“Wide-Margin Proportionality” – The UKSC’s New Framework for Judicial Scrutiny of Individual Sanctions

Introduction

In Shvidler v Secretary of State for Foreign, Commonwealth & Development Affairs and the conjoined appeal Dalston Projects Ltd & Ors v Secretary of State for Transport ([2025] UKSC 30), the United Kingdom Supreme Court confronted the limits of executive power under the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”). Two very different sanctions were on trial:

• An asset-freeze against Mr Eugene Shvidler, a British citizen whose worldwide property has been immobilised since March 2022 on the basis of tenuous links to Roman Abramovich and a former directorship at Evraz plc.
• The detention of the motor-yacht Phi, beneficially owned by Russian resident Mr Sergei Naumenko, implemented through regulations made by the Secretary of State for Transport.

Both measures formed part of the United Kingdom’s post-invasion Russia sanctions package. The key issues were:

1. The standard of appellate review in sanctions cases – must a second-instance court make its own proportionality assessment or defer to the lower court’s findings?
2. Whether the individual sanctions against Mr Shvidler and Dalston Projects Ltd infringed fundamental rights (A1P1, Article 8 ECHR, & common-law property rights) and, if so, whether the infringements were justified.
3. The breadth of the “margin of appreciation” owed to the executive when national security or foreign-policy measures are challenged.

The Supreme Court (Lords Sales, Reed, Hodge, and Lady Rose; Lord Leggatt dissenting in respect of Mr Shvidler) has now supplied a principled structure for tackling such cases, crystallising a doctrine we may label “wide-margin proportionality.”

Summary of the Judgment

1. Appellate approach. All Justices agreed that, in “test-case” sanctions appeals raising questions of systemic importance, the Supreme Court and the Court of Appeal must conduct a de novo (“own view”) proportionality assessment rather than limit themselves to classic judicial-review error checking (Edwards constraints).
2. Dalston Projects appeal. Unanimously dismissed. Detention of the yacht Phi under transport regulations was rational, proportionate, and squarely within the statutory purpose of depriving wealthy Russian residents of luxury-asset revenue.
3. Shvidler appeal. Majority (Sales LJ, Lady Rose, Reed LJ, Hodge LJ) upheld the asset-freeze, holding that:

• The Secretary of State had reasonable grounds to suspect Mr Shvidler was an “involved person.”
• Even intrusive, global asset-freezes can be proportionate where Parliament’s foreign-policy objective is of the “first order.”
• The executive enjoys a wider margin of appreciation than in ordinary civil-rights contexts, reflecting its institutional competence in foreign affairs.

4. Dissent (Lord Leggatt). A powerful 160-paragraph dissent insisted that the majority had abdicated the judiciary’s constitutional role as guardian of individual liberty. His Lordship found:

• The factual connection between Mr Shvidler and Russian aggression was “flimsy.”
• No rational link existed between freezing a British citizen’s worldwide assets and pressuring the Kremlin.
• Even if rational, the measure was grossly disproportionate – tantamount to rendering Mr Shvidler “a prisoner of the state.”

Analysis

1. Precedents Cited and Their Influence

• Bank Mellat v HM Treasury (No 2) [2013] – Four-stage proportionality grid (importance, rational connection, least intrusive means, fair balance). Both majority and dissent relied heavily, though Lord Leggatt criticised the “scales” metaphor.
• Ahmed v HM Treasury [2010] – Early UKSC condemnation of asset-freezes by Order in Council. Leggatt drew parallels, stressing the “nuclear” severity of asset-freezes.
• Liversidge v Anderson [1942]  and  A v SSHD (“Belmarsh”) [2004] – Classical separation-of-powers touchstones. Leggatt invoked them to emphasise the court’s duty not to “rubber-stamp” executive claims.
• Kiarie & Byndloss [2017], Daly [2001], Pham [2015], UNISON [2017] – Confirm the common-law principle that even where Parliament authorises intrusion, courts imply a proportionality limit.
• European doctrinal backdrop: Strasbourg’s “margin of appreciation” line, adapted to domestic “discretionary area of judgment” analyses (R (Aguilar Quila), etc.).

