When Sanctions Clash with Individual Rights: the UK Supreme Court Considers the Conflict Between Sanctions and Human Rights

Sanctions necessarily target individuals and materially impact their freedom to travel, do business and even own houses. Do the various guarantees of human rights offer a defence to these draconian restrictions?

On 29 July 2025, the Supreme Court of the UK (the “Supreme Court”) handed down judgment in the Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs and Dalston Projects Ltd and others v Secretary of State for Transport (the “Judgment”). The Supreme Court assessed whether restrictive measures imposed under the Russia (Sanctions) (EU Exit) Regulations 2019 (the “Russia Sanctions”) breached section 6(1) of the Human Rights Act 1998 and whether those restrictive measures were compatible with article 1 of the European Convention on Human Rights (the “Convention”) and article 1 of the First Protocol of the Convention. 

By majority (Lord Leggatt dissenting), the Supreme Court found that: (i) the worldwide asset freeze imposed on a Mr. Shvidler; and (ii) the detention direction and movement direction against the Phi, an ultra-luxury yacht beneficially owned by a Mr. Naumenko, were lawful and did not breach the Convention rights of Mr. Shvidler and Mr. Naumenko. The Judgment is significant for two main reasons:

First, and of general interest, it confirms that the UK Government has a wide margin of appreciation in making assessment of the rational connection between the restrictive measures of the Russia Sanctions and the political objective they pursue.

Second, and in the context of human rights generally, the Supreme Court clarified how and when appellate courts should carry out the proportionality assessment to determine the lawfulness of a measure that interferes with a person’s Convention rights.

Background

Mr. Shvidler, although born in the USSR, was a “stateless” person until he became a British subject in 2010. He has never been a citizen of the Russian Federation and has resided permanently in the UK from 2011 until his recent move to the United States. Mr. Shvidler is a friend of Mr. Roman Abramovich (who is alleged to have close connections to the Kremlin). As a result of this friendship, Mr. Shvidler has held several important positions at Russian businesses, including as non-executive director of Evraz plc. Mr. Abramovich became a designated person on 10 March 2022. On that same day, Mr. Shvidler resigned from his position as non-executive director of Evraz plc. Two weeks later, Mr. Shvidler became a designated person subject to a worldwide asset freeze.

Dalston Projects Ltd holds the legal title to the Phi, a luxury superyacht worth approximately €44 million. It is beneficially owned by Mr. Naumenko. Mr. Naumenko is not a designated person himself and there is no evidence that he has ever held any political or administrative roles that connect him to the Kremlin. The Phi had been moored at South Dock in the West India & Millwall Docks since December 2021 and was scheduled to leave for Malta on 28 March 2022, where it would subsequently be chartered for the summer season at rates between €450,000 and €650,000 per week. However, on the evening the Phi was scheduled to depart, the Transport Secretary issued a detention direction and movement direction (the “Phi Direction”) which essentially forced the Phi to remain moored at South Dock in the West India & Millwall Docks.

The appeals to the Supreme Court arose from the challenges against Mr. Shvidler’s designation and the Phi Direction.

The proportionality assessment

The Judgment provides a comprehensive and detailed analysis of the assessment of proportionality that the courts must undertake when considering potential violations of Convention rights — i.e., is the violation of a human right justified in all the circumstances.  Indeed, the Supreme Court hoped that “the recapitulation of the proper approach [to the proportionality analysis] will provide clear guidance.”

The Supreme Court first clarified when it would be appropriate for appellate courts to carry out the proportionality assessment afresh (i.e., de novo) and when appellate courts should limit themselves to assessing whether lower courts directed themselves correctly in carrying out the proportionality assessment, without second-guessing the outcome of the lower court’s proportionality assessment.

According to the Supreme Court, a de novo assessment would be justified in the following (non-exhaustive) circumstances:

• the assessment of proportionality will affect a range of cases because it establishes a point of general principle or approach, the proper interpretation of legislation or the proper development of the common law;
• the measure being challenged derives from primary or secondary legislation;
• whether the case involves a claim that legislation or proposed legislation of any of the devolved legislatures is outside the scope of authority because it conflicts with Convention rights;
• whether the case involves a claim that there is significant incompatibility between primary legislation and Convention rights (given the potential challenge before the European Court of Human Rights);
• the need to resolve differences between diverging authorities that may have emerged in the lower courts; and
• the high importance for society of the issue to be resolved and the concomitant public interest in it being directly determined by a senior court.

