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

Facts

After the Russian invasion of Ukraine in 2022, the Secretary of State designated Mr Shvidler, a businessman with British citizenship, under the Russia (Sanctions) (EU Exit) Regulations 2019, made under the Sanctions and Anti-Money Laundering Act 2018. The grounds were that he was an involved person, by reason of his close association with Roman Abramovich, who had himself been designated, and his position as a director of a company operating in a sector of strategic significance to the Russian government. Designation froze his assets and imposed travel restrictions, subject to the possibility of licences. He challenged the designation under the review provisions of the 2018 Act, contending among other things that it was a disproportionate interference with his rights under Article 1 of Protocol 1 and Article 8 of the European Convention on Human Rights.

History

The High Court dismissed the challenge and the Court of Appeal dismissed his appeal. He appealed to the Supreme Court.

Issue

How a court should assess the proportionality of a sanctions designation said to interfere with Convention rights, including how much weight should be given to the assessment of the Secretary of State, and whether the designation of Mr Shvidler was proportionate.

Held

Appeal dismissed by a majority. The designation was a proportionate interference with the Convention rights of Mr Shvidler.

Ratio

• In assessing the proportionality of a sanctions designation, the court decides for itself whether the interference with Convention rights is justified, but it must give appropriate weight to the judgment of the executive, and in a field of foreign policy and international relations, endorsed by Parliament in the 2018 Act, that weight is considerable, particularly as to whether a measure is likely to advance its aim and whether a less intrusive measure would be as effective.
• Where designation of individuals forms part of a wider strategy of exerting pressure on a foreign state by imposing costs on those associated with it, the rational connection and necessity of an individual designation may be judged by reference to its contribution to that strategy as a whole, without proof that the particular designation will itself produce a measurable effect on the conduct of the foreign state.

The judgments

Key reasoning

• The aim of the sanctions regime, to put pressure on the Russian government to cease its actions destabilising Ukraine, was plainly a legitimate aim of the highest importance.
• The strategy of targeting individuals connected to the regime and to strategically significant sectors of the Russian economy was a judgment about the conduct of foreign relations and the likely effect of sanctions, on which the executive has greater institutional competence and democratic accountability than the court.
• The effectiveness of sanctions depends on their cumulative effect and on coordination with allied states, so the contribution of each designation cannot sensibly be isolated and measured.
• The impact on Mr Shvidler, though serious, was mitigated by the licensing regime and the possibility of review, and was not disproportionate when weighed against the importance of the aim.

Where it fits in the module

On proportionality, Shvidler is a modern application of the structured test in Bank Mellat v HM Treasury (No 2) [2013] UKSC 39, showing how the weight or respect given to the primary decision-maker can shape the outcome at each stage. The division between the majority and Lord Leggatt maps onto the central debate in the topic: whether proportionality under the HRA requires the court to make its own judgment, or whether institutional competence and constitutional responsibility justify a more deferential, close-to-rationality standard in some fields.

Criticisms

• Giving considerable weight to the executive on rational connection and necessity arguably collapses proportionality into something close to rationality review in sanctions cases, contrary to the court being the judge of Convention compatibility.
• Justifying individual designations by their contribution to an overall strategy makes it very difficult for any designated person to show disproportionality, since almost any designation can be said to add to cumulative pressure.
• Designation based on association and position rather than conduct raises rule of law concerns about severe measures being imposed on individuals for the actions of a foreign state they do not control.
• On the other side, it may be argued that courts lack the means to evaluate the effectiveness of sanctions and that more intrusive review would undermine coordinated international action.