Purpose of the Bill

The purpose of the Autonomous Sanctions Amendment Bill 2024 (the Bill) is to amend the Autonomous Sanctions Act 2011 to clarify:

• that individuals and/or entities can be validly sanctioned on the basis of past conduct or status, or with respect to past circumstances
• the validity of sanctions imposed on the basis of past conduct or status, or with respect to past circumstances and
• the validity of sanctions listings that rely on the Minister's discretion to impose sanctions where the Minister has not exercised that discretion.

Background

What are sanctions?

Sanctions are punitive or coercive measures imposed by states or international organisations against other states or international organisations, or individuals. Sanctions impose restrictions on activities that relate to particular countries/organisations, goods and services, themes of conduct or persons and entities. They can include diplomatic or economic measures (though generally do not involve the direct use of armed force).

Australia implements two types of sanctions: sanctions imposed as a consequence of Australia’s membership of the United Nations (UN),[1] and sanctions imposed autonomously by the Australian Government.

What can sanctions include and who can they be applied to?

Typically, sanctions are either:

• comprehensive: as the name suggests, comprehensive sanctions generally refer to sanctions which prohibit most, if not all, economic activities with another state
• list-based: sanctions imposed on individuals and entities that are included in the lists published by the relevant sanctions’ regulator
• sectoral: sanctions which target specific entities within key sectors of a target state’s economy (for example, finance, energy and defence)
• product-specific: restrictions on the trading of certain products or services, either with a state or with specific individuals, groups or entities (for example, terrorist organisations).

Sanctions measures can vary significantly, depending on the state which is imposing them and their objectives in imposing sanctions. In some cases, a state may also employ diplomatic measures which can include cancelling or limiting diplomatic visits, or expelling diplomats.

The main types of sanctions employed by the Australian Government are:

• designation of specific individuals or entities as subject to financial sanctions (including asset freezes)
• travel bans on certain persons preventing them from entering or transiting through Australia
• restrictions on trade or procurement in goods and services (for example, prohibiting the export or the import of certain goods or services)
• restrictions on engaging in commercial activities or dealing with assets (for example, purchasing shares, granting intellectual property rights or establishing a joint venture) and
• designation of specific vessels as sanctioned vessels, including preventing them from entering Australia.

Under Australian sanctions laws, sanctions can be applied to a range of individuals or entities, including:

• a foreign government entity (for example, the government of a foreign state, or a state-owned enterprise of a foreign state such as a central bank or a transportation company)
• a member of a foreign government entity (for example, a member of Parliament or the leader of a foreign state) or
• another person or entity (for example, the family member of a foreign leader, a person who is assisting the foreign state (even if they are not a citizen of that state), a person who commits or facilitates terrorist acts or an entity operating in an industry that is subject to sanctions).

Australia’s autonomous sanctions framework

Autonomous sanctions are punitive measures that do not involve the use of armed force. They are imposed unilaterally by the Australian Government (as well as other foreign governments, including the United States and the United Kingdom) as a foreign policy tool.

In Australia, autonomous sanctions are implemented under the Autonomous Sanctions Act and the Autonomous Sanctions Regulations 2011 (the Regulations). Autonomous sanctions are discretionary tools which the Australian Government can apply, alone or with like-minded countries where appropriate, to address egregious situations of international concern.

The Department of Foreign Affairs and Trade (DFAT) notes that these sanctions can be aimed at bringing a situation of international concern to an end by:

• influencing those responsible (for example, by motivating foreign governments/leaders to adopt different policies)
• limiting the adverse impacts of a situation (for example, by denying access to military or paramilitary goods, or to goods, technologies or funding that are enabling the pursuit of programs of nuclear proliferation) or
• penalising those responsible (for example, by denying access to international travel or to the international financial system).

Australia’s autonomous sanctions regime also allows the Government to impose sanctions where the Security Council has been unwilling, or unable, to impose sanctions. In some cases, Australia has imposed additional autonomous sanctions which ‘complement’ Security Council sanctions already imposed by the Australian Government (for example, with respect to Libya).

Historically, autonomous sanctions have only been imposed by the Australian Government under the Autonomous Sanctions Act to address matters that are of ‘international concern’ in specific countries or regions. Such situations include ‘the grave repression of the human rights or democratic freedoms of a population by a government, the proliferation of weapons of mass destruction or their means of delivery, and internal or international armed conflict’.

