent article, we discussed the obiter comments concerning what constituted ‘control’ made by Mrs Justice Cockerill in Mints. The Judge concluded the Claimants, two state-owned Russian banks, were not owned or controlled by a designated person within the meaning of Regulation 7, because control is not established under Regulation 7 where a designated person controls an entity through a political office which they hold.

However, on appeal, Sir Julian Flaux, Chancellor of the High Court (sitting in the Court of Appeal), again in obiter comments, deemed ‘control’ to be a much wider concept than that provided by Mrs Justice Cockerill’s reasoning:

i) By excluding control arising from a political office, the Judge [Mrs Justice Cockerill, sitting in the High Court] had put “an impermissible gloss on the language of the Regulation because of a concern on her part that, if the appellants were correct about the construction of the Regulation, the consequence might well be that every company in Russia was ‘controlled’ by Mr Putin and hence subject to sanctions.”

ii) “If, as may well be the case, that is a consequence of giving Regulation 7 its correct meaning, then the remedy is not for the judge to put a gloss on the language to avoid that consequence, but for the executive and Parliament to amend the wording of the Regulations to avoid such a consequence.”

iii) The relevant language “is not concerned with ownership, but with influence or control” and “is apt to cover the case of a designated person who, for whatever reason, is able to exercise control over another company irrespective of whether the designated person has an ownership interest in the other company, economic or otherwise.”

iv) “The provision does not have any limit as to the means or mechanism by which a designated person is able to achieve the result of control, that the affairs of the company are conducted in accordance with his wishes”.

By virtue of the above, the Court of Appeal appeared to interpret ‘control’ extremely broadly and acknowledged that under such an interpretation, President Vladimir Putin could be deemed to control everything in Russia.

The High Court decision in Litasco

Mr Justice Foxton determined that Mr Alekperov did not exert control over Litasco SA for several reasons, namely:
1. first, Mr Alekperov resigned from Lukoil’s board soon after facing sanctions;
2. his ownership stake in Lukoil was limited to 8.5%, falling short of a controlling interest; and
3. the defendants failed to present any evidence indicating that Mr Alekperov maintained control over Lukoil.
In dealing with the question of whether Litasco SA and Lukoil were controlled by the Russian President, Mr Justice Foxton distinguished Mints on the grounds that in that particular case, the bank in question was owned by the Central Bank of Russia which was “an organ of the Russian state”. In the case before him, the Defendant provided no evidence to show that Litasco SA was owned by the Russian state.

Mr Justice Foxton directed his attention to whether “making funds available to Litasco SA amounts to making funds indirectly available to President Putin.” He concluded that “the issue of control has, as its central focus, the ability of the designated person to control the use of the funds made available.” In addition, to have ‘control’ the Russian President would have to have “an existing influence” over the company, not merely the ability to gain control sometime in the future.

Given the above test, the Court deemed it was “wholly improbable” that any funds made to the Defendant would be made available to President Putin as it was likely that the President had no idea of Lukoil or Litasco SA’s existence.

Final words

Litasco SA is the first binding decision to provide a test as to what constitutes ‘control’ under the Russia Sanctions Regulations. It strikes a middle ground between the High Court and Court of Appeal comments in Mints, concluding that whether a designated person has ‘control’ of an entity must be decided on a case by case basis and the key question is whether or not the designated person exercises control on a routine basis. Therefore, the test is a subjective, practical test, rather than an objective, abstract one.

To discuss any points raised in this article, please call us on +44 (0) 203972 8469 or email us at mail@eldwicklaw.com.

Note: The points in this article reflect sanctions in place at the time of writing, 27 November 2023. This article does not constitute legal advice. For further information, please contact our London office.
November 27, 2023
New Defence Available In Russian/Ukraine War Sanctions

On 20 June 2023, the Russia (Sanctions) (EU Exit) (Amendment) (No 2) Regulations 2023 (the Regulations) came into force.

