Seizing Yachts: What Does It Mean?
March 9, 2022 By: Kim Kavin
As world governments continue with sanctions against Russia for invading Ukraine, headlines about seizing yachts of Russian oligarchs are everywhere. “Italy Seizes Russian Oligarchs’ Villas and Yachts,” is one, for instance. Another is “Republican Bill Would Let Citizens Seize Oligarch Yachts,” a reference to the proposed BOATS Act.
But what, exactly, does seizing yachts mean? Is seize even the correct term for what’s happening? “I don’t know that we understand that,” says Michael Moore, founding partner of Moore & Co., a law firm with specialties that include maritime law. “What we do know is that Deputy Attorney General Lisa Monaco announced what’s going on, and she used the word seizure.”
Seizure has a meaning—and it’s not the same as arrest, appropriate, confiscate, or impound, Moore says.
If government agencies appropriate or confiscate property, that means it’s taken. Therefore, it’s no longer the property of the previous owner. Confiscating property is different from impounding it. Impounding means taking a boat into custody—say, by putting a chain on it, because of a perceived infringement of a law or regulation. Impounded property is out of the owner’s reach, but not yet confiscated.
The words arrest and seizure are often part of the same conversation, but they, too, mean different things. Arrest involves a warrant of arrest. In the United States. this means a federal district court judge issues an order that goes to a U.S. marshal. The marshal then physically puts an arrest sticker on the yacht. “You’ll hear people say, ‘The boat got stickered,’” Moore says. “That’s an arrest action.” An arrested yacht goes into the custody of a U.S. marshal, and then to a court-approved, government-paid custodian. The custodian insures the vessel and pays any needed expenses, pending further court action. The custodian puts a skeleton crew onboard to maintain the boat and ensure the owner doesn’t try to access her. If the owner does, he or she gets arrested.
Seizing yachts, Moore says, generically means a private party instigates action to take control of them. For example, the private party may be the U.S. government, asking allies to conduct some version of taking control. However, whether that seizure will hold up in court later is an entirely other matter. The process can drag out for a year and a half, Moore adds, if a yacht owner fights the action. “The government doesn’t have unfettered power,” he says. “Every day of the week, it engages in asset forfeiture and asset seizure, which is the step before confiscation. You go out and you seize or impound or arrest and then you take it to a judge, and if it’s contested—and I’m quite sure it will be—the judge says whether it’s a legitimate taking. It’s just going to be a wrangle.”
That wrangle will include in part judges deciding whether the owners of the seized yachts are effectively agents of the Russian government and appropriately within scope of the sanctions order. The current situation is similar to the case involving the 208-foot (63.5-meter) Benetti Waku. The U.S. government seized her in 2017, and ultimately, she sold at auction. It’s because a judge ruled that the owner effectively acted as an arm of the Venezuelan government. “ In the current situation, the United States is claiming that named Russians are effectively arms of the Russian government and have been doing things to advance the causes of the Russian government,” Moore says. “It seems to me that down the road, there will have to be a judicial fact-finding that these allegations are statements of fact.”
At that point, the question before a judge may be whether a Russian like Roman Abramovich is different from someone like Igor Sechin. From press reports it seems that Abramovich, who owns a stake in Norilsk Nickel, isn’t facing sanctions from the United States or its allies. And it appears that no government is looking to seize his yachts, like the 458-foot (139.7-meter) Lloyd Werft Solaris. Sechin, meanwhile, is the CEO of Rosneft, which the Russian government controls. Last week, authorities in France seized his 281-foot (85.6-meter) Oceanco Amore Vero .
“Governments can do unprecedented things if those acts are in their national interest. They have tremendous power,” Moore says. “The issue will be whether certain identified people, otherwise subject to the Sanctions Executive Order, are found to be effectively arms of the Russian government and therefore are subject to the seizure actions.”
Moore & Co. moore-and-co.com