Following the enactment of the Autonomous Sanctions Amendment (Magnitsky-style and Other Thematic Sanctions) Act 2021, the Government now has the power to impose autonomous sanctions to address particular issues (known as thematic sanctions) which include threats to international peace and security, malicious cyber activity, serious violations or serious abuses of human rights, or activities that undermine good governance or the rule of law.

Australia has imposed autonomous sanctions on certain persons/entities connected to the DPRK, Iran, Libya, Myanmar, the Former Federal Republic of Yugoslavia, Russia/Ukraine (and specified Ukraine regions), Syria and Zimbabwe. Australia has established thematic sanctions regimes with respect to significant cyber incidents, serious violations or abuses of human rights, and serious corruption.

Application of autonomous sanctions

Section 10 of the Autonomous Sanctions Act provides the executive government with the power to make regulations imposing sanctions with respect to any or all of the following:

• proscription of persons or entities (for specified purposes or more generally)
• restriction or prevention of uses of, dealings with, and making available of, assets (including the provision of compensation for owners who are affected)
• restriction or prevention of the supply, sale or transfer of goods or services
• restriction or prevention of the procurement of goods or services and
• provision for indemnities for acting in compliance or purported compliance with the regulations.

Part 2 of the Regulations prescribes the criteria for the Minister for Foreign Affairs (Foreign Minister) to apply sanctions with respect to a particular region or thematic situation. The Foreign Minister must then separately designate and/or declare (collectively referred to as listing) a person or entity as subject to sanctions. This is often referred to as a two-step process, as generally the Government will need to amend the Autonomous Sanctions Regulations to expand the criteria for imposing sanctions, before making the relevant determinations/declarations required to impose sanctions on specific individuals/entities.[2]

For example, on 24 February 2022 the Governor-General made the Autonomous Sanctions Amendment (Russia) Regulations 2022, which amended the Regulations to broaden the scope of individuals and entities on which Australia can impose sanctions following Russia’s invasion of Ukraine. The Foreign Minister consequently made a number of amendments to the Autonomous Sanctions (Designated Persons and Entities and Declared Persons – Russia and Ukraine) List 2014 to list certain individuals and entities as being subject to sanctions.

In amending the Regulations to provide for sanctions, the Foreign Minister must be satisfied that doing so ‘will facilitate the conduct of Australia’s relations with other countries or with entities or persons outside Australia; or will otherwise deal with matters, things or relationships outside Australia’. In applying sanctions, the Foreign Minister is not required to consider whether the imposition of the sanctions are proportionate to give effect to their objective.

In order to give effect to sanctions, the Government may also be required to amend other legislative instruments including the Customs (Prohibited Imports) Regulations 1956, the Customs (Prohibited Exports) Regulations 1958 and the Defence and Strategic Goods List 2021.

A person who has been designated or declared to be the subject of sanctions may apply for judicial review of the Foreign Minister’s decision under the Administrative Decisions (Judicial Review) Act 1977 and under common law. In reviewing the decision, the court will examine whether the Foreign Minister made an error of law in imposing the sanctions. According to the Explanatory Memorandum to the Bill, ‘the exclusion of merits review is justified as sanctions listings decisions can affect Australia’s relations with other countries and, as such, are decisions of high political content with the decision-making power personally vested in the Minister’ (Attachment, p. 4).

It is an offence to contravene Australian sanctions law, with penalties ranging from fines (with higher penalties applying to body corporates) to the maximum penalty of 10 years imprisonment.[3] As noted in the Explanatory Memorandum (Attachment, p. 3):

Sanctions listings do not impose criminal liability or punishments for criminal offences on sanctioned persons or entities. Rather, the criminal offences related to sanctions listings under Australia’s autonomous sanctions framework apply to Australians and Australian bodies corporate that provide assets to, or deal with the assets of, sanctioned persons or entities.

Review of Australia’s autonomous sanctions framework

On 30 January 2023, the Government announced it would be undertaking a review of the Regulations, ahead of their sunsetting (automatic expiry) on 1 April 2024:

The review will examine how the autonomous sanctions framework could better support the government’s foreign policy objectives. In doing so, it will consider whether the Regulations and associated instruments remain fit for purpose and will seek to identify administrative and regulatory efficiencies for government and the public, with a view to ensuring robust sanctions compliance.[4]

According to the terms of reference, the review will focus on (though is not limited to):