Established under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA), the Regulations amended the Russia (Sanctions) (EU Exit) Regulations 2019 (Russia Regulations) to establish a clearer legislative basis to enable certain assets to remain frozen/immobilised until Russia pays compensation to Ukraine “for damage, loss or injury suffered by Ukraine as a result of Russia’s invasion of Ukraine on or after 24 February 2022.”

Existing finance, shipping, and trade sanctions have also been extended under the Regulations.

The new sanctions relate to non-government controlled Ukrainian territory “the Autonomous Republic of Crimea” and city of Sebastopol and non-government-controlled areas of the Kherson and Zaporizhzhia oblasts (administrative district or region) of Ukraine.

These reflect the changing demographics now under Ukrainian control.

The Regulations introduce a defence to the strict liability offence under section 68(1) of the Customs and Excise Management Act 1979 relating to the prohibition on exportation of certain goods to, or for use in, non-government-controlled areas of the Donetsk, Kherson, Luhansk, and Zaporizhzhia oblasts.

What is the purpose of the Russia (Sanctions) (EU Exit) Regulations 2019?

Before the amendment, the Russia Regulations were for the purposes of ‘encouraging Russia to cease actions destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty, or independence of Ukraine.’
The explanatory memorandum to the Russia Regulations states that they reflect the UK’s position that Russia is fully responsible for the war in Ukraine and the damage caused, including to Ukraine’s critical infrastructure.

The amended sanctions are designed to contribute to the objective of ensuring Russia pays compensation for the damage it has caused.

What is the defence to the strict liability offence under section 68(1) of the Customs and Excise Management Act 1979?

Section 68(1) reads:

68 Offences in relation to exportation of prohibited or restricted goods.

(1) If any goods are—

(a) exported or shipped as stores; or

(b) brought to any place in the United Kingdom for the purpose of being exported or shipped as stores,

and the exportation or shipment is or would be contrary to any prohibition or restriction for the time being in force with respect to those goods under or by virtue of any enactment, the goods shall be liable to forfeiture and the exporter or intending exporter of the goods and any agent of his concerned in the exportation or shipment or intended exportation or shipment shall each be liable on summary conviction to a penalty of three times the value of the goods or [F1level 3 on the standard scale], whichever is the greater.

The defence under the Regulations in relation to section 68(1) is available in circumstances where a person had no knowledge or reasonable cause to suspect that the prohibited goods were destined for the non-government-controlled areas of the Donetsk, Luhansk, Kherson, and Zaporizhzhia oblasts.

What are the anticipated future developments in sanctions against Russia?

In a press release dated 19 June 2023, the British government affirmed its commitment to maintaining sanctions until Russia paid compensation to Ukraine for the damage caused by the Russian invasion.

The statement confirmed that a legislative route was being introduced to ensure frozen Russian assets are donated to Ukraine to help fund reconstruction.
Laws are also anticipated to mandate that “persons and entities in the UK, or UK persons and entities overseas, who are designated under the Russia financial sanctions regime, must disclose assets they hold in the UK.”

Russians who are already subject to sanctions are now able to apply to have their frozen funds released for the express purposes of donating money to support reconstruction in Ukraine.

It is important to note that no relief from sanctions will be offered in exchange for making donations.

Wrapping up

Sanctions involve a complex web of domestic and international law, much of which is beyond the scope of this article. Therefore, it is imperative to check each transaction related to Russia or any other country subject to sanctions individually and seek legal advice as to you and/or your organisation’s legal position.

To discuss any points raised in this article, please call us on +44 (0) 203972 8469 or email wt@eldwicklaw.com

Note: The points in this article reflect sanctions in place at the time of writing, 13^th July 2023. This article does not constitute legal advice. For further information, please contact our office.

July 17, 2023
Freezing Orders: Russian Oligarch Gets A Second Chance

People planning to contest account freezing orders (AFOs) will welcome the recent High Court decision in National Crime Agency v Westminster Magistrates Court, 2022 EWHC 2631 Admin where Justice Rowena Collins Rice upheld a challenge by Ingliston Management Ltd (IML) and Lodge Security Team Ltd (LST), who managed the UK personal finances of a Russian oligarch, Petr Aven, whose British assets were frozen in February 2022. Mr Aven is alleged to be close to President Vladimir Putin.

