Dalston Projects Ltd and Others v Secretary of State for Transport

This Court considered two linked appeals challenging executive action taken under the Russia (Sanctions) (EU Exit) Regulations 2019 made under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) and raising Human Rights Act 1998 issues (Article 1 of Protocol 1 and Article 8). The Court summarised the applicable four‑limb proportionality test (Bank Mellat) and explained the role of first‑instance and appellate courts when assessing proportionality (including the approach in In re B).

Applying those principles, the Court held (i) in Dalston Projects that the detention and movement directions for the yacht Phi were within the statutory powers, were for a proper purpose (not contrary to Padfield), were rationally connected to legitimate aims of the sanctions regime, and struck a fair balance in A1P1 terms, and (ii) in Shvidler that the designation under the 2019 Regulations was lawful because the Secretary of State had reasonable grounds to suspect involvement or association with persons and entities connected to the Russian state and the designation was proportionate.

• The Court rejected challenges about failure to state grounds in the detention direction, finding the Direction gave sufficient factual grounds.
• Political statements by a minister were described as erroneous political messaging but the Court concluded they did not affect the outcome.
• The Court declined to decide conversion because the public law challenges failed.

The appeals arose from two section 38 SAMLA challenges in the Administrative Court. Dalston Projects challenged detention and movement directions issued under the 2019 Regulations in respect of a luxury yacht allegedly owned or beneficially owned by a Russian‑connected individual. Shvidler challenged his designation under regulation 5 of the 2019 Regulations. Both claims invoked Convention rights (A1P1 and Article 8) and raised conventional public law grounds (Padfield, failure to state grounds, procedural points).

Procedural and legal framing:

• The Court set out the HRA framework (sections 6 and 7) and the four‑part proportionality test. It reviewed authorities on intensity of review and the respective roles of trial and appellate courts, explaining that where a first‑instance court has assessed proportionality on the facts, an appeal court reviews for whether the lower court was "wrong" (In re B), giving appropriate weight to first‑instance factual findings while retaining the duty to form its own view on proportionality where justified.

Dalston Projects (detention of the Phi):

• Nature of claim: application to set aside detention and movement directions under Part 6 of the 2019 Regulations as unlawful and disproportionate under A1P1; additional public law grounds (Padfield, failure to state grounds, political statements, alleged conversion).
• Issues framed: whether the detention power had been exercised for a proper purpose; whether the Direction stated adequate grounds; whether ministerial public statements infected the decision; whether continued detention was a mere holding measure without adequate inquiry; and whether the detention was proportionate.
• Court's reasoning: the statutory wording permitted detention of ships owned/operated by persons "connected with Russia" and did not require formal designation; the purpose in detaining a luxury asset to affect the broader sanctions objective fell within the statutory scheme and was not contrary to Padfield; the detention notice sufficiently stated factual grounds; ministerial comments were incorrect and inappropriate but did not change the outcome; proportionality (limbs 2 and 4) was satisfied because of a rational connection to sanctions objectives and the public interest outweighed the owners' losses; conversion was not pursued if public law relief failed.

Shvidler (designation):

• Nature of claim: challenge to designation under regulation 5 and regulation 6 criteria, arguing lack of lawful association with designated persons and that designation was disproportionate under Article 8 and A1P1.
• Issues framed: whether there were reasonable grounds to suspect involvement or association within regulation 6; whether the association with Mr Abramovich was made out; and whether designation was proportionate and struck a fair balance.
• Court's reasoning: the Secretary of State had reasonable grounds (including historical employment, nominee director roles and shareholding structures) to suspect the required connections and benefits; the court undertook its own proportionality assessment but upheld the designation as rationally connected to the sanctions objective and proportionate overall, taking account of the cumulative effect of sanctions and the public interest.

The appeals were dismissed. The Court provided guidance on appellate review of proportionality, distinguishing three categories of cases and endorsing the In re B approach for appeals from first‑instance proportionality findings.

Appeals dismissed. The Court applied the Bank Mellat four‑fold proportionality test and In re B guidance on appellate review. It held that the detention of the yacht and the designation of Mr Shvidler were within the statutory powers, rationally connected to legitimate sanctions objectives and, on balance, proportionate. Subsidiary public law complaints (Padfield, failure to state grounds, alleged procedural deficiencies) were rejected as either unfounded or immaterial to the outcome.

Appeals to the Court of Appeal limited to review of High Court decisions from the Administrative Court. Dalston Projects appealed from Sir Ross Cranston sitting as a High Court judge ([2023] EWHC 1885 (Admin); CA‑2023‑001658). Shvidler appealed from Garnham J ([2023] EWHC 2121 (Admin); CA‑2023‑001813). Both appeals were heard together in the Court of Appeal and dismissed ([2024] EWCA Civ 172).