The majority leaned on the foreign-policy branch of this lineage, affirming that asset-freezes are a paradigm of matters where courts should be slow to second-guess ministers. Lord Leggatt, by contrast, weaponised Ahmed and Belmarsh to push for intense, evidence-driven scrutiny.

2. Legal Reasoning

Majority

1. Statutory criteria fulfilled. Regulation 6 “reasonable suspicion” test is low—met via Mr Shvidler’s historical directorship and Abramovich links.
2. Foreign-policy context. Courts recognise executive’s superior access to intelligence, diplomatic nuance, and international co-ordination realities. That justifies a “wide margin.”
3. Proportionality. Although the freeze is severe, the enormity of Russia’s infringement of international peace and the need for cohesive multilateral pressure outweigh the individual burden; licences under Sch. 5 SAMLA temper harshness.
4. Standard of review. Appellate courts can and should evaluate proportionality afresh in first-wave sanctions cases, but still grant substantial deference on predictive judgments.

Dissent (Lord Leggatt)

1. No rational connection. Assertions that the freeze will influence the Kremlin are “armchair theories,” unsupported by empirical evidence.
2. Separation of powers. When an executive measure “strikes at the very heart” of individual liberty, courts—not ministers—must decide proportionality.
3. Proportionality failure.
   • Measure is retroactive and punishes lawful past behaviour.
   • Targeted partly to coerce speech (“speak out more robustly”), an illegitimate aim.
   • Nationality-based worldwide reach is arbitrary and discriminatory.

3. Impact and Future Significance

The decision marks a pivotal calibration point for sanctions jurisprudence:

• Judicial Review Standard. The Court of Appeal and the Supreme Court must do a full merits-proportionality inquiry in sanctions appeals of general importance. This departs from pure “anxious scrutiny” and closer aligns with administrative merits review.
• Margin of Appreciation Doctrine Reinforced. In national-security and foreign-policy contexts, ministers enjoy a wider discretion than in traditional human-rights settings. Unless reasons are “irrational on their face,” courts will seldom strike down individual sanctions.
• Asset-Freeze Design. Parliament’s choice to attach worldwide effect to designations of UK nationals has been judicially endorsed; expect broader geographic reach in future regulations.
• Dissent as Blueprint. Leggatt LJ’s opinion offers a roadmap for future litigants seeking tougher evidence-based justification, especially where sanctions reach citizens with attenuated foreign links.
• Cross-sectoral Spill-over. The “wide-margin proportionality” concept is likely to re-surface in emerging regimes—cyber-sanctions, autonomous export controls, and possibly environmental “due-diligence” penalties.

Complex Concepts Simplified

• Asset-Freeze: A legal ban on using, moving, or receiving any benefit from one’s property. Breach is usually a criminal offence.
• Designation: Formal act by a minister identifying a person as subject to sanctions.
• Margin of Appreciation / Discretionary Area of Judgment: The “space” within which courts tolerate executive policy-making without close interference, especially where the executive holds specialist information or democratic mandate.
• Proportionality Test (UK version):
  1. Is the goal important enough?
  2. Is the measure logically connected to that goal?
  3. Could a less intrusive measure achieve the same goal?
  4. Overall, is the restriction fair and balanced in its effects?
• Section 38 SAMLA Review: A statutory right for a designated person to ask the High Court to decide whether the minister’s decision is lawful.

Conclusion

The Supreme Court’s ruling in Shvidler and Dalston Projects both clarifies and reshapes the landscape of UK sanctions law. The majority affirms that, in foreign-policy matters of acute national importance, courts will defer broadly to ministerial judgments, provided a rational narrative exists. However, it also confirms that appellants are entitled to a full proportionality analysis at every appellate tier.

Lord Leggatt’s dissent warns against complacency, reminding future benches that constitutional vigilance over fundamental liberties remains essential. His opinion, though not prevailing, safeguards a doctrinal counterweight that litigants may yet deploy.

For practitioners, the upshot is clear: challenges to UK sanctions must confront a high evidential bar—but where the executive’s reasoning is speculative or discriminatory, an evidence-based judicial review remains a viable weapon. Parliament’s post-2018 sanctions architecture has thus been stress-tested, refined, and—at least for now—survives intact.