• streamlining the legal framework—to reduce the volume of subordinate legislation dealing with autonomous sanctions and improve the accessibility of the legislation
• the preconditions for applying sanctions measures —to assess if there should be clearer parameters for imposing sanctions and inform decisions as to the lifting of sanctions measures
• the existing categories of sanctions measures—to assess if they are fit for purpose
• refining the authorisation powers—to ensure permit powers are comprehensive, reduce administrative obligations and enable more balanced restrictions on activities
• the appropriateness and possible scope of a humanitarian exemption—to facilitate legitimate humanitarian activities
• the existing sanction offences, including the introduction of civil penalties—to enable flexible enforcement options, including non-criminal mechanisms for less serious contraventions of autonomous sanctions
• the appropriateness of existing regulatory powers—to examine if additional compliance tools are required, including with reference to the Regulatory Powers (Standard Provisions) Act 2014
• the renewal requirement that applies to targeted financial sanction designations and travel ban declarations—to examine the efficacy of this process
• key concepts, terms and definitions, including the criteria for the imposition of targeted financial sanctions and travel bans—to clarify the operation of sanctions prohibitions and
• any other matters that are relevant to the efficiency and effectiveness of the autonomous sanctions framework.

An issues paper was also released, which included specific questions for stakeholders to consider, with submissions closing on 26 February 2023. Submissions received by DFAT do not appear to have been published on its website. The Review was scheduled to be completed by 30 June 2023.[5]

Alexander Abramov v Minister for Foreign Affairs (No 2)

The proposed amendments appear to respond in part to the judgment of the Federal Court of Australia in Alexander Abramov v Minister for Foreign Affairs (No. 2).[6]

In this matter, Alexander Abramov, a Russian national, was originally listed as subject to sanctions under the Autonomous Sanctions (Designated Persons and Entities and Declared Persons—Russia and Ukraine) Amendment (No. 11) Instrument 2022 (First Designation Instrument) by the then Foreign Minister, Marise Payne, on 8 April 2022.

Under regulation 6 (Table Item 6A) of the Regulations, the Minister was required to be satisfied that Abramov is, or has been, engaging in an activity or performing a function that is of economic or strategic significance to Russia, and that it was appropriate as a matter of discretion to designate him accordingly.[7] Abramov instituted proceedings in the Federal Court for judicial review of the decision to list him as subject to sanctions and also made an application to the Minister under regulation 11 of the Regulations for revocation of his listing.[8]

According to the government, upon receiving the application:

In order to satisfy herself that Mr Abramov met the legal criteria—and taking into account all of the relevant information including the information provided in Mr Abramov’s revocation application and subsequent submissions—the Minister decided to revoke Mr Abramov’s listing (see Autonomous Sanctions (Designated Persons and Entities and Declared Persons—Russia and Ukraine) Amendment (No. 19) Instrument 2022) and consider his listing afresh.[9]

Upon considering this matter, the Foreign Minister, Penny Wong, found that ‘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 was therefore satisfied that he has been engaging in an activity or performing a function that is of economic or strategic significance to Russia.[10] His original designation was revoked and he was designated again on 17 September 2022 pursuant to the Autonomous Sanctions (Designated Persons and Entities and Declared Persons—Russia and Ukraine) Amendment (No. 20) Instrument 2022 (Second Designation Instrument).

Abramov amended his application for judicial review to challenge both the First Designation Instrument and the Second Designation Instrument on a number of grounds, including that ‘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’.[11]

Abramov also submitted that sanctions imposed must have a sufficient nexus to the objectives of the Autonomous Sanctions Act, namely ‘to influence certain persons or entities to act in accordance with Australian Government policy’.[12] He also submitted:

…that the use of the words “is, or has been” [in Table Item 6A, regulation 6 of the Autonomous Sanctions Regulations] required the Minister to identify either ongoing conduct having the relevant significance, or an activity or function having that significance that began in the past and continued, or the immediate effect of which continued, to the present. The applicant also submitted that this kind of temporal limitation implied that the activity or function must have the requisite “economic or strategic significance to Russia” at the time the Minister exercised the power to designate or declare a person under reg 6 of the Sanctions Regulations.[13]

In an extensive judgment, Justice Kenny ruled that Abramov ‘was successful in challenging the First Designation Instrument on the basis that the Minister’s failure to consider whether to exercise her discretion to designate him constituted a constructive failure to exercise jurisdiction’.[14] Specifically, Justice Kenny found the Department’s process for seeking the Foreign Minister’s agreement to impose sanctions did not require her to exercise her discretion in imposing sanctions:

The First Departmental Submission would have led the reader to conclude that, to the contrary, if the Minister was satisfied that a person met the listing criteria (relevantly, in item 6A(a) of the table in reg 6), then the Minister would designate and declare that person. There is nothing in that Submission to support the conclusion that the Minister considered whether she should designate and declare Mr Abramov even though satisfied he met the criterion in item 6A(a) of the table in reg 6, and that she determined that she should.[15]

