The government's imposition of sanctions on a Russian-born UK citizen and the owner of an impounded superyacht was justified, Supreme Court justices found today in a significant ruling on the proportionality of interference with human rights in pursuit of government policy. However a dissenting judgment in one of the two rolled-up appeals described the imposition of sanctions as 'a serious invasion of liberty'.
In Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs and Dalston Projects v Secretary of State for Transport, the UK's highest court was ruling on appeals by Eugene Shvidler, whose assets were frozen in March 2022, and Dalston Projects Ltd, the owner of a 58.5-metre motor yacht detained in London from the same time.
Shvidler emigrated from the Soviet Union as a stateless person in 1988 and became a naturalised UK citizen in 2010. He was designated under the Russia (Sanctions) (EU Exit) Regulations 2019 partly because of his connection with former Chelsea Football Club owner Roman Abramovich - currently the subject of sanctions - and for formerly serving as non-executive directorship of Evraz, a UK company doing business in Russia.
Dalston Projects is a UK company which owns the motor yacht Phi, which has been moored in London’s West India Dock since 2021. Its beneficial owner, Russian businessman Sergei Naumenko, said the detention had causing a loss of up to €650,000 a week in charter fees.
In today's judgment, Lord Sales and Lady Rose, which whom Lord Reed and Lord Richards agreed, dismissed both appeals, saying that both the designation of Shvidler 'was a proportionate measure lawfully issued and maintained by the foreign secretary. The direction covering the yacht Phi was 'proportionate and lawful'. The justices noted that the 'very considerable income' received from chartering the yacht 'is likely to make its way to Russia' and purchase influence there.
However in a strongly dissenting judgment on Shvidler's appeal, Lord Leggatt said: 'Making it a criminal offence for an individual who has done nothing unlawful to deal with his own assets without the government’s position… is a serious invasion of liberty'. He added that if courts are not prepared to protect individual freedoms, the right to a judicial review of a minister’s decision ‘is of little worth’.
While agreeing with Lord Sales and Lady Rose that the executive be granted a 'wide margin of appreciation' in making decisions on sanctions, their judgment did not adequately recognise the constitutional role of courts in protecting individual liberties, he said. Meanwhile the government had failed to explain how Shvidler's association with Abramovich 'implicitly legitimised' Russia's actions in Ukraine; the claims based on Shvidler's former role as a non executive director of Evraz are 'even less credible'.
On the question of proportionality, Leggat said a court should be 'slow to accept that penalising an innocent individual to incentivise others is a legitimate means of pursuing a policy claim'. Likewise, the courts should reject the 'Orwellian' approach of putting pressure on Shvidler to speak out more robustly.
'Although I am alone in doing so, I deprecate and would declare unlawful the removal of basic freedoms to which Mr Shvidley should be entitled as a citizen of this country. I would allow his appeal.'
In a statement following the judgment hand-down, Shvidler recalled the time of the USSR, when 'individuals could be stripped of their rights with little or no protections and that is how I feel about this judgment'.
His solicitor Michael O'Kane, senior partner at international firm Peters & Peters, said the decision would be remembered for Lord Leggatt's 'extraordinary dissenting judgment'. He added: 'Everyone interested in individual rights should read his judgment, as it is for the ages.'
White collar crime specialist Syed Rahman, partner at Rahman Ravelli, said the verdict sends 'a chilling message' to foreign nationals, however loosely they may be connected to Russia. 'It has to be asked whether the Supreme Court’s decision amounts to giving carte blanche to political sanctions rather than to principled human rights jurisprudence. The judgment raises serious questions about whether we are witnessing the rise of political sanctions that are being dressed up in the language of human rights law.
'There is a broader principle at stake here. If the principle of proportionality becomes rhetorical - and precision gives way to symbolism - then the UK risks abandoning any sense of legal nuance in favour of the very broad brush of geopolitics.'
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