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)

Two appeals challenging sanctions imposed under the Russia (Sanctions) (EU Exit) Regulations 2019 following Russia's invasion of Ukraine. Mr Shvidler, a British citizen, had his assets frozen worldwide due to his association with Roman Abramovich and former directorship of Evraz plc. Dalston Projects' yacht was detained in London. The Supreme Court dismissed both appeals, holding the sanctions were proportionate to the legitimate aim of pressuring Russia.

Facts

Eugene Shvidler, a British citizen who had never been a Russian citizen, was designated under the Russia (Sanctions) (EU Exit) Regulations 2019 on 24 March 2022, resulting in a worldwide freeze of his assets. The designation was based on his association with Roman Abramovich (who had been designated for obtaining benefit from or supporting the Russian government) and his former role as a non-executive director of Evraz plc, a company operating in the Russian extractives sector. Separately, Dalston Projects Ltd owned a yacht called M/Y Phi, beneficially owned by Mr Naumenko, a Russian citizen resident in Russia. The yacht was detained in London under a direction issued by the Transport Secretary on 28 March 2022.

Mr Shvidler’s Background

Mr Shvidler emigrated from the USSR in 1989, became a US citizen, and later moved to the UK in 2004 under the Highly Skilled Migrants Programme, becoming a British citizen in 2010. He had not visited Russia since 2007 and had publicly expressed hope for an end to the violence in Ukraine.

Issues

The principal issues were: (1) the proper approach to proportionality assessment by courts reviewing sanctions decisions; (2) the approach appellate courts should take to proportionality assessments; (3) whether the sanctions pursued a legitimate aim; (4) whether there was a rational connection between the sanctions and that aim; (5) whether less intrusive means could achieve the aim; and (6) whether a fair balance was struck between individual rights and community interests.

Judgment

Proportionality Assessment

The Supreme Court confirmed that when reviewing sanctions decisions for compatibility with Convention rights, the court must make its own assessment of proportionality rather than merely reviewing the reasonableness of the Minister’s decision. However, the court must accord appropriate weight to the executive’s judgment on matters within their constitutional responsibility and institutional competence, particularly regarding foreign policy and national security.

Margin of Appreciation

The Court held that Ministers should be accorded a wide margin of appreciation in making judgments about sanctions given the context involving national security and international relations. The Government has superior institutional competence to assess the likely impact of sanctions on Russia’s conduct.

Legitimate Aim

The Court found the aim of limiting and deterring Russian aggression in Ukraine to be one of the most vital aims the UK government has been called upon to pursue in recent years, satisfying the first limb of the proportionality test.

Rational Connection

For the Phi Direction, the Court accepted there was both an economic link (depriving Mr Naumenko of chartering income that would benefit the Russian economy) and a political link (targeting wealthy elite members to undermine support for the regime). For Mr Shvidler, the Court accepted that his designation contributed to the cumulative effect of the sanctions regime and could encourage pressure on Mr Abramovich and send signals about consequences of involvement with Russian business.

Fair Balance

Regarding the Phi, the Court found the balance straightforward given the limited impact on Mr Naumenko’s daily life compared to the importance of the policy objective. For Mr Shvidler, while acknowledging the severe and open-ended nature of the sanctions affecting him and his family, the Court concluded that sanctions must be severe to be effective, and the OFSI licensing system provided a safety valve for basic needs.

Dissenting Judgment

Lord Leggatt dissented on Mr Shvidler’s appeal, expressing concern that the reasons given for freezing Mr Shvidler’s assets were inadequate. He criticised the flimsy connections relied upon and argued the courts were failing in their duty to protect fundamental freedoms if they simply rubber-stamped executive assertions without critical scrutiny.

Implications

This judgment provides important guidance on the operation of the UK sanctions regime and the judicial review of sanctions decisions. It confirms that courts will accord significant deference to executive judgment on matters of foreign policy while still conducting their own proportionality assessment. The decision establishes that sanctions targeting individuals based on association with involved persons and involvement in strategic sectors can be proportionate even when the individual has no direct political connections to the targeted regime. The case also clarifies the appropriate approach for appellate courts reviewing proportionality assessments, emphasising flexibility depending on whether matters of general principle or significant social importance are at stake.

Verdict: Both appeals dismissed. The Supreme Court held that the detention of the yacht Phi and the designation of Mr Shvidler were proportionate measures lawfully issued and maintained by the respective Secretaries of State.

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)