BY ANTON MOISEIENKO

Introduction

In 2020, the Australian Parliament’s Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT) held an inquiry into the potential introduction of corruption and human rights sanctions, also referred to as ‘Magnitsky’ sanctions. The inquiry culminated in a report calling on the government to ‘enact stand alone targeted sanctions legislation to address human rights violations and corruption, similar to the United States’ Magnitsky Act 2012’. Following close to a year of suspense, the government has now committed to doing so by the end of 2021 through reforms to the Autonomous Sanctions Act 2011 (Cth) and Autonomous Sanctions Regulations 2011 (Cth), which constitute Australia’s sanctions framework.

Those invested in the subject have welcomed the announcement, but it is fair to say that the government’s formal response to the JSCFADT’s report is brimming with caution. Plenty of the JSCFADT’s key recommendations have been met with the non-committal ‘noted’, or outright declined. Among the recommendations that were declined was the proposal that an independent body be established to advise the Minister for Foreign Affairs on designations under the new sanctions regime. It was given short thrift on the grounds that ‘[s]anctions are a foreign policy tool aimed at achieving foreign policy goals’, and it is vital for the government to ‘retain appropriate flexibility in the application of sanctions’.

This approach is founded on the twin notions that sanctions are a foreign policy tool and that, save for limited due process protections, the government should face as few constraints as possible in deploying sanctions. Far from being outliers, these propositions are well-accepted internationally. In this contribution, however, I argue that the credibility, consistency and ultimately effectiveness of corruption and human rights sanctions specifically would be best served by a different stance, namely one that would subject their use to a set of well-defined principles. This requires considering the unique place of corruption and human rights sanctions in public law as non-criminal measures that are nonetheless predicated on criminal wrongdoing.

Sanctions and Crime

The focal point of this discussion is so-called ‘targeted sanctions’. They commonly entail the freezing of the targeted person’s assets and a ban on travel to the sanctioning state, as well as a range of concomitant effects such as reputational harm and exclusion from financial services. They are put in place by executive fiat, with only retrospective oversight by judicial authorities.

Formally viewed as non-criminal measures, targeted sanctions are normally imposed based on permissive evidential standards, such as that of ‘credible evidence’ (US Global Magnitsky Act 2016, s 1263(a)) or ‘reasonable grounds to suspect’ (Sanctions and Anti-Money Laundering Act 2018 (UK), ss 11(2) and 12(5)), which are far lower than either the criminal or civil standard of proof. Australia’s current sanctions framework does not provide for any particular evidential standard but, as described below, vests virtually unlimited discretion in the government.

The genesis of sanctions writ large is in the age-old practice of exerting economic pressure on adversaries by means such as blockades or embargoes. ‘Comprehensive’ sanctions vis-à-vis whole countries largely fell out of fashion in the 1990s as their humanitarian ramifications became painfully obvious. Their progeny, ‘targeted’ sanctions, are directed against a specific group of individuals or companies, such as representatives of a rogue regime or terrorism suspects. There are various shades on the gamut between comprehensive and targeted, like sectoral sanctions against key areas of a nation’s industry, but these need not detain us.

While the transition to targeted sanctions is widely acknowledged as a trend that altered the sanctions landscape, it is increasingly evident that another shift is under way. This is the ever-more frequent recourse to sanctions predicated on the target’s involvement in criminal behaviour. These sanctions, while not criminal punishment in the eyes of the law, respond to allegations of crime and can therefore be characterised as ‘crime-based sanctions’. Corruption, human rights abuse and cybercrime are all prime examples. All of them respond to what is in essence serious crime, be that large-scale embezzlement and the killing of a Russian whistle-blower that led to the original US Magnitsky Act 2012, corruption and human rights abuse in Venezuela sanctioned under Canada’s ‘Magnitsky’ law, or US and EU sanctions against foreign cybercriminals.

