A mid-sized trading group operating between London and Frankfurt discovers, on a Monday morning, that its principal shareholder has been simultaneously designated by OFSI and listed under an EU Council regulation. The group's bank freezes accounts. A pending trade-finance facility collapses. The board asks: can we challenge these designations, and if so, where, how, and how quickly?
The answer differs sharply between the two regimes. In the United Kingdom, a designated person may apply to the High Court for judicial review of a designation (a supervisory challenge to the legality of the Secretary of State's decision) or request an internal review under OFSI's statutory procedure. In the European Union, the primary route is an annulment action before the EU General Court, governed by the procedural rules of the Court of Justice. Both routes impose strict deadlines, carry high evidential burdens, and require early, specialised preparation – yet the standards of review, the procedural mechanics, and the practical prospects differ in ways that cross-border businesses consistently underestimate.
This analysis maps those differences across six dimensions: legal basis, standing, the standard of review, procedural timelines, the role of evidence, and the enforcement consequences while a challenge is pending. It closes with a practical decision guide for businesses holding exposure in both jurisdictions.
What is the legal basis for challenging a designation in each regime?
In the United Kingdom, the authority for imposing financial sanctions rests on the Sanctions and Anti-Money Laundering Act (commonly called "SAMLA"), and the challenge routes flow from that statutory foundation together with general public-law principles. A designated person may pursue three distinct avenues: a statutory review request to the Secretary of State, a judicial review claim before the Administrative Court of the High Court, and – where human rights are engaged – a challenge grounded in the Human Rights Act. SAMLA makes explicit provision for a review mechanism, meaning the decision to designate is not simply discretionary in a way that forecloses scrutiny; it is subject to procedural and substantive legality tests that the courts can apply.
In the European Union, the legal basis sits in the Treaty on the Functioning of the European Union, which gives the EU General Court jurisdiction to hear annulment actions against acts of the EU institutions. Council decisions and regulations imposing individual designations are legislative acts of the Council; they are therefore directly challengeable by the listed person. The Court of Justice hears appeals from the General Court on points of law. There is no separate internal-review mechanism comparable to the UK statutory review: the designated person's primary administrative relief is a request to the Council to reconsider, but the binding legal challenge is judicial.
This structural difference matters. Under OFSI's regime, the internal review can produce a real administrative outcome before litigation is necessary. Under the EU regime, the Council reconsideration process is often treated as a precursor to General Court proceedings rather than as a genuine alternative, because the Council's decisions on its own listings are rarely reversed at that stage without litigation pressure. In our practice, we advise clients in cross-border situations to open both tracks simultaneously where speed is critical.
Who has standing, and what standard of review applies?
Standing in both jurisdictions is broadly available to the designated person and, in the EU, to any person directly and individually concerned by the measure – a test that can, in principle, extend to entities whose assets are frozen as a consequence of another's listing, though the threshold is applied strictly by the General Court.
The standard of review is where the regimes diverge most consequentially for practitioners. In the UK, the Administrative Court applies a public-law standard: the court asks whether the Secretary of State's decision was unlawful on orthodox grounds – procedural error, Wednesbury unreasonableness, proportionality where Convention rights are engaged, or inadequate reasons. The court does not re-take the primary decision on the merits; it supervises the legality of the process and the rationality of the outcome. Where the challenge engages Article 1 Protocol 1 of the European Convention on Human Rights (protection of property), the proportionality inquiry becomes more intense. But the court retains a degree of deference on questions of national security assessment and foreign-policy judgment that limits how deeply it will substitute its own view.
The EU General Court applies a different standard. It reviews the substantive evidence for the listing de novo in the sense that it examines whether the Council had a sufficient factual basis for the designation at the time it was made. The Court has developed a body of case law establishing that the Council must provide, in the file it places before the Court, the specific, credible, and concrete evidence or information linking the designated person to the conduct justifying designation. A generic or conclusory statement in the listing reasons is not sufficient. The Court will annul the designation if that evidential threshold is not met – and in our cross-border practice, annulments on evidential sufficiency grounds are a real feature of EU General Court litigation in a way that has no close parallel in UK judicial review.
The practical implication: the EU route can offer a more direct evidential challenge, but it requires a well-resourced proceeding before a specialist court in Luxembourg. The UK route can move faster and at lower cost for interim relief, but the substantive merits review is less granular. Neither route guarantees an outcome; both require early, strategic preparation.
How do procedural timelines and deadlines compare?
