Sanctions Digest

The 2023 case of LLC Synesis v Secretary of State arose from the Belarusian Regulations. It was the first case to reach the Administrative Court in which a sanctioned party applied to set aside a sanctions designation under Section 38 of SAMLA.

The sanctioned party was a Belarusian entity and was said to provide video surveillance systems to the Belarusian state which were in turn used to “track down civil society and pro-democracy activists, in order to repress them”.

The Court dismissed the application to set aside the sanctions designation. It did not accept the claimant’s argument that the decision that there were “reasonable grounds to suspect” that the claimant was an ‘involved person’ was irrational. The Court concluded that the ‘reasonable grounds test’ “does not import a standard of proof”. Rather, what was required “is an evaluation or assessment of all the available material and information which the Court, if asked to do so, will review applying well-established principles”. 

In Shvidler v Secretary of State, the sanctioned party was a UK-US dual national and the reasons for his designation were: (i) he was a business partner of Roman Abramovich (who has been subject to sanctions since March 2022); and (ii) he had carried on business in a sector of strategic importance to Russia (extractives, construction and transport). The designation was challenged on two grounds. Firstly, it was said that the designation constituted a disproportionate interference with Mr Shvidler’s rights under Art 8 and A1P1. Secondly, it was said that the Secretary of State had exercised his discretion to maintain the sanctions in a discriminatory manner. 

The designation challenge was dismissed by the High Court. The Court concluded that there was “no doubt” that Mr Shvidler was a long-term friend and business associate of Roman Abramovich and the Secretary of State had reasonable grounds to suspect that Mr Shvidler had received significant benefits from Mr Abramovich.  Thereafter, the Court was satisfied that the designation was not disproportionate and Mr Shvidler’s case on discrimination was said to be “hopeless”. 

Mr Shvidler appealed the proportionality finding to the Court of Appeal unsuccessfully.

On 29 July 2025, the Supreme Court handed down its judgment in a further appeal by the Mr Shvidler. In a landmark decision, the Supreme Court dismissed Mr Shvidler’s appeal and upheld the UK government’s authority to impose sanctions on individuals and assets linked to Russian influence. The Supreme Court ruled that a “plausible contribution” to the “cumulative effect” of the Government’s foreign policy is sufficient to justify the imposition of sanctions.

The Supreme Court noted the “drastic” effect sanctions can have on individuals, but confirmed they need to be “severe and open-ended” to be effective and reaffirmed the role of the Office of Financial Sanctions Implementation (OFSI) in managing licencing for basic needs.

The Court of Appeal heard the Shvidler appeal alongside the appeal in Dalston Projects Lt & Ors v Secretary of State for Transport.  Dalston concerned a challenge to the decision to detain and continue the detention of a luxury yacht, the beneficial owner of which was a Russian citizen.  The yacht had been detained in London under the Russian Regulations.  The beneficial owner of the yacht, Mr Naumenko was not a designated person (as there was insufficient evidence to make the designation).  However, the Russian Regulations gave the Secretary of State the power to give a “detention direction” in respect of a ship owned, controlled, chartered or operated by a designated person or by “persons connected with Russia”. 

Mr Naumenko challenged the detention direction on various grounds including proportionality.  The Court of Appeal dismissed the appeal noting that the effectiveness of sanctions is not about a sanction being imposed on a single ship or upon a single individual, it is the combined and cumulative effect that is important.  Considering the impact of the detention direction on Mr Naumenko, the Court noted that the decision to detain his superyacht “does not cause him individual hardship in his normal daily life” and therefore it was proportionate to the ultimate sanctions aim. The Supreme Court, again considering Dalston’s case alongside Mr Shvidler’s, case, also dismissed a further appeal by Dalston.