In doing so, these sanctions edge close to the domain of criminal justice, with its established legal safeguards (e.g. the presumption of innocence) and policy expectations (e.g. the prioritisation of serious misconduct and minimisation of political interference with law enforcement work). Surprisingly, governments worldwide have invested little thought into these issues. The UK appears to be the only country to have published a (very concise) statement of principles articulating the role of corruption sanctions in its overall law enforcement efforts. The typical approach, and one taken up by the Australian government in its response to the JSCFADT’s report, is to utter the magic words ‘foreign policy’ and thereby make most legal and policy concerns disappear. As I argue below, doing so obscures rather than resolves the key issues the government will have to confront.

The Price of Flexibility

It is common for legal constraints on governments’ sanctioning powers to be rather gentle, and nowhere more so than in Australia. Section 10 of the Autonomous Sanctions Act 2011 contains a broad authorisation for the Minister for Foreign Affairs to make sanctions regulations without limiting this power to the pursuit of any particular objectives, as long as the regulations will:

  • facilitate the conduct of Australia’s relations with other countries or with entities or persons outside Australia; or
  • otherwise deal with matters, things or relationships outside Australia.

As the Parliamentary Joint Committee on Human Rights notes, this extraordinary amount of discretion renders judicial review nugatory because there is no standard to measure the government’s decision against. Australia’s current sanctions regime is therefore even less friendly to sanctions challenges than the US system, which has been rightly described as affording ‘minimal’ opportunities for judicial review.

Having had the benefit of several due process-oriented submissions, including thoughtful analysis from the Law Council of Australia, the JSCFADT recommended that ‘the evidentiary standard for a decision should be the balance of probabilities’. This is an evidential standard that is far higher than that used in other countries’ sanctions legislation, and would thus represent a departure from the present laissez-faire regulation of sanctions. Although the government’s response was a polite ‘noted’, the tenor of its remarks suggests it unlikely that the recommendation will be acted upon:

[Sanctions] decisions will be made based on evidence and ensure that listings decisions are credible, timely and will allow the Minister to exercise suitable discretion […]. This would be consistent with the Minister’s decision-making power under the existing autonomous sanctions framework. The new regime will be established within this framework.

Of course, the practical import of any evidentiary standard will depend, in part, on the precision with which listing criteria under a particular sanctions programme will be formulated. But the evidentiary standard issue is also notable because of what it tells us about the potential role of corruption and human rights sanctions. If sanctions can be adopted with relatively little evidence, there is a risk of them being used, in some cases, as an ersatz version of criminal justice in circumstances where criminal prosecution or forfeiture proceedings ought to have been brought.

A more appropriate conception of corruption and human rights sanctions is as a tool to address egregious wrongdoing that would not ordinarily be within Australian criminal jurisdiction, as well as ensure that Australian individuals and companies do not do business with some of the worst ‘bad actors’. This is precisely the vision of sanctions that the JSCFADT’s report evinces. This vision manifests itself, for instance, in the recommendation that sanctions be limited to non-Australian citizens, consistent with near-universal state practice. This, too, was met in the government’s response with a ‘noted’, accompanied by the obligatory reference to the Minister for Foreign Affairs’ discretion.

Great flexibility has great appeal, as anyone who is afraid of commitment can confirm. In this context, however, it has downsides. It may prove difficult to insist on one’s unlimited licence to sanction whomever one will and for whatever reasons, and then present resulting designations as a product of impartial justice at work. Of course, some constraints on the executive’s power to sanction will be self-imposed by listing criteria in respective sanctions regulations. Even then, consistency and credibility will require a reasonably detailed framework to determine whom to sanction from the near-unlimited pool of people involved in significant corruption, human rights abuse or other sanctionable behaviour.

One of the JSCFADT’s recommendations presented a procedural solution to the problem of sanctions designations being – or being seen as – purely political decisions. It would involve an independent advisory body making sanctions nominations for the Minister’s approval. This proposal, which was made by multiple respondents to the parliamentary inquiry, would introduce some distance between sanctions decision-making and politics while at the same time ensuring that the government remains in the driving seat. As will be predictable by now, the government’s response shot down the recommendation and noted:

Sanctions are a foreign policy tool aimed at achieving foreign policy goals. Decisions to impose targeted financial sanctions and travel bans appropriately rest with the Minister for Foreign Affairs.

