Sanctions: What to do if the “black cat has crossed the road”
Posted on 21 May 2015 by
There are currently several ‘blacklists’ of Russian individuals and businesses. The EU, US, Japan and a number of other countries have imposed targeted sanctions and restrictive measures in relation to events in Ukraine since March 2014 and the European Union’s sanctions regime was extended in March 2015. Currently there are 151 individuals and 37 organisations on the European Union’s Russian sanctions list alone and the list of individuals and businesses continues to expand along with the number of countries which are imposing sanctions.
The imposition of these sanctions by Western and other countries is ostensibly a response to what they perceive to be breaches by the Russian Federation of its obligations under international law in relation to Ukraine. Of course, in reality the imposition of sanctions is as much a result of political considerations as of legal theories; in any case, being placed on this so-called ‘blacklist’ can have serious and wide-ranging consequences for individuals and businesses on a number of levels. Furthermore, the reputational damage to a listed person and their family or business can take years to repair.
Being put on the list can be paralysing both financially and physically. As a listed individual or business, you can expect to have financial restrictions placed on you immediately and your bank accounts frozen without prior notice. It even becomes a criminal offence to provide “financial resources” to those targeted. This includes any economic assistance, from paying sums due under contracts, to providing non-cash resources such as food or electricity. Due to stringent banking compliance standards, major banks will cut off relations with a listed person, or refuse to conduct banking transactions for them. Without access to accounts or credit cards, daily life becomes a struggle. Even successful businesses can flounder as they are deprived of banking facilities and struggle to conclude cross-border transactions. In addition, travel bans are often imposed on individuals, which can cause a major disruption to an individual’s personal and business life.
Once an individual or business is on the list, they may be able to challenge their listing, through the relevant judicial system in which the sanctions have been imposed (for example, European Union sanctions can be challenged before the European Court of Justice in Luxembourg) . Listed individuals and businesses are usually, but not always informed of the sanctions by the designating authority; sometimes, targeted individuals only discover that they are the subject of sanctions when they encounter the difficulties mentioned above. Sanctions will generally be publicly announced in some form and should state reasons for the listing of the individual or business; however, these are often vague and lack supporting evidence, which presents enormous difficulties to persons wishing to challenge the sanctions in court. Critical evidence may also be withheld for security or public policy reasons. This creates a further barrier in understanding why the listing is even made in the first place. As such, it is crucial to instruct lawyers with experience of challenging sanctions.
Not only is it essential to instruct experienced lawyers, it is necessary to do so as soon as the individual or business discovers their listing. Listed persons often spend critical weeks trying to remove their listing through contacts that they might have through the government. This approach often results in considerable wasted costs, while the person risks missing the deadline for filing a formal challenge through the courts. These deadlines are often very tight and action is required immediately. Back-channel discussions can be helpful, but are most effective when conducted in tandem with a legal application through the courts in order to cover all bases. The lasting effects of inaction regarding sanction listings can be devastating and as such should be remedied through seeking legal advice and moving quickly to ensure that deadlines are met.