Delisting Petitions and Sanctions Litigation

The administrative path before the courthouse

Every major sanctions regime requires — or strongly prefers — that a designated party exhaust an administrative reconsideration process before resorting to litigation. The mechanics, timelines, and evidentiary burdens differ sharply across jurisdictions, and counsel must map them precisely before filing.

OFAC reconsideration under 31 C.F.R. § 501.807

In the United States, a person designated to the Specially Designated Nationals and Blocked Persons List (SDN List) may petition the Office of Foreign Assets Control for reconsideration under 31 C.F.R. § 501.807. The petitioner submits arguments and evidence demonstrating either (1) that the basis for designation was factually erroneous, or (2) that the circumstances giving rise to designation no longer apply — the so-called change-in-circumstances theory. OFAC then issues an administrative subpoena-style questionnaire; responses are typically demanded under penalty of perjury. The agency has no statutory deadline. Average processing times have ranged from 18 months to several years; the GAO in its February 2007 report (GAO-07-311) documented a median of roughly nine months at that time, but post-2015 caseloads have lengthened the queue substantially. Successful petitioners since 2014 include the rapper Jay Electronica's associate companies, several Iranian nationals delisted under the JCPOA-related Annex II actions on Implementation Day (16 January 2016), and Oleg Deripaska's EN+ and Rusal entities (delisted 27 January 2019 after the so-called Barrack-Mnuchin restructuring agreement).

EU relisting cycles and the duty to state reasons

The European Union operates on a fundamentally different rhythm. Most CFSP sanctions regimes — Russia (Council Decision 2014/145/CFSP), Syria (2013/255/CFSP), Belarus (2012/642/CFSP) — require the Council to review listings at fixed intervals, typically every six or twelve months. A listed person may submit observations to the Council at any time, and must do so before each renewal to preserve arguments. The Council is obliged under Article 296 TFEU and the Kadi II jurisprudence (Joined Cases C-584/10 P, C-593/10 P and C-595/10 P, 18 July 2013) to provide an individualised statement of reasons sufficient to permit effective judicial review. Where the Council fails to disclose the underlying evidence, the General Court will annul. This was the fate of numerous Iranian bank listings between 2012 and 2016 (Bank Mellat, T-496/10, 29 January 2013; Bank Saderat Iran, T-494/10, 5 February 2013).

UN Security Council: the Ombudsperson and Focal Point

For UN sanctions, the architecture bifurcates. The ISIL (Da'esh) and Al-Qaida Sanctions List under Resolution 1267/1989/2253 is uniquely served by the Office of the Ombudsperson, established by Resolution 1904 (2009) and given a delisting recommendation power by Resolution 1989 (2011). The Ombudsperson — Daniel Kipfer Fasciati since 2021 — conducts an independent review and issues a recommendation that takes effect unless reversed by consensus of the 1267 Committee or by Security Council vote. As of mid-2024, the Ombudsperson had recommended delisting in the substantial majority of completed cases, and those recommendations were almost uniformly accepted. All other UN sanctions regimes (DPRK 1718, Libya 1970, Mali 2374, etc.) route delisting requests through the Focal Point established by Resolution 1730 (2006), which lacks independent recommendation authority — the requesting state and designating state must reach consensus within the relevant Sanctions Committee, a far weaker mechanism that the 2012 Watson Institute report and successive Special Rapporteurs have criticised as failing due-process standards.

When the petition fails: courthouse strategy

Denial of an administrative petition opens the litigation phase, where the standard of review and the available remedies again diverge sharply across jurisdictions.

APA challenges in U.S. federal court

In the United States, denial of an OFAC reconsideration petition is reviewable in federal district court under the Administrative Procedure Act, 5 U.S.C. § 706, as a final agency action that is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. The leading authorities are Holy Land Foundation v. Ashcroft, 333 F.3d 156 (D.C. Cir. 2003), which upheld IEEPA-based designations against First and Fifth Amendment challenges; Islamic American Relief Agency v. Gonzales, 477 F.3d 728 (D.C. Cir. 2007); and Zevallos v. Obama, 793 F.3d 106 (D.C. Cir. 2015), which articulated the deferential standard applied to OFAC factual determinations. The D.C. Circuit and District of D.C. are the dominant venues. Courts permit OFAC to rely on classified evidence presented in camera and ex parte — a practice sustained in Kadi-like tension with due process but repeatedly upheld since People's Mojahedin Organization of Iran v. U.S. Dep't of State, 327 F.3d 1238 (D.C. Cir. 2003). Successful litigation outcomes are rare; the more common result is a remand to OFAC for further explanation, as in Fares v. Smith, 901 F.3d 315 (D.C. Cir. 2018).

The EU General Court as a delisting engine

By contrast, the General Court of the European Union has become a workhorse delisting forum. Actions for annulment under Article 263 TFEU must be brought within two months of notification of the listing act. The Court applies a substantive review of the evidence: the Council must produce a file demonstrating that the designation criteria are met, and the Court will weigh that evidence. Statistics compiled by the Court's registry show that between 2010 and 2023, roughly one-third of contested listings in the Iran, Syria, and Russia regimes were annulled in whole or in part, though the Council typically relists on revised reasoning within weeks — the so-called 'revolving door' problem identified in Bank Tejarat v. Council (T-176/12, 22 January 2015) and subsequent cases. Damages claims under Article 340 TFEU remain theoretically available but practically impossible: Safa Nicu Sepahan (C-45/15 P, 30 May 2017) was the rare success, awarding €50,000 in non-material damages.

United Kingdom: post-Brexit divergence

The UK regime under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) requires an initial administrative review under section 23, followed by ministerial reconsideration under section 25, and only then a statutory court review under section 38 before the High Court. The standard is judicial-review-style reasonableness rather than EU-style substantive review. Shvidler v. Secretary of State for Foreign, Commonwealth and Development Affairs [2024] EWCA Civ 1027 confirmed the broad deference accorded to the Foreign Secretary, with the Court of Appeal upholding the designation of Eugene Shvidler on Russia-regime grounds.

Strategic sequencing

Sophisticated practice involves parallel filings: an OFAC § 501.807 petition together with EU Council observations and, if the same client is UK-designated, a SAMLA section 23 request — all calibrated so that evidence and arguments are mutually reinforcing without creating admissions usable in adverse forums. Coordination with the designating government's diplomatic channel is often more productive than litigation alone.