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

This appeal and the related Dalston Projects appeal concerned the lawfulness of sanctions measures taken under the Sanctions and Anti‑Money Laundering Act 2018 (SAMLA) and the Russia (Sanctions) (EU Exit) Regulations 2019 (as amended), and in particular whether those measures were proportionate to the legitimate aims relied upon by Ministers. The court applied the four‑stage proportionality test (as summarised in Bank Mellat and other authorities) in relation to interference with Convention rights (article 8 ECHR and/or A1P1) caused by designation and by detention of a ship.

The majority held that:

• the court must carry out its own proportionality assessment, but the executive is entitled to a wide margin of appreciation in matters of foreign policy and national security;
• the designation of Mr Shvidler (asset‑freeze) and the detention direction against M/Y Phi were rationally connected to legitimate aims of the sanctions regime, there were no less intrusive measures available that would achieve those aims, and a fair balance was struck between individual rights and the public interest; and
• the requirement in regulation 57D(5)(c) to state the grounds for detention was satisfied by the Phi Direction and there was no conversion in law since the detention was lawful.

The court therefore dismissed both appeals (the Dalston Projects appeal and the Shvidler appeal). Lord Leggatt dissented on the Shvidler appeal and would have allowed it, concluding that the reasons advanced for Mr Shvidler’s designation were insufficiently cogent and that the interference with his rights was disproportionate.

Background and parties

The appeals arose from measures taken under SAMLA and the Russia (Sanctions) (EU Exit) Regulations 2019. Eugene Shvidler (a British citizen) was designated on 24 March 2022 and subject to an asset‑freeze. Dalston Projects Ltd (beneficial owner acting through a special purpose vehicle) challenged the detention of the motor yacht M/Y Phi, detained by movement and detention directions under the 2019 Regulations.

Procedural history

• Both matters were first decided in the High Court: Dalston Projects ([2023] EWHC 1885 (Admin)); Shvidler ([2023] EWHC 2121 (Admin)).
• Both appeals were dismissed by the Court of Appeal ([2024] EWCA Civ 172).
• Both appeals proceeded to the Supreme Court and were heard together; the majority dismissed both appeals ([2025] UKSC 30), Lord Leggatt dissenting as to Shvidler.

Nature of the claims / relief sought

• Section 38 SAMLA challenges to maintain designations/directions (an asset‑freeze in Shvidler; detention/movement directions in Dalston Projects) on grounds including incompatibility with Convention rights and alleged defects in reasons/grounds.
• Dalston Projects additionally alleged tort of conversion and raised a challenge to the sufficiency of the stated grounds for detention in the Phi Direction.

Issues framed by the court

1. What approach should a court adopt when assessing proportionality in this context?
2. What is the correct appellate approach to review of a lower court’s proportionality assessment?
3. Whether the measures pursued a legitimate aim;
4. Whether there was a rational connection between the measures and the aim;
5. Whether less intrusive measures were available;
6. Whether a fair balance had been struck between individual rights and community interests;
7. Ancillary issues specific to Dalston Projects: adequacy of grounds in the detention direction and the tort of conversion.

Court’s reasoning (concise)

• The court reaffirmed that it must assess proportionality for itself but that the executive is entitled to a broad margin of appreciation in questions of foreign policy and national security because of its constitutional responsibilities and institutional expertise.
• The relevant proportionality test was the four‑part formulation applied in Bank Mellat and other authorities (legitimate aim; rational connection; less intrusive means; fair balance).
• On the facts and contemporaneous evidence, the court found a rational connection between the measures and their aims (deterrence, cumulative effect of sanctions, and the political/economic logic of targeting wealthy elites and prestige assets); no adequate less intrusive alternative was shown; and the fair balance favoured upholding the measures, in light of the grave and legitimate public aims and available licensing safeguards (OFSI/Treasury licences) to meet essential needs.
• The detention direction for the Phi satisfied the statutory content requirement to state grounds, and no conversion arose because the detention was lawful.

Outcome Both appeals dismissed by the majority; Lord Leggatt dissented on Shvidler and would have allowed that appeal.

Appeal dismissed. The Supreme Court (majority) held that the designation of Mr Shvidler and the detention direction against the Phi were lawful and proportionate under the four‑stage proportionality test as applied to Convention rights (article 8 and A1P1). The court reiterated that it must assess proportionality itself but must afford the executive a wide margin of appreciation in matters of foreign policy and national security; on the facts the measures were rationally connected to legitimate aims, no less intrusive alternative was shown, and a fair balance was struck. Lord Leggatt dissented on Shvidler, considering the reasons insufficiently cogent and the interference disproportionate.

High Court (administrative) decisions: Dalston Projects Ltd — Sir Ross Cranston, [2023] EWHC 1885 (Admin); Shvidler — Garnham J, [2023] EWHC 2121 (Admin). Both appeals to the Court of Appeal dismissed: [2024] EWCA Civ 172. Final appeal to the Supreme Court: judgment given [2025] UKSC 30 (this decision).