Not Only a Foreign Policy Tool

It is understandable that governments, including the Australian one, are anxious to maintain the integrity of their sanctions programmes but avoid unnecessary diplomatic flare-ups. Indeed, the delay in the official response to the JSCFADT’s inquiry was reportedly caused by consternation over how to respond to the nigh-inevitable calls to sanction those involved in alleged human rights abuse in China.

It is also easy to see how reasonable minds could differ on the prudence of establishing an independent advisory body. Granted, the ultimate decision-making power would reside with the government, but the optics of overruling the advisory body for diplomatic – ie, political – grounds would be less than ideal. In final analysis, though, the dilemma remains. Corruption and human rights sanctions will either be based on a set of coherent criteria, whether publicly articulated or not, or be rightly vulnerable to charges of politicisation.

And, whatever those precise criteria are, they should maximise the contribution of corruption and human rights sanctions to criminal justice writ large. It is here that a persistent, and by now well-familiar, misconception ought to be misplaced, namely that sanctions can only ever be a foreign policy tool.

The prevailing view among policymakers and sanctions experts has been that sanctions are a priori a foreign policy tool aimed at inducing ‘behavioural change’ by the target. To speak of other objectives of sanctions, such as punishing the perpetrators of horrible crimes, is on that view an intellectual faux pas.

The ‘behavioural change’ model is a suitable precept for dealing with rogue regimes, but it sits uneasily with the reality of sanctioning people for a crime that has already taken place and simply cannot be undone. Nor is it evident why sanctions should not be levelled against bad actors so incorrigible that there is no realistic chance of making them mend their ways. In light of this, a recent Foreign Policy piece that argues in favour of jettisoning ‘behavioural change’ as the be-all-and-end-all of sanctions is to be commended.

There are two main reasons why the ‘behavioural change’ model has reigned supreme worldwide while punishment is frowned upon as a reason for recourse to sanctions. The first of these is the political sciences scholarship on the effectiveness of sanctions, such as the classic work Economic Sanctions Revisited. Effectiveness can only be assessed by reference to a desired outcome, and it is natural that compelling a change in the target’s actions has been posited as such. The second is a slew of European court cases where sanctions withstood judicial challenges on the basis of being non-criminal, non-punitive, preventative and temporary.

In truth, saying that sanctions are solely a foreign policy tool aimed at behavioural change does not advance our thinking on either their effectiveness or due process guarantees. In relation to the effectiveness of corruption and human rights sanctions, to say that we aim to change the alleged perpetrator’s behaviour is to postulate an unworkable criterion that overlooks other legitimate considerations, such as punishment and disruption. As regards due process, a serious consideration of the issue would focus on the impact of sanctions on their target rather than any particular label that is attached to them in policy circles.

Conclusion

The upcoming overhaul of Australia’s sanctions framework offers an opportunity to take stock of the international experience and develop a world-leading sanctions policy, especially in relation to corruption and human rights sanctions. Doing so will require a degree of clarity about what such sanctions are intended to achieve and how they will be wielded. Openness about what one will do in the future equals commitment, and so far this seems in tension with the government’s eagerness to preserve room for manoeuvre.

In the end, though, a credible and effective application of sanctions will require a clarity of purpose and consistency in application, which can only be attained by determining how sanctions can best serve legitimate criminal justice objectives, including the punishment of perpetrators and disruption of criminal networks. Formulaic references to sanctions as a ‘foreign policy tool’ are, on the other hand, of limited utility.

P.S. Readers interested in the issues outlined in this post may find this webinar of interest.

Anton Moiseienko is a Lecturer in Law at the Australian National University.

Suggested citation: Anton Moiseienko, ‘Corruption and Human Rights Sanctions in Australia: Where Public Law Meets Foreign Policy’ on AUSPUBLAW (20 October 2021) <https://auspublaw.org/2021/10/corruption-and-human-rights-sanctions-in-australia-where-public-law-meets-foreign-policy>