24
August 2022
PDF version [544 KB]
Leah Ferris
Law and Bills Digest Section
What are sanctions?
Sanctions are punitive or coercive measures imposed by
states or international organisations against other states or international
organisations. 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).
What types of sanctions does
Australia implement?
Australia implements two types of sanctions: sanctions
imposed as a consequence of Australia’s membership of the United Nations (UN) and
sanctions imposed autonomously by the Australian Government.
UN Sanctions
Australia, as a member of the UN, is required by Article 25
of the Charter
of the United Nations (the Charter) to implement UN Security
Council decisions.
Under Chapter VII of the Charter, the Security Council can
take action to maintain or restore international peace and security, including
the imposition of ‘measures not involving the use of armed force’ (Articles 39 and
41). Since 1966, the Security Council has established 30 sanctions
regimes, by way of legally binding resolutions, with 14 of these regimes
currently in operation.
The Security Council can only impose non-military sanctions
where it has determined ‘the existence of any threat to the peace, breach of
the peace, or act of aggression’, and where nine or more members have cast an
affirmative vote and none of the five permanent
members have used their veto power (Articles 39, 41 and 27 of the Charter).
Prior to 1993, Australia normally
implemented Security Council resolutions by making Regulations under a
number of Commonwealth Acts. However, due
to limitations on the Government’s power to make Regulations under these
Acts which would implement Security
Council sanctions imposed on the Federal Republic of Yugoslavia (for
example, the freezing of assets), Australia became unable to give full effect
to Security Council resolutions via this practice.
In 1993, the Government amended the Charter of the
United Nations Act 1945 (COTUNA) to allow for Regulations to be
made which give full effect to Security Council sanction regimes. These include
sanctions regimes which deal with particular countries such
as Lebanon, or regimes that deal with organisations such
as the Taliban.
Autonomous sanctions
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 2011 and the Autonomous Sanctions
Regulations 2011. 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).
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, including:
When can sanctions be imposed?
Non-military
sanctions can only be applied by the Security Council where it has
determined ‘the existence of any threat to the peace, breach of the peace, or
act of aggression’. The Security Council has previously applied
sanctions to ‘support peaceful transitions, deter non-constitutional
changes, constrain terrorism, protect human rights and promote
non-proliferation’.
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.
How are sanctions imposed?
In Australia, UN Security Council sanctions regimes are
primarily implemented under the COTUNA framework. Following a decision
of the Security Council to impose sanctions, a separate set of Regulations is
then made domestically, giving effect to these sanctions. For example, the
Security Council has previously imposed sanctions
on Lebanon (Resolutions 1636
and 1701) and Australia has
given effect to these sanctions via the Charter of the United
Nations (Sanctions — Lebanon) Regulations 2008.
Part 4 of the COTUNA also allows the Australian
Government to give effect to Security
Council resolutions dealing with terrorism through the listing of
individuals, entities and assets as being subject to sanctions.
A different process applies to the imposition of autonomous
sanctions. Instead of making separate Regulations for each autonomous sanctions
regime, Part 2 of the Autonomous Sanctions 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.
Determinations/declarations made by the Foreign Minister can be accessed via the
Federal
Register of Legislation.
For example, on 24
February 2022 the Governor-General made the Autonomous Sanctions
Amendment (Russia) Regulations 2022,which amended the Autonomous Sanctions
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
Autonomous Sanctions 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 is also
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.
What sanctions has Australia
implemented?
Australia has currently implemented UN Security Council
sanctions on certain persons/entities connected to Iraq,
Somalia,
the Democratic
Republic of the Congo, Sudan
and South Sudan, Lebanon,
the Democratic
People’s Republic of Korea (DPRK), Iran,
Libya,
Guinea-Bissau,
the Central
African Republic, Yemen,
and Mali,
as well as against ISIL
(Da’esh), Al-Qaida
and the
Taliban. Australia has also implemented counter-terrorism
sanctions imposed by the Security Council.
Australia has implemented autonomous sanctions on certain
persons/entities connected to the DPRK,
Iran,
Libya,
Myanmar,
the Former
Federal Republic of Yugoslavia, Russia/Ukraine,
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.
Is the Foreign Minister required to
report to Parliament on any sanctions they have imposed?
Currently, in Australia there is no requirement for the
Foreign Minister to report to the Parliament the basis on which persons have
been declared or designated under Australia’s sanctions regime and what assets,
or the amount of assets that have been frozen.
Persons and entities who are the subject of financial
sanctions are required to be published on a list maintained by DFAT, referred
to as the ‘Consolidated
List’. The list includes details such as a person’s citizenship, address,
place and date of birth, passport number and the reason why they are the
subject of sanctions. While DFAT may give advance notice to a person or entity
before designating them as being subject to sanctions, there is no requirement
that they must do so.