Deadlines in this area are unforgiving, and businesses frequently lose options through delay. Under the EU regime, the deadline for lodging an annulment action before the General Court runs from the date the measure is published in the Official Journal of the European Union or, where the applicant was individually notified, from the date of notification. The period is short – verify the current position before relying on it – and it is not extended by a request for administrative reconsideration to the Council. That point catches businesses by surprise: the time for judicial action runs concurrently with the internal administrative dialogue, not after it concludes.
Under the UK regime, the position is different in structure. The statutory review request to the Secretary of State does not carry the same rigid limitation period as EU court proceedings, but the rules of court governing judicial review claims impose their own prompt-action requirement. Broadly, a judicial review claim should be brought promptly and in any event within a short window from the date of the decision. SAMLA's internal review procedure does not toll the judicial review deadline. If the internal review is refused or the Secretary of State fails to reach a decision within a reasonable period, the person may proceed to court – but again, delay in initiating can prejudice standing.
The operational lesson is clear. A business that receives a designation notice – or whose bank notifies it of frozen funds – should take legal advice within days, not weeks. In our experience, the most common procedural failure in designation challenges is the assumption that administrative correspondence buys more time than it actually does. It does not.
Where a business holds designations in both the UK and the EU, the two limitation clocks run independently. There is no mechanism to coordinate them. Counsel in both jurisdictions must be engaged simultaneously. Is your compliance team prepared to manage a dual-track challenge under time pressure?
What role does evidence play, and what do businesses typically miss?
Evidence is the architecture of any designation challenge, and it is where the practical work of a matter is won or lost. The regimes approach disclosure and evidence differently, and understanding those differences is essential before a strategy is fixed.
Before the EU General Court, the process involves the Council producing the file it relied on when making the designation. Classified or sensitive material may be handled through a protected procedure, but the Court has increasingly insisted that designated persons receive at least a summary of the essential grounds sufficient to allow an effective response. Where the Council cannot disclose the material, it risks losing the case. This creates a genuine information-forcing function in EU proceedings that practitioners have used to good effect.
In UK judicial review, disclosure is governed by general public-law principles and by the rules applicable to closed-material proceedings where national-security-sensitive evidence is in play. The closed-material procedure (a mechanism allowing the court to examine sensitive material without disclosing it to the applicant) can substantially limit a challenger's ability to see and respond to the evidence against them. Special advocates – independent counsel with security clearance – represent the applicant's interests in the closed part of the proceedings. This is a distinctive feature of UK national security litigation that has no direct EU equivalent at the General Court level.
What businesses typically miss at the evidence stage is the breadth of the evidential package they need to assemble in support of the challenge itself. A designation challenge is not merely an argument that the legal test was misapplied; it must be backed by evidence about the designated person's actual activities, ownership structures, business relationships, and – critically – the absence of the conduct alleged. Gathering that material takes time. It requires engagement with corporate registries, financial records, and often third-party witnesses or expert opinion on the political or economic context. In our experience, clients who begin that process before the designation is formally confirmed – or immediately upon notification – are materially better placed than those who start late.
The evidentiary contrast also highlights a divergence in strategic approach. Before the EU General Court, a strong case may argue squarely that the Council's file is insufficient on its face. Before the UK High Court, the argument may need to engage more directly with whether the Secretary of State's assessment of the underlying facts was rational, even if the evidential record is thin.
What happens to sanctions exposure while a challenge is pending?
A designation remains legally effective during the challenge period unless an interim measure suspends it. This is perhaps the most consequential operational point for cross-border businesses: filing a challenge does not lift the freeze. Assets remain blocked, licences are still required for otherwise prohibited transactions, and counterparties remain under their own obligations to screen and to decline transactions with the designated person.
In the EU, interim measures – including suspension of the designation pending the outcome of annulment proceedings – are available on application to the General Court. The threshold is demanding: the applicant must show urgency and a prima facie serious case, and must demonstrate that the harm from continued designation outweighs the public interest in maintaining it. Interim measures are granted in a minority of cases, but they are a real tool and should be considered at the outset, not as an afterthought.
In the UK, an injunction or interim relief in judicial review proceedings operates under the American Cyanamid principles modified for public-law cases, with additional weight given to the public interest in maintaining government sanctions programmes. Suspending a designation by interim order is correspondingly difficult to achieve without a strong prima facie case and demonstrated urgency. OFSI licensing may offer a faster practical route to continuing essential activities while the challenge proceeds: a specific licence (a case-by-case authorisation to conduct an otherwise prohibited transaction) can be sought from OFSI to allow defined transactions to continue, pending challenge.
For a business holding exposures in both regimes, the interaction between the two funding positions is acute. A business cannot assume that winning interim relief in the EU automatically lifts the UK designation or vice versa. The two regimes are legally independent. Operationally, a business needs parallel interim strategies – and that requires counsel who understand both procedural systems and can act quickly.
