Supreme Court upholds sanctions in Shvidler and Dalston: a cautious affirmation of executive power

Posted: 15/08/2025

On 29 July 2025, the Supreme Court handed down its long-awaited decision in the joint appeals of Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs and Dalston Projects Ltd v Secretary of State for Transport [2025] UKSC 30. The judgment upheld ministerial decisions to impose sanctions and detain property under the Russia (Sanctions) (EU Exit) Regulations 2019, dismissing challenges based on proportionality and human rights compatibility.

The ruling affirms the government’s wide margin of discretion in pursuing foreign policy objectives, even where measures significantly interfere with individual rights under the European Convention on Human Rights. At the same time, the court restated its commitment to meaningful judicial oversight in the sanctions context.

Legal context and background

The appeals arose from the UK’s post-Brexit autonomous sanctions regime, built on the Sanctions and Anti-Money Laundering Act 2018 ('SAMLA'). The 2019 regulations empower ministers to impose designations and asset restrictions without requiring proof of criminal conduct, provided the action is considered appropriate to advance foreign policy or national security goals.

• Eugene Shvidler
  Mr Shvidler, a dual UK–US citizen and long-time business associate of Roman Abramovich, was designated on 24 March 2022. The decision resulted in a global asset freeze and criminalised any dealings with him, save for specific licensed exceptions. The designation was based primarily on historic business roles in Sibneft and Evraz plc; both linked to Abramovich.
  
  
• Dalston Projects Ltd and M/Y Phi
  The second appellant, Dalston Projects Ltd, owned the luxury yacht Phi, detained in London under ministerial direction. The beneficial owner, Mr Naumenko, was not himself designated but was alleged to be 'connected with' Mr Shvidler. The company argued that the detention caused significant financial loss during peak chartering seasons.
  
  Both appellants claimed that the sanctions disproportionately interfered with their rights under Article 8 (private and family life) and Article 1 of Protocol 1 (peaceful enjoyment of possessions) of the ECHR.

Judicial review and the proportionality test

The challenges were brought under Part 79 of the Civil Procedure Rules, the statutory review mechanism for sanctions designations. The central issue was whether the decisions infringed ECHR rights and, if so, whether that interference was justified. The Court applied the familiar four-stage proportionality test from Bank Mellat v HM Treasury (No 2) [2013] UKSC 39:

1. Legitimate aim – was the objective sufficiently important to justify limiting a fundamental right?
2. Rational connection – was the measure rationally connected to that aim?
3. Less intrusive means – could a less restrictive alternative have been used?
4. Fair balance – did the measure strike a fair balance between individual rights and the interests of the community?

Crucially, the court confirmed that in sanctions cases, it must conduct its own proportionality assessment, not merely review for irrationality or legal error.

The majority judgment

The majority (Lord Sales and Lady Rose, with Lord Reed and Lord Richards concurring) upheld both ministerial decisions. They found that:

• The sanctions pursued a legitimate and vital aim, deterring Russian aggression and supporting international peace and security.
• Even indirect economic pressure on individuals with ties to Russian elites could contribute to the policy objective.
• Ministers were entitled to a broad margin of appreciation, especially in matters of national security and foreign policy.
• The interference with rights, though significant, was proportionate given the wider context.

In relation to Phi, the court held that its detention was justified. Revenue from chartering the yacht could plausibly benefit individuals in Russia, satisfying the test for economic connection.

The court also noted that the cumulative effect of sanctions across the regime not the efficacy of any single measure was the correct lens for proportionality analysis.

Dissenting opinion: a note of caution

Lord Leggatt dissented with regards to Mr Shvidler’s appeal. His view was that:

• the grounds for designation were insufficient and lacked specificity, particularly given Mr Shvidler’s limited role and time lapsed association with Evraz
• the asset freeze inflicted severe personal hardship and impinged on fundamental rights
• the judiciary must play a primary role in determining whether a fair balance has been struck. Deference to the executive, while appropriate in some contexts, must not undermine the rule of law

Lord Leggatt’s dissent highlights a tension between national security discretion and the constitutional role of the courts, one that may potentially recur in future challenges.

Key takeaways

• the Supreme Court confirmed that ECHR rights are engaged by sanctions measures and require a full proportionality analysis
• the executive enjoys a wide but not unlimited margin of discretion, particularly where evidence of wrongdoing is indirect or historical
• the court reinforced its role in scrutinising factual and policy justifications, even in politically sensitive domains
• sanctions need not show direct causality between the individual and the harm targeted, association and deterrence may suffice

Implications for practice and policy

This ruling consolidates the UK’s post-Brexit approach to targeted sanctions, affirming their legal robustness even where no criminal allegation is made. It also sets a precedent for how courts will engage with proportionality in the context of global sanctions regimes.

For legal practitioners, the case underscores:

• the importance of testing the evidential basis for designations;
• the value of structured arguments under Part 79 and proportionality principles; and
• the risks to clients with indirect, historical, or reputational connections to designated individuals.

The case also signals that the sanctions landscape remains legally navigable but clients should expect sustained and intrusive scrutiny, particularly in the context of luxury assets, beneficial ownership, and geopolitical affiliations.

Conclusion

The Supreme Court’s decision in Shvidler and Dalston illustrates the delicate balance between state power and individual rights in modern sanctions regimes. While the court ultimately deferred to ministerial discretion, its review involved detailed considerations of transparency, reasoned justification, and proportionality.

This article was co-authored by Laura Stigaite, a trainee solicitor in the marine, trade and aviation team.

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