Background to the High Court decision

Shortly before sanctions were imposed on Mr Aven, the National Crime Agency (NCA) was informed by several banks to an ‘unusual’ pattern of activity” in nine UK bank accounts held by six persons and companies connected to Mr Aven. The HSBC accounts of IML and LST were among them. The NCA obtained, on a without-notice basis, freezing orders in relation to all nine accounts, and then a search warrant, and began further investigations.

IML and LST applied to the court to have the AFOs set aside. The District Court Judge declined to do this, however, the freezing orders were varied to allow for personal expenditure to be paid from the accounts.

The two companies proceeded with a judicial review challenging the lawfulness of refusal to set the orders aside. The NCA brought its own challenge against the lawfulness of the decision to vary them.

The applicable law on account freezing orders

To assist with understanding why the High Court criticised the District Court Judge’s decision to refuse to set the AFO aside, it is useful to set out, in non-technical terms, the applicable law that both courts had to consider.

The Proceeds of Crime Act 2002 (POCA) sets out a complex regime which allows for prosecutors to confiscate any assets purchased with the proceeds from criminal activity.

Under section 303Z1, the NCA can apply to a Magistrates’ Court for an AFO ‘if an enforcement officer has reasonable grounds for suspecting that money held in an account maintained with a relevant financial institution (a) is recoverable property’ – that is, in effect, the proceeds of crime – ‘or (b) is intended by any person for use in unlawful conduct’. This is referred to as the threshold question.

An AFO prevents withdrawals and payments being made from the account.

By subsection (4) of section 303Z1, an application for an AFO may be made without notice (ex-parte) ‘if the circumstances of the case are such that notice of the application would prejudice the taking of any steps under this Chapter to forfeit money…’.

Section 303Z4 of the Proceeds of Crime Act 2002 (POCA) empowers a court at any time to set aside or vary an AFO. Section 303Z5 provides the court can, when exercising its power under section 303Z47, make exclusions from the prohibition on making withdrawals or payments from the frozen account. Exclusions ‘may (amongst other things) make provision for the purpose of enabling a person by or for whom an account is operated (a) to meet the person’s reasonable living expenses, or (b) to carry on any trade, business, profession or occupation’. This amounts to a variation of the AFO.

Exclusions can be made subject to conditions. By subsection (8), the power to make exclusions must be exercised: with a view to ensuring, so far as practicable, that there is not undue prejudice to the taking of any steps under this Chapter to forfeit money that is recoverable property or intended by any person for use in unlawful conduct.

The Russia (Sanctions) (EU Exit) Regulations 2019, regulation 11 provides for an ‘asset-freeze’ in relation to persons designated for the purpose of attracting financial restrictions. It makes it a criminal offence for anyone to ‘deal with funds or economic resources owned, held or controlled by a designated person’ if they know or have reasonable grounds to suspect that they are doing so.

The High Court decision in National Crime Agency v Westminster Magistrates Court

IML and LST argued that the NCA’s without notice application when applying for the AFO had been ‘muddled, misleading and inadequate.’ Furthermore, the NCA had failed in its duty of candour and the Magistrates’ Court would probably have refused the without notice AFO if they had been made aware of the true facts.

In making his decision not to set aside the AFO, the District Court Judge drew an analogy between the AFO provisions and statutory regimes under the Sexual Offences Act 2003 and Civil Procedure Rule 3.1(7). This led him to conclude that for an AFO to be set aside, a change of circumstances must be present. The High Court rejected this, commenting that it read into the POCA a non-existent restriction on the court’s powers.

Justice Rowena Collins Rice stated that when deciding whether or not to set aside an AFO, the court must consider the threshold questions (see above). However, she ruled that this was not the case when considering an application for variation. Instead, the provisions in Section 303Z5 (see above) should be deliberated. She went on to say that the District Court Judge made a “clear error of law” in deciding to vary but not set aside restrictions on the company accounts. The High Court Judge considered “the errors and omissions . . .. to be fundamental to the extent of making [the decision] wrong, unfair, and excessively speculative.” She said the case “needs to be considered afresh, and the decision taken properly.”