While Abramov was successful in challenging the First Designation Instrument on the basis of the failure to exercise jurisdiction, he was unsuccessful on the other grounds raised in his application and the Second Designation Instrument was held to be valid.[16]

With respect to whether regulation 6 applied to past conduct, Justice Kenny stated:

The Minister may also declare and designate that 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: cf Rodney Huddleston and Geoffrey K Pullum, The Cambridge Grammar of the English Language (Cambridge University Press, 2002) p 165. It follows that whether the relevant person has in fact ceased the activity or function at the time the Minister considers making the declaration or designation does not bring the Minister’s power to declare or designate to an end providing the Minister forms the relevant satisfaction. I also accept that, as the Minister submitted, the use of this verb form would be superfluous if the words referred only to past and presently continuing conduct, and that this was not the intended result of the use of this verb form.[17] [emphasis added]

As explained by law firm Rigby Cooke Lawyers:

It was also noted by the Court that this is not limited to activities and functions of “importance” or necessarily “momentous” economic or strategic significance to Russia, and that it is a matter for the Minister to form the requisite satisfaction, subject to the requirement to do so in conformity with the standard of legal reasonableness adopted throughout the Australian judicial system.[18]

Deripaska v Minister for Foreign Affairs

In this matter, Oleg Deripaska, a Russian national who is ‘described in the material that was before the Minister as an oligarch and prominent businessman with close personal ties to President Putin’ challenged a decision made by then Foreign Minister Payne to subject him to sanctions.[19] These sanctions were imposed on 17 March 2022 via the Autonomous Sanctions (Designated Persons and Entities and Declared Persons — Russia and Ukraine) Amendment (No 7) Instrument 2022. As with Abramov, Deripaska also challenged his listing on a number of grounds, including on constitutional grounds (including freedom of political communication) and that ‘the Minister misunderstood the nature of the power that she purported to exercise’.[20]

With respect to the latter ground, Justice Kennett found that ‘the evidence in this case does not establish that the Minister, in making the decision under review, failed to understand that she had a discretion’.[21] In his judgment, he noted that his finding is the opposite of that made by Justice Kenny, on very similar evidence, in Abramov v Minister for Foreign Affairs (No 2), ‘however, 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: Vairy v Wyong Shire Council [2005] HCA 62; 223 CLR 422 at [3] (Gleeson CJ and Kirby J), [30] (McHugh J). 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” (cf eg Australian Securities and Investments Commission v BHF Solutions Pty Ltd [2021] FCA 684 at [106] (Halley J)) 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 (cf Abramov at [120]).[22]

The court did not find the applicant successful on any of the grounds raised and dismissed his application.

Committee consideration

At the time of writing, the Bill has not been referred to any committees.

Senate Standing Committee for the Scrutiny of Bills

At the time of writing, the Senate Standing Committee for the Scrutiny of Bills had not considered the Bill.

Policy position of non-government parties/independents

At the time of writing, non-government parties/independents do not appear to have commented specifically on the provisions in the Bill. 

Position of major interest groups

At the time of writing, stakeholders do not appear to have commented specifically on the provisions in the Bill. 

Financial implications

According to the Explanatory Memorandum, the ‘financial impact of the Bill is low’ and ‘any costs associated with the Bill will be met from within existing resources’ (p. 2).

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011, the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government states that the Bill promotes a number of rights and specifically engages:

• the prohibition on the retrospective operation of criminal laws in Article 15 of the International Covenant on Civil and Political Rights (ICCPR) and
• rights and procedural guarantees in relation to criminal proceedings under Article 14 of the ICCPR.

The Government considers that the Bill is compatible ‘because it promotes the protection of human rights and does not otherwise limit human rights’.[23]

Parliamentary Joint Committee on Human Rights

At the time of writing, the Parliamentary Joint Committee on Human Rights had not considered the Bill.

Key issues and provisions

Sanctions based on past circumstances, actions or positions  

As outlined in the background to this Bills Digest, section 10 of the Autonomous Sanctions Act provides the executive government with the power to make regulations imposing sanctions and sets out what sanctions may be imposed.

