Case: Dalston Projects Ltd and others v Secretary of State for Transport
On Thursday, January 16th, a Supreme Court hearing took place to hear an appeal from Dalston Project Ltd and Others regarding the detention of the 60-meter superyacht Phi in London, England following the 2022 Russian invasion of Ukraine. The case centers on the legality of the decision – made by the then UK Secretary of State for Transport Grant Shapps – to detain Phi even though her owner, Sergei Naumenko, the ultimate beneficial owner of the vessel, was never designated under any UK sanctions list. Naumenko took matters to the Supreme Court, the UK’s highest judicial authority, after unsuccessfully challenging the appeal at the High Court and Court of Appeal in 2023 and 224, respectively.
Represented by Dr. Philip Goeth (LG) AND Ali Al-Karim (Brick Court Chambers), Naumenko was described as a “pawn of policy” as his lawyers argued about the Russian businessman’s rights to peaceful enjoyment of his possessions under the European Convention of Human Rights.
Meanwhile, representing the Department of Transport, Sir James Eadie and Jason Pobjoy (Blackstone Chambers), used the concept of “tacit acceptance”, arguing that Naumenko profited and accumulated his wealth from the Russian Patronage System, even if it was inadvertently and benefiting the Putin regime.
Dutch shipyard Royal Huisman built Phi, which was detained after arriving at Canary Wharf for an awards ceremony in March 2022. Sending a message to “Putin and his cronies”, Shapps relied on The Russia (Sanctions) (EU Exit) Regulations 2019 to detain Phi, made under the Sanctions & Anti Money Laundering Act 2018. Section 57C(1)(b) of the 2019 Regulation states that a mere connection with Russia in any way would constitute a detention. Section 57D(1)(a) gave Mr. Shapps the authority to exercise this decision.
May & July 2023 – High Court Ruling
Dalston Projects Ltd & Ors v Secretary of State for Transport
EWHC 1106/ EWHC 1885
After challenging the continuation of detention direction in April 2022, and January 2023, Mr. Naumenko and Dalton Projects, the corporate ownership structure (SPV), have issued a High Court filing challenging the legality of Phi’s detention.
On 21 July 2023, The High Court ruled that Mr. Shapp’s decision to detain Phi was deemed lawful. High Court Judge Sir Ross Cranston found that although the detention intercepted Mr. Naumenko’s property rights under the European Convention on Human Rights. there was no violation, but the decision to detain the yacht was a legitimate aim in the public interest.

January 2024 – Appellate Court Hearing Takes Place
Dalston Projects Limited and others (appellants) v The Secretary of State for Transport (respondent)
Shvidler (appellant) v Secretary of State for Foreign, Commonwealth and Development Affairs (respondent)
The briefing above brings us to January 2024, when Dalston Projects took matters to the UK Court of Appeal, challenging the July 2023 decision by the London High Court which rejected the yacht’s release. The proceedings took place between Wednesday 17 and Friday 19 January, with the court justices’ verdict set to come out in the coming weeks.
During the January 2024 proceedings, lawyers representing the Security of State for Transport pleaded that, irrespective of whether Phi’s owner is on the sanctions list or not, the detention decision is paramount for the government’s efforts in encouraging Russia to cease actions destabilizing Ukraine. While Phi’ captain Guy Booth, speaking to BOAT, is in the view that “The detention of Phi cannot be justified as encouraging Russia to cease action against Ukraine. This should have been apparent to the government from the outset,”.”The effects of the detention are disproportionate.”.
FEBRUARY 2024 – Court Dismisses Appeal
After the latest round of several legal battles in battles in the United Kingdom, the Court of Appeal dismissed the appeal set forth by the yacht’s owner that challenged the legality of the High Court’s July 2023 decision. The ruling, released on February 27th, 2024, crystallizes the Court’s stance on the detention of the vessel and reaffirms the aims of the government in the role of the vessel in regard to the invasion of Ukraine.
Court of Appeal Hearing
The issue that Sir Geoffrey Vos, Lord Justice Singh, and Lady Whipple had to reconcile with was whether the High Court’s decision to keep Phi detained was lawful. During the High Court proceedings in July 2023, Sir Ross Cranston ruled that Mr. Shapp’s decision to detain Phi was in fact deemed lawful. The High Court judge found that although the detention intercepted Mr. Naumenko’s property rights under the European Convention on Human Rights. there was no violation, but the decision to detain the yacht was a legitimate aim in the public interest.
To argue the case, the claimants presented six grounds of appeal. Four based on public law grounds [2.3.4.5], one ground on proportionality under Article 1 Protocol 1 (“A1P1“) of the European Convention on Human Rights (“ECHR“)[1], and one ground on conversion [6].