Appeal for 58m detained superyacht Phi dismissed by UK Supreme Court

The UK Supreme Court has today (29 July) dismissed an appeal to overturn the Secretary of State for Transport's (SST) decision to detain the 58.5-metre Phi under recently-introduced sanction law following Russia's invasion of Ukraine.

The Royal Huisman superyacht has been held in Canary Wharf, London under a movement restriction order since 2022, suffering hull degradation, lapsed insurances and trespassers, as Captain Guy Booth explained to BOAT International last year.

The appeal, which was heard in January this year, was filed on behalf of the yacht's legal owner, Dalston Projects Ltd, and ultimate beneficial owner, Sergei Georgievich Naumenko. During the hearing, the appellants criticised the government's assumption that Phi's owner is connected to the Russian regime, despite not appearing on any sanctions lists. They also argued that the decision to seize and detain Phi interfered with the owner's basic property rights and, consequently, human rights law.

Public law rationality grounds were also cited, which maintain that governmental bodies are to act "rationally, fairly and lawfully" when assuming ownership of goods and not in a way that "den[ies] the rights of the true owner".

The Respondent (Secretary of State for Transport) reasserted that the assumption was rationally applied considering the owner's wealth and residency in Russia. They also argued that the detainment was a restriction of use, rather than an "absolute denial" of property rights. Maintenance on the yacht is still permitted, as is the presence of crew, and if the owner were to sell the yacht "to someone with no connection to Russia, [Phi] would no longer be detained".

Furthermore, the UK Supreme Court ruled there is a "rational connection" between the detention of Phi and the aim of putting pressure on Russia, both economically and politically.

"The economic link is straightforward," the judgement read. "The very considerable income that Mr Naumenko claims that he could earn by chartering out [Phi] to other wealthy people is likely to make its way to Russia. It would be spent there by Mr Naumenko and his family to invest in or buy goods and services from Russian businesses and to maintain his luxury lifestyle. In this way it would be used to contribute to the Russian economy."

With respect to political pressure, the judgement stated its reasoning as: "[Increasing] the disadvantage felt by citizens who are part of the wealthy elite in Russia can encourage opposition to the regime or its policies and can foster public disquiet in relation to the state institutions which are responsible for the hostilities in Ukraine. This can in turn discourage them from inflicting further repression and violence."

Both arguments contributed to the Supreme Court's decision to uphold the detention of Phi as lawful, and therefore dismiss both appeals. 

Phi's captain, Guy Booth, told BOAT International that this outcome was "anticipated". "We will be continuing to challenge this decision and will be approaching the European Convention of Human Rights (ECHR) without delay."

This latest judgement follows a fraught legal process that previously saw Phi's detention appeal dismissed by the UK Court of Appeal in March 2024. The Court held that the superyacht had not been detained for an improper purpose, agreeing with the Respondent's claim that "directly or indirectly, a [Russian of significant wealth] is likely to have benefitted from the Russian regime."

The ruling read: "It is rational to consider that [the owner] is the sort of individual on whom sanctions could effect the 'broad and deep impact' which Parliament intended."

However, it also agreed with elements of the appeal, noting that it was incorrect for then-Transport Secretary Grant Shapps to claim that the owner was "connected with Putin".

Representatives of the superyacht filed the appeal in August 2023, arguing that the ruling in July 2023 upholding the detention was unlawful. BOAT International has reported extensively on the case over the years.