Court of Appeal rejects challenge to yacht seizure and sanctions designation

The Court of Appeal in London has today handed down judgment in Dalston Projects Limited & Ors v Secretary of State for Transport [2024] EWCA Civ 172.

The decision relates to two appeals:

      1. a challenge by a non-designated Russian national to the seizure and freezing of his yacht in London; and
      2. a challenge to his designation by Eugene Shivdler, originally from the Soviet Union but now a British national.

Both had been unsuccessful at first instance and both lost on appeal.

The decision is one of the first at the appellate level in relation to the UK’s post-Brexit Russian sanctions.

More than anything the decision highlights the difficulties in challenging actions taken under the UK’s regulations.

The decision starts with a lengthy, but helpful, analysis of the first instance court’s and Court of Appeal’s role in such cases.

Two key takeaways can be highlighted. The first is the point made in the leading judgment in response to an argument that detaining one ship would be unlikely to have the required level of connection to the desired foreign policy objective.

The court’s response was to state (at [117]): “Driven to its logical conclusion, the Appellants’ submission would mean that, if 100 ships are detained, each owner of one ship could say that detaining his ship is not going to be particularly effective or make a material contribution to the overall aim and so it is disproportionate to detain it. That argument would obviously be absurd. It is the overall effect of detaining all 100 ships which is important and the detention of each one of them obviously has a rational connection to the overall aim in view“.

In other words no one government action has to show that it will have the effect of changing Russian policy.

The second point was made in relation to Eugene Shivdler’s designation, where it was argued that the impact on him (as a British national) and on his family was disproportionate. The Court of Appeal disagreed stating (at [210]): “I would accept that these sanctions are both severe and open-ended. But this does not meet the fundamental point that sanctions often have to be severe and open-ended if they are to be effective. If sanctions are to be effective, a serious price has to be paid by those who are within the definition of people to be designated under the 2019 Regulations”.

In other words, sanctions are meant to have a severe impact on those designated. That severity is not a basis for a challenge.

Whether the case goes up to the Supreme Court remains to be seen.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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