The Supreme Court confirmed that the proportionality assessment comprises a four-stage analysis. In this case, whether:

• the Russia Sanctions pursue a legitimate aim;
• there was a rational connection between and the objective pursued (i.e., to deter Russia from destabilising Ukraine and violating Ukraine’s territorial integrity);
• less intrusive means could have been employed to pursue the legitimate aim; and
• the measures employed strike a fair balance between the individual rights of Mr. Shvidler and Mr. Naumenko.

Stage 1: Do the Russia Sanctions pursue a legitimate aim?

Both Mr. Shvidler and Mr. Naumenko did not dispute that the Russia Sanctions pursued a legitimate aim. The majority of the Supreme Court confirmed that “[t]here can be no doubt that the aim of limiting and deterring Russian aggression in Ukraine is one of the most vital aims that the UK government has been called upon to pursue in recent years.”

Stage 2: Rational connection between the Russia Sanctions and the objective pursued

In the Supreme Court’s view, the measures imposed by the Russia Sanctions needed to satisfy an economic and political connection with the objective pursued.

Concerning Mr. Shvidler, the Supreme Court was satisfied that his association with Mr. Abramovich established that there was a rational connection between his designation and the objectives pursued by the Russia Sanctions. The Supreme Court concluded that the effectiveness of the Russia Sanctions was based on the cumulative effect of the measures imposed under that regime, and that the restrictions imposed on Mr. Shvidler contributed to that cumulative effect.

In particular, the Supreme Court accepted that Mr. Shvidler’s designation:

• “will send a signal to Mr. Shvidler himself and others who are associated with involved persons that there are negative consequences to having implicitly legitimised the Russian government’s actions”;
• will disincentivise Mr. Shvidler and others from associating with the Kremlin and those who carry out business in sectors of strategic significance;
• will incentivise Mr. Shvidler and others to oppose Russia’s invasion of Ukraine more robustly; and
• will encourage Mr. Shvidler to put pressure on Mr. Abramovich to: (i) pressure Mr. Putin to cease the war in Ukraine, and (ii) distance himself from Mr. Putin, thus isolating Mr. Putin.

Regarding Mr. Naumenko and his superyacht, the Supreme Court described the economic connection between the Phi Direction and the objective pursued by the Russia Sanctions as “straightforward,” considering:

• Depriving Mr. Naumenko of the income he would derive from chartering the Phi would prevent substantial capital from making its way into the Russian economy.
• Mr. Naumenko’s residency in Russia and membership in the Russian elite were also relevant factors that led to the conclusion that there was a rational connection between the aims of the Russia Sanctions and the Phi Direction.

However, the Supreme Court accepted that the political link needed “more explanation given that it is accepted that Mr. Naumenko has no political role in Russia.” The Supreme Court accepted the submission from the Government that the Phi Direction “will contribute to pressure on the regime in Russia, even if that pressure is exerted in subtle and invisible ways.  Given the nature of the regime and the support on which it relies, that is a plausible assessment. It is also an assessment for which a court is wholly unqualified in constitutional terms and on grounds of relative expertise to substitute its own view” (emphasis added).

Stage 3: Less intrusive means

The Supreme Court did not develop its analysis of whether less intrusive means were available to achieve the objective pursued by the Russia Sanctions. It noted that counsel for Mr. Shvidler and Dalston Projects could not identify any less intrusive means that could have been adopted.

Stage 4: Fair balance

While the Supreme Court explicitly recognised that Mr. Shvidler’s designation resulted in “very drastic” consequences for him and his family, it nevertheless found that the worldwide asset freeze imposed on him struck a fair balance. The Supreme Court emphasised that for sanctions to be effective, they needed to be severe and open-ended to deprive him of his wealthy lifestyle and therefore contribute to the cumulative effect of the sanctions regime.