Designations and declarations that impose sanctions on persons and entities (‘sanctions listings’) are made pursuant to regulations 6 and 6A of the Regulations. These Regulations provide that the Minister may, by legislative instrument, designate a person or entity for targeted financial sanctions and/or declare a person for a travel ban (collectively ‘impose sanctions’). Currently, regulations 6 and 6A of the Regulations refer specifically to past circumstances, actions or positions in establishing the criteria in which sanctions can be imposed on a person/entity.

Item 1 will insert proposed section 10A into the Autonomous Sanctions Act to clarify that individuals and/or entities can be validly sanctioned based on past conduct or status, or with respect to past circumstances. Proposed section 10A provides that regulations made under the Autonomous Sanctions Act may make provision to allow for sanctions to be imposed on individuals and entities on the basis of past specified circumstances, or past actions committed, or past positions held by the individual/entity, regardless of the period of time that has elapsed since the circumstances existed, the actions were taken or the position was held.

The Explanatory Memorandum states that ‘the effect of the provision will be to confirm that there is no temporal limit on sanctions criteria in the Regulations, under which individuals and entities may be sanctioned’ (p. 4). As discussed in detail in the background section of this Bills Digest, in the recent decision of Alexander Abramov v Minister for Foreign Affairs (No 2), Justice Kenny indicated that sanctions could be applied under the current legislation with respect to past conduct/activities provided the Minister was satisfied (in the context of Abramov) that the conduct or activity was still of economic or strategic significance to Russia.[24]

The amendments will make clear that it is irrelevant how much time has elapsed from the date of the relevant circumstances, conduct engaged in, or position held, and the point in which sanctions are imposed.

Validation of sanctions based on past circumstances, actions or positions

The general rule when interpreting legislation is that, unless there is a clear statement to the contrary, the legislation does not operate retrospectively. As stated in the Explanatory Memorandum, ‘the validation provisions in Part 2 of this Bill apply retrospectively in that they validate sanctions and sanctions criteria from the point at which they originally came into force, not just from the point of Part 2 of the Bill coming into force’ (p. 4).

Item 3 and 4 in Part 2 of the Bill retrospectively validate (make legally valid) regulations/instruments made under the Autonomous Sanctions Act (including ones no longer in force) which may otherwise be considered invalid by a court where they relate to past circumstances, actions or positions.

Item 3 validates regulations made under paragraph 10(1)(a) of the Autonomous Sanctions Act prior to the commencement of Part 2 of the Bill (and instruments made under these regulations which have also previously commenced) that would have otherwise been considered to be invalid by a court were it not for the insertion of proposed section 10A.

Item 4 validates instruments:

• made under regulations made for the purposes of paragraph 10(1)(a) of the Autonomous Sanctions Act (including ones that are no longer in force)
• made prior to the commencement of Part 2
• that impose sanctions on the basis of past circumstances, actions or position and
• that would otherwise be wholly or partly invalid on the basis that so much time had elapsed between the relevant circumstances, conduct engaged in or position held, and the imposition of the sanction, that the sanction could be construed as beyond the power of the authorising regulation.

As a result of the amendments, these regulations/instruments are considered to be legally valid from the point at which they were enacted. In addition, the provisions confirm that these validation provisions apply to civil and criminal proceedings instituted before the commencement of Part 2 and apply to matters currently before the court (including cases where an Australian individual/entity has been required to take action to comply with sanctions imposed on an entity/individual). This may have an impact on proceedings currently before the court or possible future appeals.

Validation of sanctions where the Minister did not exercise discretion  

The Regulations enable the Minister to designate a person or entity for targeted financial sanctions, and declare a person for a travel ban, if the Minister is satisfied that the person or entity meets the listing criteria specified in the Regulations. The decision to impose sanctions is therefore at the Minister’s discretion.

As outlined in the background to this Bills Digest, recent court cases have challenged the imposition of sanctions on the grounds that the Minister did not exercise her discretion when imposing sanctions. As noted by Justice Kennett in Deripaska v Minister for Foreign Affairs, the question of whether discretion was exercised is one to be decided on the facts of each case based on the evidence provided by the parties.[25]

However, item 5 of the Bill will retrospectively validate any sanctions imposed in circumstances where it may not be explicitly clear that the Minister considered their discretion:

• to sanction the person/entity at all, where they meet the criteria for imposing sanctions or
• to decide whether to only designate a person for targeted financial sanctions or only declare them for travel bans, or both.

These provisions will apply despite any effect they may have on a person’s rights and will also apply to civil and criminal proceedings instituted before the commencement of Part 2. However, item 6 makes clear that where the provisions in Part 2 would lead to the acquisition of property by the Commonwealth, the government is liable to pay a reasonable amount of compensation to the person.