Dalston Projects Limited & Ors v Secretary of State for Transport

A court determining whether executive action is compatible with a Convention right must decide proportionality as a matter of substance. It applies the four-limb test and may give appropriate weight to executive expertise, especially in foreign affairs, but cannot confine itself to rationality review.

On a first appeal concerning proportionality in an individual case, the appellate court reviews whether the lower court’s outcome was wrong. It does not conduct a rehearing, but neither is intervention restricted to errors of law or unreasonable conclusions.

An individual sanctions measure may be proportionate because of its contribution to the cumulative effect of a wider sanctions regime. Rational connection requires no perfect fit, and the possibility of a marginally less intrusive measure is insufficient if it would unacceptably compromise the objective.

The first appeal challenged decisions to detain and continue detaining a luxury yacht under the Russia (Sanctions) (EU Exit) Regulations 2019. The owner was ordinarily resident in Russia but was not designated and had no established connection with President Putin. Sir Ross Cranston dismissed the statutory review claim in [2023] EWHC 1885 (Admin).

The conjoined appeal concerned Eugene Shvidler’s designation because of his association with Roman Abramovich and his former directorship of Evraz. Garnham J dismissed that claim in [2023] EWHC 2121 (Admin).

Both claims arose under section 38 of the Sanctions and Anti-Money Laundering Act 2018. The common questions concerned how a first-instance court should determine proportionality under the Human Rights Act 1998, and how an appellate court should review that determination. The individual appeals also raised proper purpose, rational connection, less intrusive measures and fair balance.

1. Both appeals dismissed. A first-instance court determining whether executive action violates a Convention right decides proportionality for itself as a substantive question. Its task is not confined to reviewing whether the executive acted rationally or properly considered proportionality. The court may nevertheless give substantial weight to the executive’s assessment where the context engages foreign relations, national security, institutional expertise or democratic accountability. It must not assume the underlying administrative decision-making power: paras [9]-[21].

2. Appeals concerning proportionality fall into three categories. Case-stated appeals are governed by the restricted Edwards v Bairstow standard. Challenges to the compatibility of a rule or policy may require the appellate court to undertake its own assessment. A first appeal concerning application of a measure to an individual is a review under the Civil Procedure Rules 1998. The question is whether the lower court’s proportionality outcome was wrong. The appellate court does not rehear the case, ordinarily respects findings of primary fact and is not confined to identifying an error of law or an unreasonable conclusion: paras [22]-[36].

3. The yacht-detention power was used consistently with the statutory purpose. Regulation 57D expressly extended beyond designated persons to ships owned, controlled, chartered or operated by persons connected with Russia. The power was not merely ancillary to the power to exclude Russian ships. Detention could lawfully contribute to the intended broad pressure on Russia: paras [63]-[78].

4. The former Secretary of State’s claim that the yacht owner had connections with President Putin was incorrect and ought not to have been made or considered. It did not vitiate the decision because the same outcome would inevitably have followed, later decisions had superseded it and no substantive public-law breach remained. Regulation 57D(5)(c) required grounds, not full reasons. Identifying the ownership of the vessel and the owner’s connection with Russia satisfied that requirement: paras [79]-[100].

5. The yacht’s detention satisfied all four proportionality limbs. Its contribution had to be assessed as part of the cumulative sanctions response. There was a rational connection between pressure on a wealthy Russian resident and the objective of influencing Russian conduct. The significant but non-hardship interference with use of a luxury asset did not outweigh the exceptionally weighty public interest in responding to Russia’s invasion of Ukraine: paras [109]-[131].

6. In the Shvidler appeal, Garnham J had incorrectly treated proportionality as depending on whether the executive’s conclusion was reasonably open to it. The Court of Appeal therefore made the assessment itself, while remaining an appellate court conducting a review: paras [161]-[169].

7. The designation was nonetheless proportionate. The statutory expression “associated with” was inclusive and bore its natural, broad meaning. Mr Shvidler’s financial and professional relationship with Mr Abramovich supplied reasonable grounds for the association finding. His former directorship also independently satisfied a designation criterion: paras [174]-[186].

8. Rational connection requires no perfect fit and is assessed objectively. Individual designations may contribute cumulatively by creating pressure and deterrence. Less intrusive alternatives did not provide an equivalent response without unacceptably compromising the objective. Although designation was severe and open-ended, the effects on Mr Shvidler and his family did not outweigh the public interest in ending Russia’s serious violation of international law: paras [187]-[216].

1. Court of Appeal (Civil Division): In [2024] EWCA Civ 172, dismissed both conjoined appeals. It held that the yacht detention and Mr Shvidler’s designation were lawful and proportionate, although the judge in the Shvidler proceedings had misstated the court’s role.
2. High Court, Administrative Court — Dalston Projects: Sir Ross Cranston dismissed the statutory review claim in [2023] EWHC 1885 (Admin). He granted permission to appeal because the issues were important.
3. High Court, Administrative Court — Shvidler: Garnham J dismissed the statutory review claim in [2023] EWHC 2121 (Admin). Lewis LJ granted permission to appeal on proportionality but refused permission on discrimination.