For years, they have been symbols of the extraordinary wealth accrued by oligarchs. Now, superyachts are front and centre of the West’s race to sanction those closest to Russian president Vladimir Putin following his invasion of Ukraine.
Several have so far been seized by European governments.
They include billionaire Alexei Mordashov’s £45 million boat Lady M and a £444m boat – one of the world’s largest yachts – owned by businessman Andrey Melnichenko, both of which were seized by authorities in Italy.
Russian oligarch Igor Sechin’s 280-foot Amore Vero was seized by authorities near Marseille, France. Days later, Spain also announced it was detaining £458m superyacht ‘Crescent’ said to belong to Mr Sechin, a close ally of Mr Putin and head of Russian oil giant Rosneft.
A $75m (£7m) superyacht owned by sanctioned Russian oligarch Dmitry Pumpyansky – chairman and owner of steel pipe manufacturer OAO TMK – has also been seized in Gibraltar.
But such seizures, it seems, may be the easy part for authorities. What happens next could well be the difficult – and the costly – bit.
That’s because impounding a boat in this way doesn’t mean the state takes ownership of it. Rather it means the superyacht is simply frozen from being used or sold by its oligarch owner.
It falls, essentially, into a sort of legal limbo.
Deciding what to do with such vessels next and who has the right to have a say – as well who gets the proceeds of any future sales – is almost certain to spark court battles and appeals that will likely last years.
As Benjamin Maltby, a partner at Keystone Law, told CNBC this week – “we’re in uncharted water, the situations we’re seeing now have never really occurred before”.
Under current laws across most of Europe, for a government to actually take ownership of any asset, it would have to be able to prove that the particular asset in question was either used as part of a crime or bought with the proceeds of illegal activity.
Trying to tie a superyacht to clear evidence of criminality in Russia – even if criminality took place – would appear almost impossible, experts suggest.
Which means that, to all intents and purposes, the yachts stay in a sort of legal grey zone: not owned by the state that seizes them but with their owners unable to access them, sail them or sell them.
It is unclear who will even pay the cost to keep them berthed and maintained – which itself does not come cheap.
Technically, it is thought the oligarchs themselves would be responsible for these costs. Except, under the current sanctions, they aren’t allowed to exchange money with western authorities.
It is, as Mr Maltby said, “a Gordian knot”. And it may well remain one for years to come.
