UK Court dismisses sanctions funding judicial review

The Administrative Court in the UK has dismissed a claim for judicial review brought by Egyptian businessman Ahmed Ezz, which challenged the rationality of an HM Treasury decision on the release of his frozen funds for the payment of legal expenses in Egypt – R (on the application of Ezz) v HM Treasury [2016] EWHC 1470 (Admin). Mr Ezz is subject to an asset freeze under the EU’s sanctions on Egypt (see previous blog), for allegedly misappropriating public funds. The decision at issue was to assess the reasonableness of the legal fees charged by Mr Ezz’s Egyptian lawyers by taking the maximum London legal rates and converting them to a reasonable rate in Egypt via the IMF’s purchasing power parity (PPP) ratio. The ratio compares the relative costs of living in different countries, and in this way HM Treasury reduced the maximum daily rate payable for appearing in court from £15,000 in the UK to US$5,790.98.

The Court found that, in accordance with general principles of interpreting EU law, the derogation from the asset freeze under the EU’s Egypt sanctions for payment of legal expenses must be interpreted restrictively. It said that this was particularly so given that the objective of the sanctions was to recover misappropriated public funds, which would allegedly be undermined were Mr Ezz’s application successful. It noted that HM Treasury had been generous in using the maximum daily rate in London as its starting point, and that the “reasonable” fees allowed by the EU did not necessarily mean the highest legal fees payable. The Court concluded by saying that it was not unreasonable for HM Treasury to use the PPP conversion ratio, even though the cost of legal services in Egypt may not be perfectly reflected by a ratio based on general living expenses.