23 Mar 2018

Return to the deep freeze?

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UK/Russia diplomatic relations have hit a post-Cold War low following the recent poisoning of the former Russian spy Sergei Skripal and his daughter, Yulia, in Salisbury. The UK Government's immediate reaction was to expel 23 Russian diplomats. The Russian Government retaliated with the expulsion of 23 UK diplomats, the closure of the UK's consulate in Saint Petersburg and the shuttering of the British Council's operations in Russia.

It has also led to a renewed focus on the UK's ability to impose sanctions on targeted countries outwith the various EU sanctions regimes. The EU has imposed sanctions on a number of countries through a series of regulations which currently have direct effect in the UK, as in other Member States. That will cease when the UK leaves the EU.

The UK Government has introduced The Sanctions and Anti-Money Laundering Bill (the "Sanctions Bill") which is currently wending its way through Parliament. Its primary purpose is to provide the UK with the necessary legal powers to implement sanctions post-Brexit, by enabling it to maintain the current EU law sanctions, including by updating them as necessary, and by enabling it to implement new sanctions and measures to respond to new foreign policy threats – which may go beyond adopting new sanctions mirroring those imposed by the UN and the EU.

The diplomatic crisis arising out of the Skripal poisonings has laid bare the weaknesses in the current UK sanctions arsenal. As things stand, if the UK wishes to impose additional and wide-ranging sanctions on Russia, it faces a stark choice: seek to persuade all of the other 27 member states of the EU that additional sanctions are justified and proportionate; or pass emergency domestic legislation.

In the former context, the UK's EU partners have been vocal in broadly supporting the UK's expressions of outrage. However, up until now there has been little enthusiasm for any expansion of the restrictive measures targeting Russia. On the contrary, the EU has expressed significant concern at the impact of the widening sanctions to be imposed against Russia in the US's bi-partisan Countering America's Adversaries Through Sanctions Act ("CAATSA") which President Trump signed into law on 2 August 2017. It is well known that President Trump himself has little enthusiasm for the sanctions set out in CAATSA but Congress has mandated him to take action, so take action he must – although he retains significant flexibility in their implementation.

In the latter context, much has recently been written about the possible introduction of a UK version of the US Magnitsky Act. The US Act passed in 2012 permits US officials to freeze the assets and ban the entry of Russians believed to be implicated in Sergei Magnitsky's death in a Russian prison in 2009 and in human rights violations more broadly. It was expanded in 2014 to target human rights abuses worldwide and similar legislation has been adopted by a number of countries including Canada, Estonia, Latvia and Lithuania.

Again, up until recently, the UK has shown little enthusiasm to adopt Magnitsky-style sanctions, the Home Office having previously expressed concern that allowing third parties to demand action against human rights abusers would lead to "vexatious claims based on gimmick politics". However, there was some limited movement last year with the passing of the Criminal Finances Act 2017 (the "CFA"). Section 13 of the CFA (which came into force on 31 January 2018) expanded the definition of "unlawful conduct" under Part 5 of the Proceeds of Crime Act 2002 ("POCA") to include conduct occurring outside of the UK which "constitutes, or is connected with, the commission of a gross human rights abuse or violation. Under Part 5 of POCA, an enforcement authority can apply to Court for a recovery order or seek a property freezing order in relation to property which is, or represents, property gained through "unlawful conduct".

There things might have rested but for the use of a toxic nerve agent on British soil against the Skripals. Speaking in the House of Commons on 14 March 2018, the Prime Minister stated that the Government would table an amendment to the Sanctions Bill to strengthen its powers to impose sanctions in response to a violation of human rights. "In doing so, we will play our part in an international effort to punish those responsible for the sort of abuses suffered by Sergei Magnitsky". The Prime Minister went on to say that the Government would freeze Russian State assets "wherever it has evidence that they may be used to threaten the life or property of UK nationals or residents". These are key developments but they will not lead to any quick change in the law since the Sanctions Bill is not expected to come into force until the Brexit transitional period at the earliest. Until then, the clear risk is that UK sanctions policy towards Russia remains in limbo.

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Sue Millar

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