Sanctions permits: balancing national security and human rights
Source: Yurydychna Hazeta
The property division case involving the Poroshenko spouses has once again exposed one of the most underappreciated gaps in Ukrainian sanctions legislation – the absence of a mechanism to protect the rights of third parties when restrictions automatically extend to those who are not themselves under sanctions. An analysis of this case, prepared by the Institute of Legislative Ideas (ILI), has sparked a broader legal debate about the need to introduce a sanctions permit mechanism in Ukraine.
The court of first instance denied Maryna Poroshenko's claim for division of property. "The imposition of sanctions is a means of protecting national interests, and therefore court decisions cannot nullify the effect of these restrictions," the court stated. The Vinnytsia Court of Appeal, however, reached the opposite conclusion, noting that national legislation provides no procedural mechanism for restoring the rights of third (non-sanctioned) parties whose property rights are restricted within administrative sanctions proceedings.
A different approach was demonstrated by the appellate court in the case of sanctioned individual Alona Lebedieva. The Kyiv Court of Appeal overturned a favorable first-instance ruling and denied the division of marital property, stating that private-law instruments should not be used by participants in civil transactions to avoid fulfilling public obligations, to release property from seizure in public-law relations, or to create a court precedent for public-law relations.
So there are two appellate rulings and two opposing approaches. One prioritizes protecting the rights of the non-sanctioned co-owner; the other prioritizes the effectiveness of the sanctions regime and the public interest. Both positions have legal grounding. The problem is that the law provides no answer as to how exactly to balance these two interests. As a result, courts are left to find that balance on their own between protecting property rights and ensuring the effectiveness of sanctions – which naturally leads to inconsistent case law.
The EU's approach to such situations is clear: jointly owned property of a sanctioned and a non-sanctioned person is subject to freezing. But the non-sanctioned co-owner has the right to obtain access to it – through a special permit from a competent authority, allowing a specific transaction to be carried out or access to the property to be granted without undermining the sanctions regime. This ensures a balance between the effectiveness of sanctions and the protection of the rights of bona fide third parties.
It is precisely this mechanism that ILI's new study addresses. The study examines how sanctions permits function in the European Union, the United States, and the United Kingdom, identifies their common principles and distinguishing features, and proposes a model that could be implemented in Ukrainian legislation.
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Chapter І
Why don't sanctions permits weaken sanctions?
The claim that sanctions permits weaken sanctions is mistaken. Practice shows the opposite.
Sanctions are a necessary tool for pressuring individuals who pose threats to national security. But their effectiveness depends not only on the strictness of the restrictions but also on the system's ability to balance the public interest with human rights. Without a proper permit mechanism, sanctions can produce consequences that go beyond their intended purpose: affecting non-sanctioned co-owners, employees, creditors, clients of sanctioned companies, or family members of a sanctioned person. In practice, this can mean blocked salaries, funds for legal aid, rent payments, medical treatment, or other basic needs. In such situations, the state must have a lawful instrument that allows it to quickly assess the circumstances and, if warranted, authorize a specific action without weakening the sanctions overall. Otherwise, even well-founded sanctions risk being deemed disproportionate and in violation of human rights.
This is precisely why the EU, the US, and the UK have a sanctions permit mechanism. In the European Union, this is generally described through the category of "authorisation"; in the US and UK, through "license." The name differs, but the logic is the same: the action remains prohibited until a competent authority reviews the circumstances of the specific case and grants formal permission.
This mechanism operates within clear boundaries. Permits may be granted for humanitarian and medical needs, payment for legal assistance, protection against technogenic or security risks, fulfillment of specific obligations, or resolution of critical economic situations. In other words, this is a controlled legal instrument that allows the state to distinguish between genuinely prohibited actions and situations where a restriction produces disproportionate or undesirable consequences.
That is why sanctions permits do not weaken sanctions. On the contrary, a transparent issuance procedure reduces room for manipulation, strengthens state oversight, and increases the resilience of the sanctions regime against legal challenges.
Chapter ІI
Who issues permits, and how?
Despite differences between jurisdictions, the logic behind the sanctions permit mechanism is similar. In the European Union, EU Council regulations set the general rules, while permits are issued by national competent authorities. Some states, such as Romania and Germany, divide these powers among several specialized bodies, while others (Malta, Czechia, Cyprus) have adopted a "single window" model.
An application for a permit can be submitted not only by the sanctioned person but also by any interested third party whose rights or legitimate interests are affected by the sanctions: a co-owner of property, a creditor, a counterparty, a humanitarian organization, or an employee of a sanctioned company. The burden is on the applicant to prove that the requested transaction meets the grounds for granting a permit and does not contradict the objectives of the sanctions regime.
In most EU countries, applications are reviewed within approximately 30 days, with simplified procedures for certain humanitarian cases. In the US and UK there are no fixed deadlines, but applications are reviewed based on their complexity and priority.
A permit is always issued under clearly defined conditions. It specifies the authorized transaction, its duration, any applicable caps on amounts, reporting requirements, and other restrictions. Compliance with these conditions is monitored by the competent authority, and circumvention can result in revocation of the permit and liability for violating sanctions legislation, including criminal liability.
Chapter ІII
When there is no permit, the state amends sanctions manually
Notably, the need for sanctions permits has already arisen in Ukraine. The most well-known example is the "Freedom Finance Ukraine" case. After sanctions were imposed in 2022, not only the assets of the sanctioned company were frozen, but also the funds of more than 12,700 Ukrainian clients totaling roughly 3.5 billion hryvnias – including investors in military bonds. The law provided no mechanism allowing bona fide clients to access their assets. The problem was resolved only two years later, through amendments to the President's sanctions decree that effectively created an individual exception for this specific situation.
This episode shows that the answer to whether Ukraine needs sanctions permits is obvious. The state is already effectively confronting this necessity. But without establishing a transparent procedure that applies equally to everyone, similar situations will continue to be resolved through ad hoc political decisions.
Chapter IV
What does this mean for Ukraine?
A permit mechanism is not a "loophole" in the sanctions regime. On the contrary, it is a necessary condition for its legitimacy and effectiveness. Without it, sanctions either impose disproportionate restrictions on people who are not their intended targets, or become vulnerable to challenge in national and international courts.
That is why Ukraine should move from ad hoc responses to systemic regulation. A sanctions permit mechanism should be enshrined in the Law of Ukraine "On Sanctions," defining the competent authority, the range of persons entitled to apply for a permit, the grounds for granting it, the timeframes for reviewing applications, the procedure for monitoring compliance with permit conditions, and liability for violations of those conditions. This is also one of Ukraine's commitments within the framework of EU accession negotiations.
The introduction of such a mechanism should occur alongside the criminalization of sanctions evasion. Draft Law No. 12406 on criminalizing sanctions evasion has been awaiting its second reading in the Verkhovna Rada for over a year, while EU Directive 2024/1226 requires that failure to comply with the terms of an issued permit be recognized as sanctions evasion. Effective implementation of this requirement is therefore impossible without first establishing the permit-issuing mechanism itself.
The paradox is that sanctions permits protect not sanctioned individuals, but the sanctions themselves. They allow the state to eliminate disproportionate consequences in individual cases without undermining the sanctions regime as a whole. So the question is no longer whether Ukraine needs this mechanism, but only when it will become a full-fledged part of Ukrainian sanctions legislation.
This material was prepared with the support of the European Union and the International Renaissance Foundation as part of the joint initiative "Joining the EU Together." The material reflects the views of the authors and does not necessarily reflect the position of the European Union or the International Renaissance Foundation.