Where do the EU and OFSI positions converge – and where does that create cross-border risk?
A useful myth to address is the assumption that EU and UK designations always mirror each other. Before the UK's departure from the European Union, UK sanctions designations substantially tracked EU Council decisions. That alignment has eroded over time. The UK now maintains its own autonomous sanctions programmes under SAMLA, makes its own listing decisions, and can designate persons not listed in the EU – and equally, the EU can list persons not designated by OFSI. A challenge to one designation does not affect the other.
This divergence creates a specific cross-border risk: a business that successfully challenges its EU listing may find that the UK designation remains intact, and vice versa. The reputational and operational benefit of one annulment is limited if the other regime's listing continues to prevent banking relationships, correspondent accounts, and trade-finance lines. In our cross-border practice, we regularly advise clients that a dual-regime challenge strategy – with co-ordinated but legally independent proceedings in London and Luxembourg – is the only approach that fully addresses the exposure.
There is also a secondary-sanctions dimension for businesses with US-nexus activity. An OFAC designation under a US programme is a legally separate measure again. OFAC's internal review procedure and the US Administrative Procedure Act provide the challenge routes in that jurisdiction. A successful EU or UK de-listing does not automatically produce US delisting. Where a business is designated across all three regimes, the strategic sequence of challenges matters: it should be planned with awareness of the procedural timelines and the potential precedential effect of a successful annulment in one jurisdiction on the reasoning of another.
The position above illustrates why the standard analysis – "challenge the listing in the regime where you are located" – is insufficient. The cross-regime interaction can determine which challenge to prioritise, how to sequence the litigation, and how to allocate legal resources. Has your compliance team modelled the full multi-regime exposure before settling on a single-jurisdiction challenge strategy?
If a transaction has already been flagged, accounts have been frozen, or a formal designation notice has been received, early-stage review is essential. Options narrow with time, and the procedural window in EU proceedings is shorter than most businesses assume.
For a confidential review of a pending designation or a challenge strategy across the UK and EU regimes, contact Calder & Vance at info@caldervance.com.
Common risk flags and mistakes in designation challenges
Designation challenges fail – or achieve less than they should – for a predictable set of reasons. Identifying them early reduces avoidable cost and preserves strategic options.
The first and most common failure is delay. As noted above, the procedural windows in both regimes are short and run concurrently with administrative dialogue. A business that invests weeks in correspondence with the designating authority before taking legal advice may find the judicial window has narrowed materially or closed.
The second failure is an incomplete picture of the designated person's ownership and control structure. Designation decisions can affect entities that own, are owned by, or are otherwise controlled by the listed person. Businesses that focus only on the direct designee and fail to map the wider ownership chain may miss related freezes and may present an incoherent factual case to the court. The ownership and control test (the UK and EU rule for whether a non-listed entity is caught through a listed person) requires a full analysis of the corporate structure before any challenge is framed.
The third failure is treating the challenge as purely a legal argument without investing in the evidential record. As discussed in the evidence section above, courts in both jurisdictions – particularly the EU General Court – scrutinise the factual basis for the designation closely. An under-evidenced challenge, however legally well-framed, gives the authority the opportunity to defend solely on the adequacy of its stated reasons.
The fourth failure is insufficient attention to the licensing route as a parallel track. While a challenge proceeds, a designated business still needs to function. A well-structured specific-licence application to OFSI – or the equivalent EU mechanism where available – can allow defined transactions to continue and can itself generate useful information about the regulator's assessment of the designation's scope.
The fifth failure is underestimating the reputational dimension. Banks, trade-finance providers, and business counterparties monitor sanctions lists independently. Even a technically successful challenge may leave residual reputational damage if the process and its outcome are not managed proactively. Businesses that plan their external communications strategy alongside the legal challenge consistently achieve better commercial outcomes than those that do not.
In a recent matter, a financial-services business held designations under both a UK OFSI programme and the corresponding EU Council regulation. We assessed the evidential position in both jurisdictions, prepared parallel challenge strategies with co-ordinated timelines, and applied for specific-licence cover under OFSI to maintain essential payment operations while the proceedings were initiated. The matter proceeded on both tracks, and interim measures were assessed and pursued in the EU proceedings. No outcome is guaranteed by our engagement; the point is the structured, early-stage approach that preserved the available options.
Related practices
- Delisting evidence packages – building the evidence file for a designation challenge across major regimes
- Further analysis: judicial review of OFSI designations – detailed procedural guidance on the UK statutory review route
- Mistaken identity removal: BIS/EAR vs EU – how erroneous listings are addressed under US and EU rules