Phi, the 60-meter superyacht moored at the UK’s Canary Wharf Harbour since March 2022, has its last chance to appeal its seizure with a Supreme Court hearing set for January 16th, 2025.
The motor yacht is built by Dutch shipyard Royal Huisman for Russian businessman Sergio Numyenko. She was delivered in 2021, after which made her way to London for an awards showcase. Her time docked in London coincided with the Russian invasion of Ukraine. Pursuant to the invasion, countries including the US, EU, and UK began to impose sanctions on Russian individuals with the aim of pressuring Russia to cease sanctions destabilizing Ukraine or undermining or threatening its territorial integrity.
While the owner behind Phi was never placed under any sanctions list, then Secretary of State for Transport Grant Shapps ordered for the yacht to be detained under the amended EU Russia Regulations Act 2019. A move complemented by Mr. Shapps himself visiting the yacht down at Canary Wharf, standing in front of her with filming a video stating that this was a message to “Putin and his cronies”. The owner of the yacht was not known at the time, although later disclosed to the Transport Department. For the past two years, Phi, and her ultimate beneficial owner Dalston Projects Limited, would continue to find itself embattled in the UK Courts.
Legal grounds of PHI’s Detention
Mr. 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].