First Russia sanctions case decided by Supreme Court

30/07/25

On 29 July 2025, the Supreme Court (Lord Reed, Lord Sales, Lord Leggatt, Lady Rose and Lord Richards) dismissed appeals by Mr Shvidler and Dalston Projects Ltd. against sanctions imposed on them under the Russia (Sanctions) (EU Exit) Regulations 2019 as amended.

The Court accepted that in both cases the sanctions had interfered with the appellants’ private lives under Article 8 of the ECHR and their rights to peaceful enjoyment of their property under Article 1 to the First Protocol. Like the High Court and Court of Appeal, it however rejected (by a majority in Shvidler and unanimously in Dalston Projects) the submission that those interferences were disproportionate and so unlawful. It came to that conclusion after making its own assessment of the proportionality of the sanctions measures.

In relation to Dalston Projects, the Court also (i) rejected the contention that the Transport Secretary had failed to state proper grounds for the detention of its vessel;  and (ii) having dismissed the challenge under A1P1, declined to rule on whether the Secretary of State had committed the tort of conversion.

The judgment of the Supreme Court is the latest in a series of unsuccessful attempts by sanctioned individuals and entities to challenge measures imposed pursuant to regulations made under the Sanctions and Money Laundering Act 2018. In that sense, it covers well-travelled ground. Two particular aspects of the judgment however deserve special mention.

First, the Supreme Court took a different approach from the Court of Appeal (Vos MR, Singh and Whipple LJJ) to the question of whether an appellate court is required to make its own, fresh assessment of the proportionality of a measure or whether, on the other hand, it need only review whether the first-instance court applied the correct approach and arrived at a reasonable result. The Supreme Court unanimously rejected Singh LJ’s tripartite scheme in favour of a more flexible approach. It commented that a fresh assessment at appellate level is likely to be appropriate where the appeal court’s decision is likely to provide guidance for later cases (as was the position here), or where the subject matter has major social or political significance.

Secondly, Lord Leggatt disagreed with the majority’s decision that the sanctions imposed on Mr Shvidler were lawful. He considered that the government had failed to show a rational connection between freezing Mr Shvidler’s assets and the objectives of the sanctions regime. He also disagreed that the executive should be accorded a wide margin of appreciation over the question of whether its own decision to restrict the liberty of an individual strikes a fair balance between that individual’s rights and the interests of the community. Lord Leggatt would have held that to prohibit Mr Shvidler from using any of his own funds and resources globally without the government’s permission was oppressive, unjust and disproprortionate to any contribution that this drastic curtailment of his liberty could rationally be expected to make to ending the war in Ukraine.

The judgment is here.