UK Supreme Court Decides First Sanctions Case – Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs [2025] UKSC 30

The Supreme Court has dismissed the appeals in Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs [2025] UKSC 30. This is the first Supreme Court decision on a designation under the Russia (Sanctions) (EU Exit) Regulations 2019.

Several elements of the case will be useful to practitioners in the area. Perhaps the most significant is the clarification of how the courts should treat the assessment of proportionality, both at first instance, and on appeal. In relation to a first instance challenge to designation, it was confirmed that the court is not undertaking a mere rationality review, it must also make its own assessment of the proportionality of a given action. [See section 7 of the decision]

The case also deals with when an appellate court should make a “fresh determination”, rather than simply reviewing the first instance decision. Singh LJ identified three “categories of case” where the appellate court can make its own assessment of proportionality. The Supreme Court rejected this approach, on the basis that simple categorisation of such cases is not possible. The court suggested that the following factors might justify taking a fresh approach, while making clear that this list is not exhaustive:

1. 1. the relevance of the assessment of proportionality across a range of cases;
   2. the nature of the measure in question, since the constitutional responsibility of the senior courts is likely to be engaged in a more acute way in relation to challenges to primary or secondary legislation;
   3. whether the case involves a claim that legislation of any devolved legislatures is outside competence by reason of incompatibility with Convention rights;
   4. whether the case involves a claim that there is significant incompatibility between primary legislation and Convention rights;
   5. the need to resolve differences between strands of authority which may have emerged in the lower courts; and
   6. the high importance for society of the issue to be resolved and the concomitant public interest in its being directly determined by a senior court.

Appellate litigation in this area will inevitably involve the appellant (be they a designated person or government department) arguing that the decision is of such general importance that the appellate court is entitled to make such a “fresh determination”. The court recognised this reality, and stated:

“Unfortunately, the fact that simple categories do not exist in this area may mean that in circumstances where it is unclear which appellate approach is correct, and there is the prospect of an onward appeal to this court, an intermediate appeal court may find it prudent to make an assessment of proportionality according to both approaches.”

More generally, sections 7-12 of the judgement are essential reading when it comes to the approach that the courts should take to proportionality in the context of sanctions legislation, and how the authority on deference applies in the context of sanctions.

The dissenting judgement of Lord Leggatt will be of considerable interest to those representing designated persons, particularly those who are designated by virtue of an association with a relevant person, rather than their own actions falling under regulation 6(2)(a). Lord Leggatt had a “difference of view about the separation of powers”, which in the context of a robust dissent rather undersells the distance between his decision and that of the majority.

A key distinction between the reasoning of the majority and that of Lord Legatt was on the extent to which sanctions can be justified when the impact on a given regime is likely to be limited. The majority decision appeared to accept that designation is sustainable even where it would only exert pressure on the Russian regime in “subtle and invisible ways”. In relation to Shvidler, Lord Leggatt said the following of the Secretary of State’s reasons:

“I consider them so inadequate and lacking credibility that they do not establish a rational connection between the measure taken and the desired aims. In making that assessment I have had in mind the argument that the effectiveness of sanctions depends on their cumulative effect. Unless, however, a measure is rationally connected to the desired objective, it cannot add or contribute anything to any such cumulative impact.”

Those instructed to represent designated persons may wish to consider the extent to which a designated person is actually connected to, or capable of influencing a target regime when challenging the proportionality of a given measure.