Comment on freezing orders

This case illustrates how difficult it is for the NCA to proactively enforce sanctions. It is worth reminding you, dear reader, freezing orders are considered the law’s ‘nuclear weapon’ and the judiciary is exceptionally sensitive to any laxity in the application for an AFO and will meticulously consider setting aside and varying applications. For example, when commenting on the court’s obligations under section 303Z5 and in particular, subsection (8), Justice Rowena Collins Rice observed:

“These tests again require close attention to the factual matrix and an evaluative decision to be taken in all the circumstances, including giving careful attention to the scheme of the Act. What constitutes someone’s reasonable living expenses? What, apart from the absence of a variation order, is stopping the person being enabled to meet those expenses? What would be the prejudicial effect of making exclusions on the taking of taking further steps towards forfeiture? And if there is a prejudicial effect, does the court assess it to be undue, and if so why?”

It is also important to note that the fact an applicant for a setting aside order has been sanctioned does not change the court’s approach. Instead, the circumstances surrounding the sanction will provide further information for the court to consider. For example, as an alternative to the often costly and complex AFO setting aside application, a more straightforward OFSI licence covering assets not subject to the AFO may provide a better solution.

What matters most is that if you are subject to an AFO or UK, EU, or US sanctions you must instruct an experienced solicitor to advise you. Not only will they be alive to NCA tactics, but they can also develop a strategy that has the best chance of lifting an AFO and/or sanctions and protecting your personal and professional reputation.

December 6, 2022
How Russian Sanctions May Affect Your Business
Note: The points in this article reflect sanctions in place at the time of writing, 12^th April 2022. This article does not constitute legal advice. For further information, please contact our London office.

We recently discussed the effectiveness of targeted sanctions when it comes to dealing with rogue states such as Russia and North Korea and argued that although sanctions provide the impression to voters that their government is taking affirmative action, there is little evidence they influence the inner circle of a country’s leadership. Regardless of their effectiveness, however, targeted sanctions have been used by the UK, EU, and US against Russian individuals and businesses in response to Russia’s invasion of Ukraine. Many companies have been caught up in the sanctions regime and/or want to launch new ventures in Russia. This article explains the type of sanctions in place and the risk assessments and due diligence organisations must apply before, during, and after doing business in Russia in order to protect their best interests. And although this article focuses on Russian sanctions, the information contained below applies to doing business in any sanctioned jurisdiction.

To begin, let us look at what Russian sanctions may apply to your organisation.

What is the scope of UK, EU, and Russian sanctions?

UK sanctions

UK sanctions apply to all British citizens, British overseas citizens, and any entity incorporated in the UK. They also cover any actions taken by someone in the UK (either wholly or partly) or in UK territorial waters.

EU sanctions

EU citizens, incorporated entities, anyone on board an aircraft or ship travelling within the jurisdiction of an EU Member State, and anyone conducting business wholly or partly within the EU is subject to EU sanctions.

US sanctions

Like US taxes, US sanctions can ensnare the unwary. Not only do US sanctions apply to US citizens and incorporated businesses, as well as anyone conducting business wholly or partly within US territory, under the Countering America’s Adversaries Through Sanctions Act (CAATSA) non-US citizens can also be caught by US sanctions.

Given the wide catchment of UK, EU, and US sanctions, people and organisations doing or planning to do business in Russia and/or any other country where sanctions have been imposed need to undertake comprehensive due diligence and risk management to ensure they are fully compliant with any sanctions imposed. Non-compliance can lead to significant legal, financial, practical, and reputational implications for UK organisations. Below is a brief guide to ensuring you do not inadvertently breach not only the legal aspect of international sanctions but the spirit in which they have been applied, the latter being something that the public will neither forgive nor forget if your business is subjected to a ‘trial by social media’.

