Dalston Projects Limited and others v Secretary of State for Transport

On 29 March 2022, the Secretary of State for Transport (“Secretary of State”) detained the MY Phi, a superyacht docked in Canary Wharf. The Phi was detained on the ground it was a ship that was “owned, controlled or operated by a person connected with Russia”.

The Claimants did not dispute that the ultimate beneficial owner of the Phi was Mr Naumenko, the Second Claimant, who was resident in Russia, and thereby satisfied the definition of “a person connected with Russia” under the Russia Sanctions Regulations. The Claimants’ challenge focussed on the lawfulness of the detention on the grounds of (i) improper purpose and (ii) breach of A1P1.

Sir Ross Cranston, sitting as a High Court Judge, dismissed the application.

He rejected the Claimants’ argument that, absent designation of Mr Naumenko, the Phi’s detention was improper. The Russia Sanctions Regulations clearly established a distinct regime for persons “connected with Russia” (§63). He held that the Phi had been detained for a proper purpose, namely because the Phi was a high value ship and Mr Naumenko was a person “connected with Russia” (§69).

He also rejected the A1P1 challenge. The detention was rationally connected to the UK Government’s foreign policy response to Russia’s invasion of Ukraine, given “the likely direct and indirect links between Mr Naumenko’s wealth, economic activities and the Russian state”, such that he was “the sort of individual economic actor on whom sanctions could effect the “broad and deep impact” which Parliament intended via the “connected with Russia” powers” (§84). As to fair balance, the Court emphasised three points: (i) the “weighty public interest factors” of the UK’s foreign policy response to “what is being inflicted on Ukraine and the wider geopolitical instability this has caused”; (ii) that Mr Naumenko “does not claim to be suffering financial hardship because of [the Phi’s] detention”; and (iii) the deference due to the executive, especially within the area of foreign policy (§§87-88).

Jason Pobjoy and Emmeline Plews acted for the Secretary of State for Transport.

A copy of the judgment is available here.