In Phillips v Secretary of State (2024), the sanctioned party was a mono-British national. His designation pursuant to the Russian Regulations arose “entirely from his expression of his own political opinions on social media to a primarily UK domestic audience”. The Court concluded that the claimant had “decided to set his face against an overwhelming international consensus, to align himself with Russia’s invasion of Ukraine, to travel to the frontline, and to help Russia fight its propaganda”.

In refusing to set aside the decision to maintain the claimant’s designation, the High Court acknowledged that the imposition of sanctions interfered with the claimant’s rights to: (i) peaceful possession of his assets; (ii) respect for private and family life and his home; and (iii) to a limited extent, his freedom of expression. However, it concluded that the “designation of the claimant does strike a fair balance between his [ECHR] rights and the legitimate aim of the UK’s national security”. The continued designation was not found to be incompatible with the ECHR.

In Khan v Secretary of State (2024), a sanctions designation pursuant to the Russian Regulations was challenged by a Russian-born British citizen (Ms Khan). It was common ground that Ms Khan had never been involved in political affairs, had never provided material support for Putin’s regime in Russia and “wields no personal economic influence” capable of influencing Russian foreign policy. However, her husband is a wealthy businessman said to have “a proximity to the Russian government and Mr Putin”. The designation arose from Ms Khan’s association with her husband (and the provision in Regulation 6(2)(d) of the Russian Regulations, which permits sanctions designations in respect of associates of ‘involved persons’).

The designation challenge failed. The Court did not accept Ms Khan’s arguments that: (i) there had been a failure to consider whether her designation would advance the statutory purpose of the Russian Regulations; (ii) the designation constituted a disproportionate interference with her rights under Art 8 and A1P1; and (iii) Regulation 6(2)(d) was incompatible with Art 8 and A1P1.

Ms Khan appealed the decision. In January 2025, the Court of Appeal dismissed the appeal. An application has since been made to the Supreme Court for permission to appeal. 

Whilst not directly relevant to the question of sanctions designations, readers may be interested in the comments made by the Court of Appeal in relation to the adequacy of OFSI’s licensing regime in place at the time of the appeal hearing. Dingemans LJ noted: “the Respondent has not identified any good reason for the failure to make immediate provision for expenditure on ordinary living expenses including food by way of specific licence when designating an individual, and it is neither reasonable, nor fair to the designated person, to fail to make provision for basic living expenses, including food, on designation. This is because the designated person will either be liable to prosecution for a criminal offence or be unable to eat”. Following the appeal, OFSI issued a new General Licence for Interim Basic Necessities for Designated Persons.

This judicial approach has continued. In February 2025, the High Court handed down its judgment in Dana Astra IOOO v Secretary of State.  The claimant in this case (Dana) was the subject of sanctions pursuant to the Belarusian Regulations. Dana is a major real estate development and construction company operating in Belarus. Factors leading to the designation of sanctions included: (i) the fact that Dana was a sponsor of the Belarusian National Olympic Committee (BNOC), which was said to be involved in the repression of Belarusian civil society; and (ii) that it had benefitted from supporting the Belarusian Government through carrying on business in a sector of strategic significance to Belarus. 

Dana argued that: (i) the designation constituted a disproportionate interference with Dana’s rights under A1P1 and equivalent rights protected by the common law; and (ii) it was irrational on conventional public law principles for the Secretary of State to maintain the designation. In resisting the challenge, the Secretary of State argued that the decision to designate Dana did not constitute the exercise of jurisdiction over it by the UK within the meaning of Article 1 ECHR (which provides that contracting states shall secure to everyone “within their jurisdiction the rights and freedoms defined” in the Convention).

The court dismissed the designation challenge and in doing so concluded: (i) Article 1 of the ECHR could not be established “on the sole basis that a state takes a decision capable of affecting a person situated abroad, or because that decision affected one or more of that person’s interests abroad”; and (ii) that the sanctions were not, in any event, disproportionate.

At the time of writing, permission to pursue an appeal to the Court of Appeal has been granted and remains to be heard.