Be mindful that the situation can change rapidly and without warning, therefore, it is vital to take experienced legal advice regarding the below guidelines.

Check your commercial contracts

If you have commercial contracts with people or organisations in a sanctioned country you must review the terms of the agreement to ensure the goods and services they cover do not fall within current sanctions. Never take the wording of sanctions at face value – the EU has sanctioned ‘luxury goods’ such as alcoholic spirits, sporting equipment, perfumes, handbags, and clothes. These items are defined as ‘luxury’ if their value exceeds €300, hardly an outrageous sum.

You may wish to simply cancel any contracts that have connections with a sanctioned state, however, unless the terms of the contract allow for such a step, for example, there is a force majeure clause that permits termination in the case of sanctions, you will be in breach of contract.

If one or more of your contracts have become uneconomical, untenable, or both, you may be able to rely on the doctrine of frustration. Frustration was defined by Lord Radcliffe in Davis Contractors Ltd v Fareham UDC [1956] AC 696 (at 729) (emphasis added)

“frustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not this that I promised to do.”

Generally speaking, the courts in England and Wales will ask the following questions to determine whether or not a contract has been frustrated:
- Did the event occur after the contract was formed?
- If so, does it strike at the heart of the contract and is it entirely beyond what was contemplated by the parties when the agreement was entered into?
- Is either party at fault?
- Does the frustrating event render further performance impossible, illegal, or transform performance into something radically different from that contemplated by the parties at the time of signing?
Although the above questions provide a reliable guide to how the courts will evaluate whether or not the doctrine of frustration will apply, all cases will turn on their own facts.

Undertake comprehensive due diligence and risk management exercises

In circumstances where you or your organisation plan to launch a new venture into a territory subject to UK, EU, or US sanctions, a meticulous due diligence and risk management exercise must be completed. Factors to consider include:
- The legal jurisdiction governing any agreements and disputes.
- Payment terms such as late payments and letters of credit which may be considered loans and therefore prohibited by certain sanctions.
- The ability to secure adequate insurance and onboard suppliers/distributors.
- Including contractual terms to allow for a rapid exit, for example, a detailed force majeure clause and sanction-specific termination clauses.
- Undertaking Know Your Customer/Business Partner checks to establish whether or not an entity is owned or controlled by a sanctioned person, or a designated person is effectively also sanctioned but does not appear on a sanctions’ list.
Wrapping up

Sanctions involve a complex web of domestic and international law, much of which is beyond the scope of this article. Therefore, it is imperative to check each transaction related to Russia or any other country subject to sanctions individually and seek legal advice as to you and/or your organisation’s legal position.

Below are some websites you may find helpful:
You can also contact the Export Support Service on 0300 303 8955.

To discuss any points raised in this article, please call us on +44 (0) 203972 8469 or email us at mail@eldwicklaw.com.

Written by Waleed Tahirkheli
April 26, 2022
Are Targeted Sanctions Effective In Dealing With Rogue States?
As the war in Ukraine continues, sanctions imposed by Western governments and the impact of hundreds of companies pulling out of the country are starting to negatively affect the daily life of the Russian people. Prices are increasing, shortages are being reported, and the rouble has plummeted.

Never before has such a large, modern economy been cut off from most of the world so swiftly. Unfortunately, there is ample proof that state and even UN sanctions are not effective in coercing a government deemed to be breaking international law to change its behaviour. What sanctions are extremely good at achieving is punishing innocent civilians. The horror placed upon ordinary Iraqi people following crippling sanctions in response to Saddam Hussain’s invasion of Kuwait in 2003 led to sanctions being focused more on individuals and companies rather than the misbehaving state itself. These are known as smart or targeted sanctions and they are also being used by Western governments, including the UK, to punish Russia. Evidence shows, however, that targeted sanctions also achieve little in relation to dealing with rogue states. Worse still, innocent people can become caught up in freezing orders and other sanction tactics whilst the individuals targeted often use their wealth and power to avoid most of the negative consequences.

