Spain and France demand shipowners pay for yachts frozen under Russian sanctions
Should shipowners pay for yachts frozen under Russian sanctions?
Spain and France have authorized the owners of superyachts frozen under sanctions against Russian businessmen to pay for repairs, three sources told reporters.
In Spain, six boats were frozen after sanctions were imposed following Russia's invasion of Ukraine in February. A source familiar with the matter said: "most" of the owners were paying for repairs, crew, docking, and insurance.
Individuals are usually restricted from making financial transactions in the jurisdictions where they are sanctioned, but the Spanish and French governments are authorizing payments under EU and national legislation, according to three sources.
Spain's Finance Ministry told Reuters that a 2014 law - passed after Russia annexes Crimea that year - allows sanctioned individuals to pay necessary fees for asset maintenance. The ministry did not confirm whether the payments had been authorized.
The payment came after some Western governments pledged to target the luxury assets of allies of Russian President Vladimir Putin as the centerpiece of their efforts to punish Moscow.
In March, Spanish Prime Minister Pedro Sanchez vowed a "decisive" and "severe" crackdown on Putin's allies when he announced the freezing of a Spanish yacht.
So far, only one fixed yacht has been sold: Axioms, which was auctioned in Gibraltar in August, was commissioned by the bank, JPMorgan Chase, not the government.
U.S. and EU proposals to sell seized Russian assets and offer the proceeds to Ukraine have stalled. Read more Read more
The decision to freeze rather than seize luxury assets thought to be owned by sanctioned Russians in France and Spain means their operating costs remain the responsibility of the owners, according to the Spanish Finance Ministry, a French maritime lawyer, and representatives of two French frozen vessels.
James Jaffa, a lawyer with the British firm Jaffa & Co who specializes in yachts, including for Russian clients, said the cost of maintaining such yachts is often "pocket money" for their owners, and that failure to pay could allow creditors such as shipbuilders to seek court authorization to seize and sell yachts to settle debts.
"The sanctions do not seem to have had the serious effect expected," Jaffa said.
Port management company Ocibar said the owners of two yachts frozen and moored at facilities in Tarragons and Majorca under the Spanish sanctions - the Crescent and the Lady Anastasia - are making payments, including dock and utility fees and skeleton crews.
October said it was following procedures established by the authorities and declined to confirm the identity of the owners or the costs involved.
A government source told Reuters that Spanish authorities believe Crescent is controlled by Eduardo Chinatown, the former head of sanctioned Russian energy giant Rosanne. Chinatown reached through his company Independent Oil and Gas but did not respond to requests for comment.
Ms. Anastasia is registered with Quasi, a public shipping database, under the ownership of a company called Homeland Shipping Limited. A person familiar with the matter said Spanish authorities believe the company is controlled by Alexander Mikhail, the sanctioned head of the weapons group Russian Defense Export.
Mikhail, contacted through Exportation, did not respond to requests for comment. The Department of Homeland Security contacted through a lawyer representing it, and the ship's registered manager also did not respond to Reuters' questions.
In France, five yachts have been frozen. Philippe Blanche tier, a lawyer for Alexei Khrushchev, a sanctioned shareholder of Russia's Ala Bank, told Reuters that his lawyer Philippe Blanche tier told Reuters Philippe Blanche tier, his lawyer, told Reuters that he had been paying for his two frozen vessels in Cannes and Tibetans under a 2014 EU law that allows payments for maintaining the frozen property.
Khrushchev declined to comment, he added. The court ordered the release of the Tibetans' yacht in early October due to procedural errors during the seizure. A decision on the second yacht is pending. Read more
The French Ministry of Finance confirmed that EU rules allow payments, but declined to say whether the request had been authorized.
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