Eugene Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs

Meeting the statutory threshold for sanctions designation does not, by itself, establish proportionality. Where Convention rights are engaged and the decision-maker has a discretion, the individual designation must be assessed under the four-stage test in Bank Mellat v HM Treasury (No 2) [2013] UKSC 39. The court must scrutinise rational connection, less intrusive alternatives and fair balance, while giving appropriate weight to executive expertise in foreign affairs. An individual measure need not produce a demonstrable result by itself if sanctions operate cumulatively and are capable of contributing systematically to the statutory objective. Family hardship, temporary effects, licensing arrangements and review safeguards are relevant to fair balance. Different treatment does not establish Article 14 discrimination where ethnicity is not shown to have influenced the decision and outcomes reflect cumulative individual circumstances.

The claimant, a British-American dual national and former non-executive director of Evraz plc, challenged his designation under the Russia (Sanctions) (EU Exit) Regulations 2019. The designation was made under regulation 5 and later varied after a ministerial review. The claimant accepted that his former directorship satisfied one designation basis, but disputed his alleged association with Roman Abramovich and receipt of financial benefit from him.

He challenged the designation under section 38 of the Sanctions and Anti-Money Laundering Act 2018, alleging disproportionate interference with Articles 8 and 1 of Protocol 1 and discriminatory treatment contrary to Article 14. The central issues were whether both designation bases were established, whether the measure was proportionate, and whether ethnicity had influenced the decision.

The review was dismissed.

1. The statutory scheme was not one whose application automatically satisfied proportionality in every individual case. Because Convention rights were engaged and the Secretary of State retained a discretion, the individual designation required separate proportionality assessment. The structured four-stage approach in Bank Mellat v HM Treasury (No 2) [2013] UKSC 39 was applied.
2. Foreign policy did not create a forbidden area of review. The court was required to scrutinise the factual basis, rational connection, alternatives and fair balance, while recognising the Secretary of State’s institutional competence and giving special weight to executive judgments on policy and foreign affairs. The court was not to substitute its own policy assessment.
3. The Secretary of State was entitled to rely on the response to the section 38 application and on Mr Reed’s evidence. Under the Carltona principle, officials acted for the Secretary of State, and the later material expanded and amplified the reasons already given. This approach was supported by Belfast City Council v Miss Behavin’ Limited [2007] 1 WLR 1420.
4. Both designation bases were established. The claimant’s employment, severance payment and nominee directorship provided reasonable grounds to suspect that he had obtained financial benefit from Mr Abramovich. Payment by Sibneft or Evraz did not prevent the benefit being attributable to Mr Abramovich, whose ownership and patronage enabled the appointments. Evidence that Mr Abramovich, Mr Abramov and Mr Frolov acted in concert also provided reasonable grounds to suspect a joint arrangement under Schedule 1 paragraph 3, so their combined holdings could be attributed for regulation 7 purposes.
5. The designation was rationally connected to the statutory objective. The Secretary of State could reasonably regard it as capable of exerting pressure through the claimant’s relationship with Mr Abramovich, sending signals to others, encouraging divestment and discouraging involvement in strategically significant Russian sectors. Not every proposed mechanism had to be established. The weaker factor concerning resignations did not stand alone, and the cumulative effect was sufficient.
6. The challenge based on less intrusive measures failed. The comparative effectiveness of alternative foreign-policy measures was a matter on which the court had to defer, absent an analysis that was self-evidently irrational or outside the range of reasonable responses.
7. Fair balance was established. The severe effects on the claimant and his family were relevant, including under Beoku-Betts v Secretary of State for the Home Department [2009] 1 AC 115 (HL). However, the sanctions were temporary and reversible, licensing arrangements mitigated their effects, and ministerial and court review were available. The effectiveness of an individual designation did not have to be separately demonstrated because the regime operated cumulatively, as explained in Dalston Projects Ltd v The Secretary of State for Transport [2023] EWHC 1885 (Admin).
8. The discrimination ground was hopeless. There was no evidence that race, nationality or ethnicity had influenced the decision. The claimant’s designation resulted from the combination of his Evraz role and relationship with Mr Abramovich, while other individuals were differently situated. Ground 2 was dismissed.

not stated in the judgment.