An interview with Maya Lester 

Hello everybody and welcome to another edition of C&F Talks. A great pleasure to have with me today, Maya Lester KC from Brick Court Chambers. Maya specialises in sanctions law and public and competition law. She represents and advises companies, individuals and governments before the English and European courts and is active in most of the leading cases.

She founded and co-writes the blog www.globalsanctions.com which is the main international sanctions legal resource with over 11,000 followers worldwide. So, Maya is going to be speaking at our upcoming Economic Sanctions Summit in London on the 17th of March. Maya, welcome.

Thank you very much.

It's great to have you with us. Let's turn to our first question.

How have recent UK judicial decisions clarified the scope of sanctions enforcement, particularly in relation to secondary sanctions or extra-territorial application?

Interesting question. And actually, on the subject of recent judicial decisions, between a huge number of judgments and developments in sanctions around the world, we now end up updating that website sometimes 15 or 20 times a day. It's quite extraordinary how fast the pace of change is, and all judgments are recorded there.

But just on your question, there's been a lot of court judgments in the UK over the last few years which relate to the issue that you identified, sort of extra-territorial application of sanctions. In other words, as people know, lots of different jurisdictions around the world impose sanctions, notably the United Kingdom, the European Union and the United States. Those sanctions are not always the same as each other.

And so, one issue that the courts have been very engaged in is, if you like, the clash of jurisdictions. So, when does something being illegal in sanctions terms in one system impact on, say, a contract in another system? Now to some extent that depends on what the parties have agreed, obviously. So, is there a particular sanctions clause in a contract dealing with exactly this issue of, you know, if something becomes unlawful in a different jurisdiction, what is the party's bargain? 

So just to give a couple of examples, I mean, there's been one recent case where the parties didn't have a sanctions clause and recent cases where they did. One good example of where they didn't is a case I was involved in called Beneathco. So Beneathco had an account, bank account, trading account with a company called R.J. O'Brien in US dollars. It became subject to US sanctions. And so, the issue was, could payment be made?

R.J. O'Brien said, we can't make payment because it would be now contrary to US sanctions. And so, the high court had to deal with the issue of what happens where it's just the common law governing this situation. In other words, when parties haven't dealt with this.

And they said that because payment had to be made in US dollars, and would require an act in the US, in other words, the involvement of a US correspondent bank, and would breach US sanctions. That's one of the narrow cases in which even an English law contract would be unravelled. And the court also has interesting things to say on an odd piece of legislation called the UK blocking regulation, which will be familiar to some viewers and listeners, which is about trying to actually make it a criminal offence in the UK to comply with US sanctions. So, an interesting one there.

Just one example of a case where there was a sanctions clause recently, a case called Ceto, Ceto Shipping against Savory, where the court basically said the clause applies in that particular case, if sort of reasonable judgment had been exercised that there was a US sanctions related risk, experts on both sides, and the court decided that there was indeed. So, lots of interesting action on that front.

Complex and hard to predict by the sound of it.

In light of a recent case law, what trends were emerging in UK courts approach to balancing national security interests with commercial freedoms in sanctions related disputes?

Another interesting question. I mean, essentially, of course, when you talk about national security interests, and indeed foreign policy interests, the courts are acutely aware that those are, first of all, very important policy, issues of public policy, but also that it's not necessarily always for the court to wade into policy determinations. So, there are a number of cases where the court is very careful not to trespass on governmental decision making.

But I think there's a difference here between what we call public law and private law. So cases against the government, which relate directly, perhaps to the government's determination of whether it's appropriate to sanction someone or not, where we're talking about those sort of commercial contractual cases I was talking about earlier, the court is more engaged with what have the parties agreed, what is the impact of different legal systems, and so on. So, in a sense, their foreign policy and national security is the background. But the key issues are more commercial ones.

Okay.

And how are UK courts handling challenges to sanctions designations or blocking orders? And what does this mean for businesses and financial institutions operating under UK sanctions regimes?

Well, lots and lots of cases in the UK courts, and indeed the European courts, where people and companies have, as you say, challenged their sanctions designations. In the UK so far, the government has a complete clean sweep on these cases. In other words, no one has ever succeeded in challenging their inclusion on a UK sanctions list.

Some really interesting recent judgments on this. One case called Shvidler, which is the first case to have gone to the UK Supreme Court, where the Supreme Court, as I said earlier, takes the approach that it's really not for the court to be wading too closely into decisions relating to whether someone should be on a sanctions list, whether including them has an effect, whether it's really disproportionate to include them. That rather deferential approach to the government led to a very strong dissenting judgment by one judge, Lord Leggatt, who really said, you know, the judges are not doing their job properly if they simply rubber stamp governmental decisions. So, a real clash of policy there.

Another interesting recent case called Dana Astra, a Belarus case, which is about the issue of when does the Human Rights Act, the European Convention on Human Rights, apply to sanctions decisions? And in that case saying, well, actually, it only does if someone has property in the United Kingdom. Not all decisions, according to this judgment, anyway, engage UK Human Rights Act jurisdiction unless you actually have property in the UK. So, we'll see what happens.

I think it's also worth noting, though, that you mentioned the issue of the balance with national security and foreign policy. And the courts have so far taken a slightly different approach in cases about prescribed terrorist organizations. So, people will be aware of the recent Palestine Action judgment, where the court overturned the government's decision about whether Palestine Action should be a prescribed organization and took a much less deferential approach as compared with sanctions cases. We'll see if that survives an appeal. But so not consistent across the board.

When it comes to the European court, there are more success stories from the point of view of people challenging their designations and a recent quite strong judgment of the court deprecating the EU's practice of relisting people again and again who have won their cases. So, some interesting action on that front.

It's also worth saying, though, that although the government, although the courts have been very reluctant in the UK to wade in, the government has been removing some people and companies from sanctions lists of its own accord. An interesting announcement yesterday that somebody put out a statement saying that they would change their behaviour and therefore they were delisted from UK sanctions. So, will we see a bit of a change of approach?

And on your question about what does it mean for businesses, I think all it really means for businesses is that you have to be very careful, as most businesses are, to screen recent sanctions lists. You have to assume that people are lawfully listed unless the courts or the government decide otherwise. So, it's perhaps less a kind of business issue, you know, these court judgments on listings, but certainly very interesting from a legal and policy perspective.

Yeah, so a very complex situation for not just financial institutions, but everybody to come to terms with and somewhat unpredictable in the way that you've outlined. Thank you very much, Maya, for sharing those thoughts.

For our viewers, if you'd like to learn more about this very dynamic area, please do have a look at our website www.cityandfinancial.com, where you'll find details of the Economic Sanctions Summit in London again on the 17th of March. So, we very much hope our viewers will be able to join us there.

Only remains for me to say thank you so much, Maya, for joining us today for that very interesting conversation.

My pleasure and looking forward to the summit very much.