An Australian Magnitsky Act – What would it look like and why do we need it?

A bunch of euro banknotes stuffed into an envelope Image: Markus Spiske/Unsplash

By Ruby O'Kane

Increasing discussion around the impunity of corporate actors involved in corruption and human rights abuses under domestic and international law is driving a movement to adopt laws that target individuals for abuses committed overseas. 

Deterring human rights abuses has long relied on the possibility of prosecution and jail time for perpetrators, either through legal avenues at the International Criminal Court (ICC) or within particular jurisdictions. However, the effectiveness of these methods has been limited, both legally, by particular doctrines of international law, and practically, with many questioning the success of the ICC.  

A ‘Magnitsky Act’ is a type of legislation that enables governments to impose economic sanctions against foreign individuals or entities who commit or are involved in serious human rights abuses and corruption abroad. This legislation operates extra-territorially, imposing penalties on individuals or companies, including freezing and requisitioning assets and travel bans, for acts performed outside the legislating country’s jurisdiction. 

It derives its name from US laws enacted to sanction the individuals responsible for the 2009 death of Russian lawyer Sergei Magnitsky, who uncovered serious tax fraud by several Russian companies confiscated from an American financier.  

The Joint Standing Committee on Foreign Affairs, Defence and Trade in Australia recommended the enactment of an Australian ‘Magnitsky Act’. This recommendation comes after eight months of hearings and contributions from many notable individuals, including human rights lawyer Amal Clooney and pre-eminent lawyer Geoffrey Robertson AO QC, who warned that failure to adopt a new human rights-specific sanctioning regime would risk Australia becoming a haven for ‘dirty money’ and ‘despots’.  

 

What did the Committee recommend? 

The Committee recommended Australian legislation closely follow the 2012 and 2016 US laws: 

  • A broad definition of human rights and corruption to ensure ‘the greatest number of potential abuses’ fall within the scope of the legislation; 

  • Individuals (and their immediate family and direct beneficiaries), corporate entities, state and non-state organisations can be subject to sanctions; 

  • Creation of an independent body to publicly receive, consider and make recommendations regarding imposition of sanctions, which the Minister for Foreign Affairs would have to consider in their decision-making; 

  • Right of reply and review of decisions by the Minister on request of a targeted or sanctioned person; 

  • Publication of names of sanctioned people, the reason for their listing and an annual report on sanctions by the Foreign Minister. 

 

Why is a ‘Magnitsky Act’ necessary? 

Existing legislation is not built for purpose 

Although two existing Acts deal with international sanctions, they are not built for purpose. The scope of the Charter of the United Nations Act 1945 (Cth) is extremely narrow, only permitting implementation of UN Security Council decisions. Although the Autonomous Sanctions Act 2011 (Cth) provides more discretion, it provides no mention of human rights, and the Committee found it was not being used for such purposes. Specific sanctions should be available for human rights abuses. 

Australia’s role in a new global movement 

Magnitsky regimes are gathering legislative and popular support across the world, including and especially, amongst Australia’s allies. Apart from the US, Canada and the UK have recently enacted Magnitsky laws and the EU is not far behind. These laws, acting extra-territorially to create a potentially global sanctions system, will reach their full potential if they are widely and consistently adopted across a majority of jurisdictions. Australia should contribute to building this new global movement.  

Sanctions as an alternative tool of foreign policy 

Sanctions for human rights abuses could prove an invaluable legal tool where other diplomatic efforts have failed or where international attempts at consensus, including collective sanctions, have been slow or unsuccessful. Australia’s extensive diplomatic attempts to persuade China to address human rights abuses against Uighur Muslims in the Xinjiang province, for instance, have been largely ineffective in changing China’s behaviour. The US has recently placed sanctions against Chinese entities and officials for oppression of the Uighur population and there is growing impetus in the UK for such action. Such sanctions would provide Australia with another diplomatic tool that can be used to deter states, and individual perpetrators, from engaging in human rights abuses; one that, by addressing the financial interests of perpetrators and those in their inner circle, is perhaps more persuasive than traditional diplomatic tools. 

 

What are the potential pitfalls? Can they be mitigated? 

The Committee also addressed some of the critiques of Magnitsky regimes, which one submission argued create legislative confusion and are a mere ‘cynical geopolitical weapon’. 

Duplicating legislation 

Although a new sanctions Act would create some additional complexity in the existing legislative environment, this argument against it does not recognise the practical and symbolic value of a specific human rights sanctioning regime. A Magnitsky act which provides specifically for sanctions against human rights abusers will arguably be more effective and its use more politically acceptable, than adapting any of our current regimes for this purpose. Apart from this practical value, Magnitsky legislation also has an important symbolic value; enacting separate legislation will have an important signalling effect to Australia’s allies and a deterrent effect for (potential) perpetrators of human rights abuses.  

Politicisation of sanctions 

Some have also argued that decisions on whether to impose sanctions will be political and selective, based largely on Australia’s diplomatic or trade relationships, and that this will open Australia to accusations of inconsistency and double standards. Although impositions of sanctions for human rights abuses may be political, as sanctions generally are, there will be accountability and oversight mechanisms built into legislation, as recommended by the Committee, which will ensure a transparent, rather than arbitrary and opaque, process. Accusations of ‘double standards’ on the topic of human rights have already been levelled against Australia, most recently by China. This has not prevented Australia from continuing to engage China and other countries diplomatically on human rights issues. Historically, political naming and shaming has proved a valuable and accepted tool in the international defence of human rights. Magnitsky legislation would merely enable Australia’s government to effectively pursue such diplomacy, which has proved successful in promoting positive changes in otherwise dire human rights situations. 

Ineffectiveness 

Some have critiqued the effectiveness of the sanctions, arguing that too few countries have adopted Magnitsky legislation to make its deterrent effect successful. However, this is a sort of ‘self-fulfilling prophecy’ argument. It is true that Magnitsky laws will be more effective if there is global coverage, such that human rights abusers cannot simply move their assets to a jurisdiction where they are not under threat of Magnitsky-type sanctions. However, this should be a reason for Australia to enact Magnitsky legislation and improve its effectiveness, not the reverse. 

 

Where to from here? 

There is wide (and increasing) support in parliament for this legislation, which suggests that this will be a legislative priority for the Morrison government in the coming year. Not only will an Australian ‘Magnitsky Act’ create a more effective system of deterrence and reduce impunity for international human rights abuses and corruption, it will also fill the gaps in Australia’s diplomatic arsenal and signal Australia’s commitment to redressing rights abuses to our most important allies. Any pitfalls of the legislation can be mitigated by proper accountability and transparency mechanisms recommended by the Committee. 

 

Ruby O’Kane is a final year International Studies (International Relations)/Law student at UNSW Sydney and was an intern at the Australian Journal of Human Rights in the Summer Term of 2021.