The detention of superyacht “Phi”

Earlier this year the English Court of Appeal upheld the detention of the superyacht “Phi”.

The Court of Appeal considered the detention of the luxury motor yacht “Phi” owned by a Russian national, under the Russia (Sanctions) (EU Exit) Regulations 2019.

The Court dismissed the appeal challenging the detention of 58.5-metre Phi, which was arrested in 2022, on the basis of recently-introduced sanctions law following Russia’s invasion of Ukraine. The appeal was based on the fact the yacht’s owner, a Russian national, has never appeared on any sanctions list.

The ruling held that the superyacht had not been detained for an improper purpose considering the owner’s residency in Russia and “economic activities”, agreeing with the Respondent’s claim that “directly or indirectly, a [Russian of significant wealth] is likely to have benefitted from the Russian regime.”

Since the English decision, the General Court in Brussels handed down a judgment which seemingly softened the interpretation of the EU’s approach to non-sanctioned Russian citizens.

Two Russian citizens were removed from the European list of sanctioned individuals because it had not been proved that they were directly involved in efforts to undermine or threaten the territorial integrity, sovereignty and independence of Ukraine.

More than 1,700 Russian individuals and 400 entities have been subject to trade sanctions since 2014. In the case brought by Petr Aven and Mikhail Fridman, “a degree of proximity” to Mr. Putin was not enough to show they benefited from the Russian regime.

It will be interesting to see how this judgment affects the release of seized assets in the future.