The dismissal of the first judicial challenge to sanctions imposed on an individual following the invasion of Ukraine has prompted a call for an independent review of the regime.
Billionaire businessman Eugene Shvidler was ‘designated’ under the regime established following the invasion in February last year. His March 2022 designation was on two bases: that there are reasonable grounds to suspect association with Russian billionaire Roman Abramovich and that Shvidler is, or has been, involved in obtaining a benefit from the Russian government as a non-executive director of Evraz plc, an entity carrying on business in sectors of strategic significance.
Shvidler argued that the designation was a ‘disproportionate interference’ with his Article 8 and Article 1 rights of the European Convention on Human Rights and that the foreign secretary had ‘exercised his discretion in a discriminatory manner in breach of Article 14 read together with Article 8 and Article 1 Protocol 1 of the ECHR’.
In Eugene Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs Mr Justice Garnham acknowledged the ‘significant effect the sanctions imposed’ were having on Shvidler and his family.
The 28-page judgment said Shvidler’s ability to conduct his businesses had been ‘destroyed’, he can no longer access financial institutions he has used for many years, his two private aircrafts have been grounded and he has been unable to pay the expenses necessary to ensure his private yacht is safe and seaworthy.
The judge said: ‘Undoubtedly, this is a case where close scrutiny is necessary in order to adjudicate on a complaint that convention rights have been infringed.’ While the secretary of state is the primary decision-maker, ’the court is well placed to judge the reasonableness of his analysis’.
Finding the bases of the designation well-founded, the judge said Shvidler’s ‘remuneration as a director can properly be regarded as a financial benefit obtained from Mr Abramovich’. He added that the sanctions imposed on Shvidler may discourage others from working in support of the Russian state.
‘To be effective sanctions need to send messages to the designated person, and others in a similar position, that the conduct in question is unacceptable. The value of such messages persists even if the person in question ceases the conduct complained of and makes statements distancing himself from the Russian regime,’ the judge said. The sanctions imposed on Shvidler 'are capable of contributing systematically to the desired objective'.
In dismissing the second ground of challenge, the judge described the discrimination case as ‘hopeless’. Shvidler’s case in this regard 'proceeds on inference without foundation’, he said. 'It is plain from all the evidence that the reason that the claimant was designated was not just his role at Evraz but the combination of that role with his relationship with Mr Abramovich.'
Welcoming the outcome, Helen Taylor, senior legal researcher at Spotlight on Corruption, said: ‘Today’s ruling is a significant victory for the government’s ambitious use of sanctions as a foreign policy tool aimed at sending a political message to Putin and his enablers. Importantly, the court recognised that the effectiveness of any sanctions regime doesn’t just turn on one designation, but on the cumulative effect of a range of measures designed to increase pressure on the global networks of influence that sustain Russian kleptocracy.’
However she said Shvidler’s challenge exposed weaknesses in the government’s sanctions capacity and processes and called for an independent review of the sanctions regime to ensure 'the right people are being targeted, the licensing regime supports the aims of sanctions, and there’s a clear policy about the kind of behavioural change the government seeks to secure from those designated.'
Anthony Hanratty, senior associate at international firm Withers LLP, said: ‘This decision is a signal of intent from the UK when it comes to sanctions enforcement, suggesting a more expansive and aggressive approach than the EU. The sanctions legislation is drafted very broadly and gives a lot of discretion to government ministers when deciding whether to sanction someone, even where there is no direct involvement with, or benefit from, the Russian regime.
‘However, this also greatly increases the risk that persons who have no current ties to the regime, and who oppose the invasion of Ukraine, will find themselves falling foul of sanctions and will have a very difficult job having them removed.’
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