UK Supreme Court Ruling Affirms Government’s Sanctions Regime
By Lauren Schaefer, Legal Fellow
On 29 July 2025, the UK Supreme Court handed down one of the most important sanctions decisions since Brexit. In Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs and Dalston Projects Ltd v Secretary of State for Transport, the Court ruled on how far the UK can go in using sanctions and how these measures stack up against human rights protections.
The Case
Eugene Shvidler – a British citizen and long-time associate of Roman Abramovich – was sanctioned under the UK’s Russia (Sanctions) (EU Exit) Regulations 2019 after Russia’s full-scale invasion of Ukraine in 2022. His assets were frozen, and he argued that this was a disproportionate interference with his rights under the European Convention on Human Rights (ECHR), including Article 8 (respect for private and family life) and Article 1, Protocol 1 (protection of property).
Dalston Projects Ltd brought a related challenge over the detention of the Phi superyacht, allegedly owned or controlled by Russian businessman Sergei Naumenko, claiming the seizure of the yacht lacked proper justification and due process.
Both cases turned on the proportionality test — a legal yardstick for judging if a government action that limits rights is fair. Specifically in this case, whether the sanctions infringed on the appellants’ ECHR rights. The proportionality test asks four key questions: Is the government pursuing a legitimate goal? Is there a logical link between the action and that goal? Could the same result be achieved in a less harmful way? And does the public benefit outweigh the harm to the individual?
The Judgment
The Supreme Court unanimously endorsed a “fresh determination” approach to the proportionality review. A “fresh determination approach” means that when a proportionality assessment has already been made by a first instance court, the appellate court (in this case the UKSC) must itself re-assess the proportionality question in full, rather than applying a lighter-touch review of whether the lower court’s decision was reasonable. The Court said this was approach was appropriate because sanctions decisions can seriously affect individual rights, so an in-depth, independent review is needed to ensure they are lawful and proportionate.
The court upheld the legality of both decisions by a majority in Shvidler and unanimously in Dalston. The Court found:
- Legitimate Aim: The sanctions regime pursued a vital objective—deterring Russian aggression in Ukraine.
- Rational Connection: Even indirect associations with influential figures like Abramovich could justifiably fall within the sanctions regime, given its aim to prevent further aggression and to have a cumulative impact through multiple designations.
- No Less Intrusive Means: No viable alternatives were presented that would achieve the same effect with less interference.
- Fair Balance: Although the sanctions had severe impacts—such as an asset freeze on Shvidler and revenue loss from Phi—these were necessary for sanctions to be effective. The licensing regime offered a degree of mitigation
There was one note of dissent among the judges; Lord Leggatt called Shvidler’s designation “Orwellian” and warned against allowing “guilt by association” to become normal in UK law along with undue deference to executive power.
Why It Matters
This ruling marks the Supreme Court’s endorsement of the legality of the UK’s expansive approach to sanctions targeting “involved persons” and associates, even absent direct links to state misconduct. The case is considered to be the leading UK authority on how courts should evaluate proportionality and human rights claims in the sanctions context.
The judgment is also practically significant: had Shvidler succeeded, it would likely have opened the door for dozens of sanctioned individuals to challenge their designation, especially those who lack direct links to state misconduct, potentially weakening the UK’s Russia sanctions framework. As such, the decision not only clarifies the legal standard for reviewing sanctions but also reinforces the UK’s political commitment to using economic restrictions as a tool of foreign policy, particularly in response to serious human rights violations such as those committed during the war in Ukraine.
Photo by: Maggie Jones CC 1.0 / Russian-owned Phi superyacht, seized when sanctions were imposed on Russia in March 2022.
