Actions speak louder than words – how deferential will the courts really be to sanctions decisions made by the Government?

In Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs [2023] EWHC 2121 (Admin), the High Court commented that questions of evidence concerning designating specific individuals under the sanctions regime were not entirely questions of foreign policy on which the court is unqualified to form a view, nor a subject on which the court should necessarily be slow to interfere on grounds of institutional competence. Nonetheless, the court went on to dismiss the challenge to the claimant's designation.

Key Points

• Matters relating to foreign policy and national security will often attract the broadest margin of discretion for the executive. However, the court must consider closely the particular question that falls for decision so as to gauge the extent to which it should defer to the expertise of the Secretary of State and the extent to which it can itself form a judgment.
• Whether the evidence supports the contention that designation could contribute to achieving relevant objectives is not entirely a question of foreign policy on which the court is unqualified to form a view, nor is it a subject on which the court should necessarily be slow to interfere on grounds of institutional competence.
• Ultimately the executive remains best placed to assess the effectiveness and appropriateness of different methods of achieving its objectives and the court will be reluctant to second guess those decisions.

Background

The claimant, a British citizen, challenged decisions of the Foreign Secretary to "designate" him as being subject to an asset freeze under the sanctions regime which addresses the Russian invasion of Ukraine: the Russia (Sanctions) (EU Exit) Regulations 2019 (the "2019 Regulations"), made under s1 of the Sanctions and Anti-Money Laundering Act 2018 ("SAMLA"). SAMLA ss38-40 provide for court review of, inter alia, designation decisions, and in determining whether a decision should be set aside, the court is required to apply the principles applicable on an application for judicial review.

There were two bases for the claimant's designation:

i) there are reasonable grounds to suspect that the claimant is associated with a person (Mr Roman Abramovich, who was himself designated last year) who is, or has been, involved in obtaining a benefit from, or supporting, the Government of Russia; and

ii) there are reasonable grounds to suspect that the claimant himself is, or has been, involved in obtaining a benefit from, or supporting, the Government of Russia through working as a non-executive director of Evraz plc, an entity carrying on business in sectors of strategic significance to the Government of Russia.

The claimant challenged the designation on human rights grounds, including alleging that there had been a disproportionate interference with his rights under Article 8 (right to private and family life) and Article 1 of the First Protocol ("A1P1") (right to peaceful enjoyment of possessions) of the European Convention on Human Rights ("ECHR").

The claimant gave evidence describing the significant impact of the designation on his and his family's life, including his children losing their places at UK schools, his ability to conduct his businesses being destroyed, no longer being able to access financial institutions he has used for many years, his two private aircraft being grounded, and being unable to pay the expenses necessary to ensure his private yacht is safe.

Judgment

There was no doubt there had been a significant restriction on the claimant's Article 8 and A1P1 rights and the question was therefore whether the restriction was proportionate.

The court assessed the designation against each element of the proportionality test: (i) whether its objective is sufficiently important to justify the limitation of a fundamental right; (ii) whether it is rationally connected to the objective; (iii) whether a less intrusive measure could have been used; and (iv) whether, having regard to these matters and to the severity of the consequences, a fair balance has been struck between the rights of the individual and the interests of the community.

The claimant agreed that the first element was met since the objective of the statutory scheme of "encouraging Russia to cease actions destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine" is of the greatest importance and in principle justifies the limitation on the fundamental rights of those affected. The claimant did not dispute that the regime as a whole was proportionate, but argued that that did not mean this particular designation was proportionate.

Before considering the other elements of the test, the court considered the degree of deference that it should afford to the Secretary of State in making decisions under the 2019 Regulations. Although accepting that matters of foreign policy may require special weight to be given to the executive's judgment, the court emphasised that when looking at whether ECHR rights have been infringed there is no "forbidden area" or constitutional bar on the court making all necessary inquiries. Noting the impact on the claimant's ECHR rights, the court was in no doubt that it should apply "close scrutiny" in order to reach its decision, and considered itself well placed to judge the reasonableness of the analysis on how far the evidence supports the contention that designation of the claimant contributes to achieving the relevant objective. This was not entirely a question of foreign policy on which the court is unqualified to form a view, nor was it a subject on which the court should necessarily be slow to interfere on grounds of institutional competence. However, the court will still respect the special constitutional competence of the Secretary of State, and will limit itself to asking whether the decision was one properly open to the executive rather than acting as a primary decision maker.

Garnham J considered the evidence relating to the claimant's association with Mr Abramovich, and concluded that both bases of the designation were well founded. In relation to the Secretary of State's suggestion that designation of the claimant would incentivise him to put pressure on Mr Abramovich to encourage President Putin to cease or limit Russian actions in Ukraine, the likelihood of one oligarch influencing the behaviour of another was said to be one of those areas of decision making where the Secretary of State is better able to assess the evidence than the court is. The identification of levers of pressure by which to influence the Government of Russia's decision-making, and the weight to be attached to different potential courses of action, is a matter of foreign policy in respect of which the Secretary of State has institutional expertise and is entitled to considerable respect. There was therefore a rational connection between the measure and the objective.

On the question of whether a less intrusive measure could be used, Garnham J again considered this to be an area where the courts have to defer to the judgment of the Secretary of State, since the relative effectiveness of different measures was not an area in which the court could second guess the Foreign Office.

Finally, in relation to whether a fair balance had been struck, the court accepted the Secretary of State's evidence as to the conscientious regard that had been had to the impact of designation on both the claimant and his family. In view of the objectives involved here being of the highest order, the court could not say that a fair balance had not been struck.

Comment

As in other specialist areas, judicial review claimants will face a high hurdle when seeking to overturn public law decisions in sensitive areas of policy. Foreign policy and national security are traditionally among the areas where the Government is given an especially broad margin of discretion. Although here the court was keen to emphasise that it had an important role to play and was able to properly assess the quality of evidence and the various limbs of the proportionality test, rather than simply taking a completely hands off approach, its actual findings repeated the position that the Secretary of State was better placed to make judgments on such issues than a judge. Even applying the necessary close scrutiny in light of the significant impact on the claimant's life and the undoubted interference with his ECHR rights, the high threshold for overturning such a decision was not met.

Regardless of the court's willingness to consider the evidence in detail (rather than affording undue deference to the decision maker), the reality will often be that a judicial review court is simply not best placed to go behind the decisions of bodies with expertise and experience in sensitive policy areas.