UK Court of Appeals Upholds Indefinite Detention of Russian Superyacht

One appeal challenged the high court’s rejection of a Russian resident’s challenge to the U.K.’s detention of his superyacht.

The U.K. Foreign, Commonwealth and Development Office didn't designate the Russian resident, Sergei Naumenko, as having been involved in any activities related to the invasion of Ukraine. However, the then-secretary of state for transport issued an order detaining the yacht, a power granted by regulations issued in 2019 at the outset of the new sanctions regime, and made public remarks in a TikTok video that the vessel belonged to a Russian oligarch. Authorities decided detention of the yacht would continue as they gathered more evidence. Naumenko appealed to the U.K. courts, without getting relief.

In declining to hear the one appeal, the court said the 2019 regulations were clear that the transport secretary had the power to detain the property of non-designated persons, adding that “these were broad restrictions and had the potential for persons to be caught by them in circumstances that are ‘less than ideal.’”

While the secretary’s remarks were incorrect, they ultimately would have had no effect on the outcome of the situation, the court said.

Finally, the court said its role was to determine whether the lower court justices had been correct in determining that the detention of Naumenko’s private property was more beneficial to the public than harmful to Naumenko himself.

The judge said the harm to Naumenko was significant but ruled it was proportional, saying “there are … weighty public interest factors on the other side of the balance, in particular the need to bring to an end the illegal use of force by Russia and the violation of the territorial integrity of Ukraine.”

In the appeal regarding Eugene Shvidler, the court upheld the government's listing. Shvidler obtained refugee status in the U.S. after fleeing the then-Soviet Union in 1989, later migrating to the U.K. and becoming a naturalized citizen. However, he maintained close contact and regular business dealings with acquaintances in Moscow, eventually rising to the board of the U.K.-listed company Evraz as the nominee for its Russian subsidiary.

In 2022, Shvidler was designated as a person associated with the invasion of Ukraine. Evraz would itself be designated a few months later. After his designation, Shvidler’s children were turned away from their respective private schools and they and Shvidler moved to the United States.

Shvidler sought a review of his designation, including directly contacting then-Foreign Secretary Liz Truss, and then turned to the courts, where he argued fruitlessly that his designation was disproportionately harmful.

On appeal, the appeals court found that the lower court judge was wrong in his assessment of the court’s role in proportionality decisions. The lower court incorrectly limited itself to “asking whether the decision was one properly open to the executive,” but courts must also rule on the substance of whether that decision was proportionate, the judge said.

The judge found that he had grounds to rule on the appeal as a result of the error. However, he said that the appeal would be conducted only by review, and nothing would be reheard.

As with the Naumenko case, the judge found that the designation of Shvidler was proportionate to the public's needs. He said the sanctions on Shvidler were “severe and open-ended,” but the family had access to enough funds to meet their needs. He also made special note of the impact of Shvidler’s designation on his children, but said that it wouldn't be enough to reverse the designation.

“They have been able to continue their education in the United States and, if they had remained in the UK, they would have had access to the publicly funded education system in this country, even if that was not their or their parents' first choice,” he said.