Australian Federal Court decisions on the Autonomous Sanctions Regulations prompt legislative changes

Background

Alexander Abramov, a Russian national, was first designated on 8 April 2022 by the then Foreign Minister, Marise Payne.³ Regulation 6 of the Autonomous Sanctions Regulations 2011 (Cth) (Regulations), enables the Minister to designate a person or entity for targeted financial sanctions, and/or declare a person for a travel ban if:

• the Minister is satisfied that the person or entity is, or has been, engaging in an activity or performing a function that is of economic or strategic significance to Russia;
• the person is a current or former Minister or senior official of the Russian Government; or
• the person is an immediate family member of a person mentioned in paragraphs (a) or (b) of the Russia criteria.

Following his designation, Mr Abramov commenced proceedings in the Federal Court of Australia for a judicial review of the decision to list him as a designated person. In response, the Minister revoked his designation on 16 September 2022.⁴ On the same day, the Minister immediately relisted Mr Abramov as a designated person based on new information and submissions.⁵ The reasons for the decision included:⁶

“Mr Abramov has played a key role in Evraz plc, a UK-based holding company that owns or controls several Russian entities with operations and interests in the steel and coal sectors in Russia and provides support to the Russian Government in furtherance of its economic and strategic priorities.”

Mr Abramov subsequently amended his application to challenge both designations and raised the following grounds of review:

• the Minister failed lawfully to form the requisite state of satisfaction on the basis of the evidence and other material placed before her in relation to Mr Abramov;
• the Minister’s failure to consider whether to exercise her discretion to designate or declare Mr Abramov was an error of law and constituted a constructive failure to exercise jurisdiction; and
• the Minister failed to accord Mr Abramov procedural fairness.

Decision

Mr Abramov was successful in challenging the first designation, with the Court finding that there was “jurisdictional error because there was a constructive failure to exercise jurisdiction.”⁷However, he was unsuccessful in challenging the second designation.

In relation to the second designation, the Court held that the Minister may designate an entity or person:

“… even though the person has ceased the activity or function, providing the Minister is satisfied that that activity or function is (still) of economic or strategic significance to Russia. The use of the verb form “has been ... engaging ... or performing” indicates that the activity or function to which these words relate began in the past and has continued for some time thereafter without a clear endpoint.”⁸

Notably, the Court also stated that:

“…there is nothing in reg 6 to limit the activities and functions mentioned in item 6A(a) of the table to activities and functions of “importance” let alone “momentous” economic or strategic significance to Russia

…

[i]t is a matter for the Minister whether to form the requisite satisfaction, subject to the requirement to do so in conformity with the standard of legal reasonableness."⁹

Background

Oleg Deripaska, a Russian National, was designated on 17 March 2022 by the then Foreign Minister Marise Payne.¹⁰ Following his designation, Mr Deripaska commenced proceedings in the Federal Court of Australia for judicial review of the decision to list him as a designated person. Mr Deripaska raised a number of grounds of review, including that the “the Minister misunderstood the nature of the power that she purported to exercise”.¹¹

Decision

The Court dismissed Mr Deripaska’s application. In response to the argument that the Minister misunderstood the power, the Court stated that:

"It is true that the Explanatory Statement does not include any explanation of why the Minister decided to designate and declare the applicant, other than recording the Minister’s satisfaction that the relevant criterion in item 6A was met. That, however, does not take matters very far. The Explanatory Statement does not purport to be a statement of reasons. Its role is to explain the legal basis for, and intended effect of, the legislative instrument to which it relates.

Inferences about a decision-maker’s reasoning process may properly be drawn from the briefing material that the decision-maker was given.”

The Court considered that the Minister had an understanding of the Regulations due to her involvement in making the Autonomous Sanctions Amendment (Russia) Regulations 2022 with the Governor General in February 2022, and concluded that “[t]he evidence in this case does not establish that the Minister, in making the decision under review, failed to understand that she had a discretion.”¹²

In the judgment, Kennett J recognised that this finding was the opposite of that made by Kenny J in Abramov v Minister for Foreign Affairs (considered above), however stated that (citations omitted):¹³

the question what inference should be drawn from evidence is a factual one. Findings of fact in one case do not bind a court in a subsequent case. The Court in each case must consider for itself the evidence adduced in the particular case. There is therefore no need to consider whether the findings made by Kenny J on the evidence in Abramov were “clearly wrong” and it would be inappropriate to express any view on that question. It will be apparent that I have come to a different conclusion, in the context of this case, about what the somewhat convoluted language of the Recommendation would have conveyed to the Minister (cf Abramov at [112]) and the significance of the Ministerial Submission having included discussion of matters that were irrelevant to whether the applicant met the criteria in item 6A.”