Before looking at the details of the sanctions imposed by the British Government on Russia, it is useful to define what sanctions actually are.

What are sanctions?

Sanctions are a range of measures put in place by individual governments, regional groups (for example the European Union or the African Union) or the United Nations to achieve one or more of the following:
- Prevent escalation of or settle conflicts.
- Curtail nuclear proliferation.
- Deal with terrorism and human rights violations.
Types of sanctions include:
- Economic – impose commercial and financial penalties, for example levying import duties and/or blocking exports of certain goods.
- Diplomatic – reducing or recalling diplomats or cancelling high-profile international meetings.
- Sport – preventing the sanctioned country’s athletes from competing in international events.
- Targeted/smart sanctions – imposes travel bans and asset freezing orders on individuals, companies, or other entities such as terrorist organisations.
- Military sanctions – these are used as a last resort and can involve targeted military strikes and arms embargoes.
Russians affected by UK sanctions following the invasion of Ukraine

The UK has long been criticised for turning a blind eye to international money laundering within its territories. Many Russian oligarchs have invested heavily in UK luxury homes, businesses, and even football clubs. Following the invasion of Ukraine, the UK, alongside the EU and US, imposed sanctions on hundreds of members of the Russian regime, including wealthy Russian oligarchs such as Chelsea FC owner Roman Abramovich and ex-Arsenal shareholder, Alisher Usmanov as well as others who are considered to be close to the Kremlin, for example, former Russian president Dmitry Medvedev and Defence Minister Sergei Shoigu, plus a further 386 members of the Russian parliament.

The problem with imposing targeted sanctions on Russian oligarchs

Countries such as the US have had sanctions in place against many Russian billionaires since the annexation of Crimea in 2014. These appeared to do nothing to deter President Vladimir Putin from a full-scale invasion of Ukraine eight years later. This may be because despite being once close to the Kremlin, most of the recognised oligarchs now seem to have little influence, or even contact with President Putin and his inner circle.

In 2000, at a meeting with 21 business tycoons, President Putin made himself abundantly clear regarding his attitude to the oligarchs – they could remain in business but they were to stay out of politics. And he backed this up with action – Mikhail Khodorkovsky, once Russia’s richest man as head of oil giant Yukos and a fierce critic of the President, spent 10 years in prison for tax evasion and theft after funding opposition parties.

With Mr Khodorkovsky’s fate still fresh in their minds, almost all oligarchs now stay well clear of politics. Although some have condemned the war, none have directly criticised President Putin. Mikhail Fridman told Bloomberg that “to say anything to Putin against the war, for anybody, would be kind of suicide.”

It seems, therefore, that although imposing sanctions on the business and personal interests of oligarchs may appease the public by giving the impression that those who made billions out of the collapse of the USSR are finally being penalised, in reality, they no longer have any ability to influence the Kremlin’s actions. And even if they did, a 2019 paper concerning the effectiveness of targeted business sanctions concluded:

“Through empirical analysis, significant evidence was found in support of the hypothesis that targeting military interests will result in more successful outcomes than targeting other interest groups or comprehensive sanctions. Evidence regarding the targeting of business interests presented a far less compelling case of this line of sanctioning’s efficacy relative to comprehensive sanctions.”

Final words

Although more research is required to judge the effectiveness of smart sanctions, the initial evidence does not appear promising. Furthermore, smart sanctions are even less likely to achieve the aim of the government or group that imposes them if they are not targeting people and/or business interests that can actually influence the rogue state’s leadership. I will leave the final word to Mohamed ElBaradei, an Egyptian law scholar and diplomat, former Director-General of the International Atomic Energy Agency, and Nobel Peace Prize recipient:

“People talk about smart sanctions and crippling sanctions. I’ve never seen smart sanctions, and crippling sanctions cripple everyone, including innocent civilians, and make the government more popular.”

Written by Waleed Tahirkheli

To discuss any points raised in this article, please call us on +44 (0) 203972 8469 or email us at mail@eldwicklaw.com.
March 25, 2022