Can a decision to impose sanctions
be challenged?
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.
At the time of publication, the Federal Court of Australia
was currently in the process of hearing an application
for judicial review filed by Mr Alexander Abramov, arguing that he should
not be the target of sanctions.
Who must comply with sanctions and
what are the consequences for non‑compliance?
Australian sanctions laws apply
to activities which occur:
-
in Australia
-
by Australian citizens and Australian-registered bodies corporate
located either overseas or on foreign vessels or aircraft and
-
on board Australian
aircraft or vessels.
Australian entities operating overseas may also have to
comply with sanctions imposed by other countries.
The COTUNA legislative framework and the Autonomous
Sanctions Act prohibit the following
activities:
-
making a ‘sanctioned supply’ of ‘export sanctioned goods’
-
making a ‘sanctioned import’ of ‘import sanctioned goods’
-
providing a ‘sanctioned service’
-
engaging in a ‘sanctioned commercial activity’
-
dealing with a ‘designated person or entity’
-
using or dealing with a ‘controlled asset’ or
-
the entry into or transit through Australia of a ‘designated
person’ or a ‘declared person’.
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. A recent example of where a person has been
convicted for breaching Australian sanctions laws was R v Choi (No 10) [2021]
NSWSC 891, where Mr Choi was sentenced to imprisonment for a fixed term of three
years and six months for providing sanctioned services to North Korean
entities.
In some cases, the Foreign
Minister may authorise certain activities which would otherwise be
prohibited through the granting of a permit. However, if a permit is granted on
the basis of false or misleading information, then it is taken never to have
been granted and the person or entity who supplied the information can be
prosecuted.
Which government agency is
responsible for administering Australia’s sanctions laws?
The Australian
Sanctions Office (ASO), within DFAT, is the Australian Government’s
sanctions regulator. It was established on 1 January 2020 and is responsible
for administering Australia’s sanctions law. Other government agencies,
including the Department of Defence, the Department of Home Affairs and the
Australian Federal Police, also play a key role in regulating and enforcing
sanctions.
Australia also plays a role in enforcing UN sanctions,
including through Operation
ARGOS which is the Australian Government’s commitment to the international
effort to enforce UN Security Council sanctions on North Korea until it takes
concrete steps towards denuclearisation. The Australian Defence Force
contributes by deploying
a Royal Australian Air Force P-8A Poseidon maritime patrol aircraft to
monitor and deter illegal ship-to-ship transfers of sanctioned goods.
What are Magnitsky sanctions?
Legislation that governments have enacted to impose
sanctions on an individual who has committed human rights abuses or is guilty
of significant corruption is often named, or referred to as, ‘Magnitsky
legislation’.
Sergei
Magnitsky was a Russian-based tax lawyer employed by American businessman
Bill Browder to investigate tax fraud in Russia. Mr Magnitsky was arrested
and allegedly tortured by Russian authorities in 2009 after he uncovered
extensive corruption by Russian officials. He later died in prison.
In response to these events,
the United States passed the Russia
and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law
Accountability Act 2012 (Magnitsky Act 2012) to require the
President to identify and impose sanctions on any person determined to have
been involved in the detention, abuse, or death of Magnitsky. Subsequently, the
United States Government passed the Global
Magnitsky Human Rights Accountability Act 2016 (Global Magnitsky Act
2016) to allow the President to impose sanctions on individuals or entities
identified as engaging in human rights violations or corruption. Other
countries, such as the United
Kingdom and Canada,
have also enacted Magnitsky legislation.
Has Australia imposed Magnitsky
sanctions?
In its 2020 report titled Criminality,
Corruption and Impunity: Should Australia Join the Global Magnitsky Movement?,
the Human
Rights Sub-committee of the Joint Standing Committee on Foreign Affairs,
Defence and Trade recommended that the Australian Government enact stand‑alone
targeted sanctions legislation to address human rights violations and
corruption, similar to the United States’ Magnitsky Act 2012.
The Morrison Government agreed in principle
with this recommendation. On 2 December 2021, the Parliament passed the Autonomous
Sanctions Amendment (Magnitsky-style and Other Thematic Sanctions) Act 2021
(Magnitsky Sanctions Act) which amended the Autonomous Sanctions Act
to allow for sanctions to be imposed on individuals and entities responsible
for, or complicit in, egregious conduct. While previous sanctions imposed by
Australia have been country‑focused, these
reforms allow the Government to impose sanctions to address a wider range
of conduct (for example, human rights abuses), irrespective of where the
conduct occurs.
The Government has committed to
undertaking a comprehensive review of Australia’s sanctions framework
within 12 months of the commencement of the Magnitsky Sanctions Act, ‘to
ensure the framework is aligned with contemporary foreign policy objectives’
and will include consideration of whether additional legislative reform is
necessary.
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