Key takeaways
UK sanctions designation
UK ministers have a broad discretion to exercise their statutory powers to designate individuals and entities for sanctions purposes.
Threshold for designation
If the relatively low threshold is met, then designation is almost always going to take place.
Jurisdiction over a designated entity
Designation will not bring a designated entity within UK jurisdiction for the purposes of article 1 of the ECHR.
In July 2025, in conjoined appeals, the UK Supreme Court upheld sanctions designations under UK sanctions regulations: Supreme Court Upholds Sanctions Designations | Hill Dickinson. That decision highlighted the broad discretion granted to UK Government ministers in exercising their statutory powers to designate individuals and entities for sanctions purposes.
The Court of Appeal decision in this case reflects the fact that there is a relatively low threshold for designation and once that threshold has been met, the Secretary of State for Foreign, Commonwealth and Development Affairs is only going to exercise his discretion not to make a designation in very narrow circumstances, namely de minimis cases.
The background facts
Dana Astra IOOO (DANA) is a large developer and construction company registered and operating in Belarus. Its parent company is registered in Cyprus. In 2014, DANA won a government contract for the development of a huge site in Belarus in what was effectively a public-private partnership (the Project). The Project is ongoing and is a flagship development for the Belarus state.
In 2019, DANA entered into a four-year sponsorship agreement with the Belarusian National Olympic Committee (BNOC). The International Olympic Committee subsequently took measures against BNOC for not protecting athletes who had protested against the rigged Belarus elections in 2020. As a result, DANA terminated the sponsorship agreement in January 2021 as it sought to distance itself from BNOC.
In July 2022, the regime of President Lukashenko of Belarus sanctioned DANA because of allegedly unfriendly actions taken by its Cypriot parent company. Those sanctions were severe. It faced real problems operating in Belarus, was unable to extricate itself from the Project and was threatened with expropriation.
UK designation
DANA was first designated by the UK Secretary of State on 31 December 2020, resulting in any UK assets it had being frozen (although apparently it had none). The reasons given in the original Sanctions Designation Form (SDF) was that DANA was alleged to belong to the Karic brothers, who were closely associated with President Lukashenko and his family. DANA was the only non-state-owned entity general sponsor of the BNOC and DANA was said to have publicly supported Lukashenko in the face of strikes and protests.
That designation was varied on 17 March 2022 after a triennial review. An updated SDF and an accompanying lengthy Sanctions Designation Form Evidence Pack (SDFE) were created in March 2022.
DANA asked for its designation to be revoked on 16 February 2023. It submitted extensive materials in support, in 43 annexes. Officials reviewed each of those annexes, and the reasoning and evidence in the March 2022 SDF and SDFE, and other open-source material.
The judge described the review as involving a rigorous process and the conscientious consideration of the designation on a fresh basis. There was no suggestion of procedural unfairness.
The ensuing Administrative Review Form added a second ground of designation, based on the fact that DANA carried on business in the construction sector in Belarus. Reference was made to the Project. The relevant UK government officials met in August 2023 to discuss the administrative review. They decided to recommend to the Secretary of State that the designation should be varied with an amended Statement of Reasons. The Secretary of State accepted their recommendation.
The amendments to the designation were that:
As a sponsor of BNOC, DANA had been involved in the repression of civil society or democratic opposition in Belarus, or other actions policies or activities which undermined democracy or the rule of law; and
It had benefited from or supported the Government of Belarus through carrying on business in a sector of strategic significance to the Government of Belarus, namely the Belarusian construction sector.
The challenge
DANA challenged the sanctions imposed on it by the Secretary of State pursuant to s.38 of the Sanctions and Anti-Money Laundering Act 2018 (SAMLA 2018).
DANA argued that:
the designation was a disproportionate interference with its rights recognised by article 1 of Protocol 1 (A1P1) to the European Convention on Human Rights (ECHR).
it was irrational on conventional public law grounds for the Secretary of State to maintain the designation. DANA maintained that
the Secretary of State's conclusion that it was an 'involved person' was irrational.
when the Secretary of State reviewed the designation, he could not rationally have concluded, on the material before him, that the matters which led him to conclude that DANA was an 'involved person' were sufficient to justify maintaining the designation.
The relevant legislation
SAMLA 2018 is the UK’s domestic mechanism for the imposition of sanctions. S.1(1) gives the appropriate Minister the power to make regulations for listed purposes, including achieving the UK’s foreign policy objectives and promoting respect for democracy (s.1.(2)).
Pursuant to s.11(2A), the Secretary of State can designate a person by name if he has reasonable grounds to suspect that person is an 'involved' person, meaning a person involved in an activity specified in the regulations (s.11(3)).
