Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs; Dalston Projects Ltd v Secretary of State for Transport [2025] UKSC 30 (29 July 2025)

Appellants, designated under the UK's Russia sanctions regime due to links with Roman Abramovich, challenged the meaning of 'control'. The Supreme Court dismissed their appeals, affirming a broad, reality-based interpretation of control and the government's wide discretion in such matters.

Facts

This case concerned two conjoined appeals against designations made under the Russia (Sanctions) (EU Exit) Regulations 2019 following Russia’s invasion of Ukraine. The first appellant, Mr Eugene Shvidler, a UK/US national and business associate of Roman Abramovich, was designated, resulting in the freezing of his assets, including two private aircraft. The second appellant, Dalston Projects Ltd, a UK company beneficially owned by Mr Shvidler, was also designated in respect of a property it owned in London. The legal basis for the designations was that the appellants were ‘owned or controlled’ by Mr Abramovich, who was already a designated person. The appellants argued that while Mr Abramovich had provided financial benefits and support, this did not amount to ‘control’ in the legal sense required by the Regulations.

Issues

The Supreme Court considered two principal legal issues:

1. The correct interpretation of ‘control’ under Regulation 7 of the 2019 Regulations. Specifically, does a person ‘control’ a company or trust if they have the practical ability to direct its affairs, even without a formal legal entitlement?
2. Whether the designation of the appellants and the consequent freezing of their assets was a disproportionate interference with their right to peaceful enjoyment of their possessions under Article 1 of the First Protocol (A1P1) to the European Convention on Human Rights (ECHR).

Judgment

The Supreme Court unanimously dismissed both appeals, upholding the decisions of the lower courts.

The Meaning of ‘Control’

The Court endorsed a broad and purposive interpretation of ‘control’. Lord Carnwath, giving the lead judgment, emphasised that the term should not be confined to strict legal or technical definitions of ownership. Instead, it must be viewed pragmatically in the context of the sanctions regime’s overarching purpose: to exert pressure on the Russian state by targeting its supporters and beneficiaries.

The concept of ‘control’ in this context is not a term of art. It must be interpreted broadly and pragmatically, having regard to the purpose of the sanctions regime. The question is one of practical, not theoretical, influence. A person may control a trust or a company even if they have no legal entitlement to its assets or income, if in reality it is managed in accordance with their wishes.

The Court found there was sufficient evidence that Mr Abramovich exercised de facto influence over the appellants’ assets and business affairs to satisfy the ‘control’ test.

Proportionality and A1P1

The Court held that while the sanctions were a severe interference with the appellants’ property rights, they were justified and proportionate. The aim of the sanctions – to protect the UK’s national security and respond to Russia’s aggression – was of the highest importance. In this context, the Court affords a wide ‘margin of appreciation’ to the executive and Parliament in deciding on the necessity and scope of such measures.

In her concurring judgment, Lady Arden stated:

In matters of national security and foreign policy, the executive is afforded a wide margin of appreciation… The court will not interfere unless the measure is manifestly without reasonable foundation. Given the gravity of the situation in Ukraine, the measures imposed on the appellants, while severe, cannot be said to fall into that category.

The Court concluded that the interference was prescribed by law, pursued a legitimate aim, and struck a fair balance between the protection of individual rights and the general interests of the community, and was therefore not disproportionate.

Implications

This judgment is of significant importance as it solidifies the legal foundation of the UK’s post-Brexit sanctions regime. It confirms that the judiciary will interpret key terms like ‘control’ broadly and pragmatically to give effect to the policy’s purpose. The decision reinforces the high bar for challenging sanctions on human rights grounds, particularly where matters of foreign policy and national security are concerned. It signals to designated persons and their associates that attempts to challenge designations based on narrow, technical arguments about ownership structures are unlikely to succeed where practical influence can be demonstrated.

Verdict: The appeals were dismissed.

Source: Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs; Dalston Projects Ltd v Secretary of State for Transport [2025] UKSC 30 (29 July 2025)