Finance litigation update - July 2022

FINANCE LITIGATION UPDATE – JULY 2022 19 Government Minister considers that it is in the public interest to use the urgent procedure. Any such designation can only last for a maximum of 112 days at which point it will cease to have effect unless the Minister certifies that there are reasonable grounds to suspect that the person meets the criteria for designation under the UK sanctions regime. • The Government has also been given the flexibility of designating by description (e.g. groups or bodies of individuals) even where it is practicable to identify and designate the relevant persons by name. • Perhaps acknowledging the impact of the measures introduced, the ECA also limits the power of the court to award damages to those challenging designation to cases of bad faith (rather than negligence) and by giving the UK the power to place a cap on any damages awarded (no such cap has yet been proposed). These limitations will not apply to proceedings commenced before 4 March 2022. Comment The amendments in Part 3 of the ECA enable the Government to follow a more streamlined, efficient process with increased and wider-reaching powers. The war in Ukraine, and the extraordinary speed of the sanctions response (and its rapid expansion), has meant that the ECA has been adopted quickly, with just two weeks between the first reading and Royal Assent (SAMLA itself took seven months to go through the same process). The understandable desire for swiftness may expose the Government to claims by those targeted; and the Government appears to expect this. The same day the ECA received Royal Assent, the UK used the new urgent procedure to designate more than 350 Russian individuals and entities. That no doubt saved already stretched resources within the Civil Service, but the clock has started ticking on reviewing each of those designations to ensure they can be maintained under the standard procedure. In the meantime, the changes due to take place to the monetary penalty regime will likely lead not only to more 'results' for OFSI (only one of six monetary penalties imposed over almost five years has been for more than £150,000) but to UK businesses adopting an even more risk adverse approach, fearful of inadvertently tripping up in the face of the sanctions against Russia that have rapidly expanded to an enormous scale and complexity in the last few weeks. Sue Millar, Stephen Ashley and Rebecca Garrick