S.21(1) provides that prohibitions or requirements may be imposed by regulations 'in relation to conduct in the United Kingdom or in the territorial sea by any person' and 'conduct elsewhere, but only if the conduct is by a United Kingdom person'.
The Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 2019 SI No 600 (the Regulations) came into force on 31 December 2020. The purposes of the Regulations satisfied one or more of the conditions in s.1(2) of SAMLA 2018 in that they targeted the Belarus Government’s undemocratic and repressive practices.
Pursuant to the Regulations, the Secretary of State can designate an 'involved' person. 'Involved' for these purposes means that one is or was involved in (i) the repression of civil society or democratic opposition in Belarus; and/or (ii) obtaining a benefit from or supporting the Government of Belarus through carrying on a relevant business activity (Regulation 5A). The latter encompasses 'carrying on business in a sector of strategic significance to the Government of Belarus'. The construction sector is such a sector (regulation 6(4)(b)).
The proportionality test
In Bank Mellat -v- HM Treasury [2013] UKSC 39, the Supreme Court set out a four-stage test for determining whether a sanctions designation was proportionate:
Was the aim of the measure important enough to justify an interference with a protected right?
Was the measure rationally connected with that aim?
Could a less intrusive measure have been used?
Did the effect of the measure on the designated entity’s protected rights outweigh the importance of the aim (to the extent that the measure contributed to achieving that aim)?
The Administrative Court decision
The judge dismissed the challenge. He decided that it was not irrational for the Secretary of State to conclude that DANA was an 'involved' person by virtue of its sponsorship of the BNOC, the test being 'reasonable grounds to suspect.' The fact that DANA had subsequently terminated the sponsorship agreement did not undermine the fact that it had given BNOC apparent public support at the relevant time.
The judge further found that DANA was not within the UK jurisdiction for the purposes of article 1 of the ECHR and that the designation did not bring it within the UK’s jurisdiction for those purposes. Any interference with DANA’s goodwill was not within the jurisdiction because DANA did not have an existing business in the UK. The fact that the designation might interfere with DANA’s ability to start a business in the UK in the future was not sufficient, nor was it enough that DANA’s goodwill in Belarus might be affected.
The judge also stated that any interference with DANA’s rights was lawful and proportionate. He was satisfied that the Secretary of State had considered less intrusive measures and was entitled to decide that they would not have worked. The judge added that the aim of designation was not punishment, its purpose was to change the behaviour of particular regimes.
DANA appealed.
The Court of Appeal decision
The Court of Appeal dismissed the appeal.
As to jurisdiction, the Court of Appeal stated that a company with no presence, business or assets in the UK was/is not 'within' the 'jurisdiction' of the UK for the purposes of article 1 of the ECHR. This view was reinforced by s.21 of SAMLA 2018. There appeared to be no scope for the 2018 Act to have extra-territorial effect in the case of an entity like DANA which was not a 'United Kingdom person'.
On the authorities, the facts (1) that a decision was made within the jurisdiction of a contracting state and (2) that it had serious implications for a person who was outside the jurisdiction were not enough to bring that person within the jurisdiction for the purposes of article 1 of the ECHR.
While acts done or producing effects outside a state’s territory could in exceptional circumstances be an exercise of jurisdiction within article 1, such circumstances required special justification. This case did not come within any of the recognised exceptions and the Court of Appeal did not believe there was justification to create a further exception for sanctions which do or might have extra-territorial effects.
As a result, the issue of proportionality did not arise. However, the Court of Appeal stated that the judge had correctly applied the four-stage test in Mellat. He had directed himself correctly in law and the evaluative assessments he made were plainly right. The Court of Appeal also endorsed the judge’s findings on goodwill.
Regarding rationality, there was a relatively low threshold for designation. If that threshold was met, then there was limited scope for the Secretary of State to decide not to exercise his discretion to designate in circumstances where there were reasonable grounds to suspect someone was an involved person. This would be limited to de minimis cases, which was not the case here.
Furthermore, these cases involved an enormous amount of potentially relevant information that was not always easily verifiable. The Secretary of State did not have to make findings of fact on the balance of probabilities; rather, the test was 'reasonable grounds to suspect.' Additionally, while the Secretary of State had to give a statement of reasons, the reasons had to be brief and he was not required to provide detailed explanations.
The judge had found that rational reasons had been given for the designation and that a decision that he had found to be proportionate could not be found to be irrational. The Court of Appeal found no basis to interfere with the judge’s conclusions in this regard.
Comment
It may seem unfair that DANA should be sanctioned and adversely targeted in Belarus on the basis that it was labelled as 'unfriendly' to the State and then face UK sanctions for its associations with the Belarus regime, particularly where it appeared to have no property or assets in the UK.
Nonetheless, the designation appears to have been made in furtherance of the UK’s foreign policy objective of taking action against undemocratic, repressive states and those who cooperate with, support or benefit them.