Regarding the Phi, the Supreme Court stated that the correct approach was to assess if the Phi Direction struck a fair balance between: (i) the individual rights of Dalston Projects and Mr. Naumenko on the one hand; and (ii) the general interest of the community. The Supreme Court was satisfied that a fair balance had been struck because the Phi Direction did not cause Mr. Naumenko any financial hardship. Indeed, his wealth was such that the deprivation of the charter revenue would not cause him any financial difficulties in his everyday life.

The Supreme Court also emphasised that Mr. Naumenko could financially absorb any deterioration to the Phi on account of its detention, or he could apply to the Office of Financial Sanctions Implementation (“OFSI”) for a license to carry out any necessary maintenance.

Too wide a margin of appreciation?  Lord Leggatt’s dissent

Lord Leggatt dissented from the majority in relation to the lawfulness of Mr. Shvidler’s designation. He “profoundly disagree[d]” with the majority’s view that the Government should be accorded a wide margin of appreciation on the basis of greater institutional competence than the courts to determine whether the Government’s own decision to restrict the individual rights of a person strikes a fair balance between the person’s rights and the rights of the community.

According to Lord Leggatt, the appropriate formulation for the proportionality test (stage 4 of the assessment) is not whether a fair balance has been struck between the individual rights of a person and the interests of the community but rather whether “an imbalance has been demonstrated by showing that the public interest outweighs the rights of the individual.” 

In Lord Leggatt’s view, Mr. Shvidler’s designation was unlawful because: (i) there was no rational connection between his designation and the aim pursued by the Russia Sanctions; and (ii) the measures imposed on him were disproportionate to the interests of the community.

No rational connection

Lord Leggatt was of the view that the margin of appreciation given to the Government should be limited insofar as there was no concrete evidence that freezing Mr. Shvidler’s assets could have the desired consequences of the Russia Sanctions. But in particular, Lord Legatt concluded that the Government’s justifications for designating Mr. Shvidler did not support:

• The assertion that Mr. Shvidler’s association with Mr. Abramovich was supposed to have implicitly legitimised Russia’s actions after the annexation of Crimea.
• The Government’s argument that Mr. Shvidler’s designation will disincentivise others from associating with the Kremlin does not explain why individuals who are not deterred from associating with the Kremlin by the prospect of being designated might credibly be deterred by Mr. Shvidler’s designation.
• The worldwide freezing of Mr. Shvidler’s assets could hardly create an incentive for him to speak openly against Russia’s invasion of Ukraine in more robust terms. Furthermore, there was no evidence that a condemnation of Russia’s actions by Mr. Shvidler would have an impact on the behaviour of anyone with influence in Russia or the Kremlin.
• Mr. Abramovich’s assets had already been frozen by the time that Mr. Shvidler was designated. It is difficult to understand why Mr. Abramovich would be influenced to take any action on account of Mr. Shvidler’s designation rather than his own designation.
• Lord Leggatt was further unpersuaded that Mr. Shvidler’s involvement as a non-executive director in Evraz had a credible connection with the aims pursued by the Russia Sanctions.

The interference with Mr. Shvidler’s rights was disproportionate

In Lord Leggatt’s view, Mr. Shvidler had been designated for prior conduct (i.e., close connection with Mr. Abramovich and non-executive directorship in Evraz) which was lawful and legitimate at the time.  According to him, “[a] court should be slow to accept that penalising an innocent individual to incentivise others is a legitimate means of pursuing a policy aim, however important that aim is thought to be.”

Moreover, Lord Leggatt considered that the Government’s position that Mr. Shvidler’s designation would encourage him to speak out more robustly against Russia’s actions “has sinister connotations.” He did not consider it legitimate for the Government to freeze an individual’s assets to put pressure on that person to say something that aligns with the Government’s policy.

Lastly, Lord Leggatt considered it unjust that Mr. Shvidler had been subjected to more restrictive sanctions solely because he was a British national.

Conclusion

The Judgment is significant because it gives the Government significant deference in its decisions and grounds for designating individuals. Given the detailed explanation that the Supreme Court gave regarding the proportionality assessment of measures that interfere with individual rights, it is unlikely that similar cases will reach the Supreme Court in the near future. Lord Leggatt’s dissent, however, may caution the executive to justify more robustly its designations under sanction regimes. 

All in all, however, it seems clear that removing a sanctions designation through anything other than convincing the authorities that their intelligence is mistaken remains a forlorn hope.