UK Supreme Court dismisses appeals in first de-designation challenges to UK’s Russia sanctions

The Supreme Court issued an important judgment involving designated persons, rejecting the argument that the UK Government acted unlawfully.

In two cases – Shvidler (Appellant) v Secretary of State for Foreign, Commonwealth and Development Affairs (Respondent); and Dalston Projects Ltd and others (Appellants) v Secretary of State for Transport (Respondent), the Supreme Court considered the operation of UK Russia sanctions regime and the proportionality of any interference with the sanctioned person and entity’s rights, as guaranteed by the European Convention of Human Rights (Article 8 of the Convention – right to private and family life, and Article 1 of the First Protocol to the Convention – right to property) .

Both appellants, Mr Eugene Shivdler and Dalston Projects Ltd (which owns a yacht, M/Y Phi), have been affected by restrictive measures imposed by the UK against Russia. Mr Shvidler, a UK and US national, was subject to sanctions since 24 March 2022, with his worldwide assets being frozen. Yacht Phi has been moored in London since 28 March 2022, preventing its ultimate owner, Mr Naumenko, from earning a significant income from chartering the yacht during the Mediterranean sailing season.

Mr Shvidler and Dalston Projects challenged the designations imposed on them by the UK Government under the special procedure set out in Part 79 of the Civil Procedure Rules. Mr Shvidler also separately asked to engage with the FCDO over any potential steps for him to have the sanctions lifted.

Mr Shvidler contended that sanctions against him were unlawful, as they were disproportionate and discriminatory, and that less intrusive measures could have been implemented. Dalston Projects raised an issue of rational connection between the imposed measures and the effectiveness of the sanctions.

Dalston Projects Ltd and Mr Shvidler’s challenges were first dismissed by the High Court in July and August 2023 respectively. The appeals brought against dismissal of the claims were then heard by the Court of Appeal, which also dismissed them in February 2024 [2024] EWCA Civ 172

The Supreme Court hearings in both cases took place in January 2025.

The UK Government has accepted that sanctions interfere with designated persons’ rights, but argues that they are justified considering the aims pursued.

The Supreme Court has agreed with the Government’s rationale and indicated that there were no less intrusive measures that could be used by the Government and that “the effectiveness of a sanctions regime depends on the cumulative effect of the measures imposed under that regime”.

The Supreme Court further indicated that sanctions must be severe and open-ended in order for them to be effective. While they affect the designated person and his relatives’ lives, the licencing regime reduces the negative impacts of designation.

The Supreme Court also defended Government’s stance of not publishing a policy on designation and de-designation, stating that “[d]esignations have been issued on rational and legitimate grounds in many cases”.

The Supreme Court unanimously dismissed the appeal of Dalston Projects Ltd, and dismissed the appeal of Mr Shvidler by a majority. Lord Leggatt provided a dissenting opinion on the Shvidler appeal. He questioned the legality of the sanctions and the designation of Mr Shvidler, indicating – by reference to sanctions – that “the longer the prohibition remains in place with no end in sight, the more oppressive it becomes”.

Lord Legatt emphasised that sanctions produce violations of the individual’s rights, and that punishment of an innocent individual cannot be used as “a legitimate means of pursuing a policy aim, however important that aim is thought to be”.  He further added: “Although I am alone in doing so, I deprecate and would declare unlawful the removal of basic freedoms to which Mr Shvidler should be entitled as a citizen of this country. I would allow his appeal.”

How Gherson can assist

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