Free the Phi? UK Government in the Court of Appeal to defend seizure of Russian-owned superyacht

Insight

29.01.2024

On Friday 19 January 2024, the Government was in the Court of Appeal fighting an attempt to overturn a High Court decision related to its Russian sanctions regime, and the seizure of a superyacht owned by (non-sanctioned) Russian, Sergei Naumenko.

The Russian businessman is challenging the seizure and detention of his luxury yacht, the M/Y Phi, in February 2022, arguing that its seizure could have been a publicity stunt for then UK Transport Secretary, Grant Shapps. The 59-meter yacht was seized in Canary Wharf, London, invoking UK sanction laws, despite its owner not being subject to sanctions. In justifying the decision, Shapps characterised the yacht Phi as a symbol of Russia's influence and affluence.

The appellants, Dalston Projects (the company through which the yacht is owned), are challenging the legality of Judge Sir Ross Cranston's decision in July 2023, in which he rejected an appeal for the yacht's release. They argue that the then British Transport Secretary acted with improper intent and in breach of the European Convention on Human Rights, specifically the right to property. In his 2023 verdict, Sir Cranston justified the decision’s validity on the basis that the government was entitled to seize assets from oligarchs in order to exert direct pressure on them, and indirectly on Putin’s regime. The court ultimately ruled that the Secretary of State acted within the bounds of the Sanctions Regulations, which allowed for the detention of vessels connected to Russia, regardless as to whether the owner was sanctioned or not.

In the Court of Appeal, lawyers for the Government urged the panel to reject the appeal of Naumenko against High Court Judge Ross Cranston's ruling. They argue that holding the Phi helps to achieve the government's aim of disrupting Russian shipping because of its high profile, and that it was irrelevant that Naumenko had not been personally sanctioned by the UK.

Court of Appeal Justices Geoffrey Vos, Rabinder Singh and Phillipa Whipple will hand down their ruling in due course.

M/Y Phi first arrived in London for an awards show in early 2022 and has remained there ever since. At 58.5 meters, the Phi is the third-biggest yacht made by Dutch shipbuilder Royal Huisman. It boasts an "infinite wine cellar" and a swimming pool.

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