(Bloomberg) -- The UK detained the £38 million ($50 million) superyacht owned by an unsanctioned Russian tycoon in an attempt to look tough and compel him to openly criticize the Russian regime, his lawyers told a UK court.

Sergei Naumenko, a property developer and food importer who isn’t on any sanctions list, sued the UK’s Department of Transport saying he never engaged in political activities and has no connections with Russian President Vladimir Putin. Last year’s freeze of almost brand new 60-meter (197-foot) “Phi” interferes with Naumenko’s rights to “peaceful enjoyment of possessions,” under the European Convention on Human Rights, his lawyers said in the documents given to the court before the Thursday hearing.

The government insists the boat was detained as Naumenko fits the criteria of a person “connected with Russia.” “The system of patronage under President Putin’s regime means that Mr. Naumenko was unlikely to have made and retained such a level of wealth without showing loyalty and directly or indirectly benefiting from the Russian regime,” Jason Pobjoy, a lawyer for the transport department said in court documents.

Lawyers for Naumenko and a spokesperson for the Department of Transport declined to comment. 

The case is one of the first to test the UK government’s ability to go after assets of wealthy Russians. A raft of higher-profile Russian billionaires and oligarchs have been formally sanctioned by the UK, US and European Union and have also turned to the courts to fight the measures.

The dispute will examine the purpose and proportionality of sanctions against Russia, said Helen Taylor, a researcher at charity Spotlight on Corruption. “Having detained Naumenko’s superyacht while stopping short of sanctioning him, the government is now pressed to explain how targeting this symbol of mobile wealth docked in London will pressure Putin to change course in Ukraine,” she said.

The UK is effectively trying to compel Naumenko to criticize the Russian government without considering how it would impact him and his business at home, the tycoon’s lawyers said. “Disproportionate action against individuals cannot be justified by a generalized desire to appear tough, whether that message is intended for consumption by the domestic electorate or elsewhere,” his lawyer Nigel Giffin said in the court filings.

Sanctioning a luxury yacht sends a signal to other super rich Russians, the government’s lawyer countered. Detaining a superyacht can potentially impact the willingness of other rich Russians to continue their political support and tolerance of the Russian regime’s actions, Pobjoy said.

The 500-tonne “Phi”, which was built in 2021, has been stuck in a dock in London’s Canary Wharf since December of that year. Following a winter stopover, the boat was due to leave for Malta in March 2022, when it was detained by then-Transport Secretary Grant Shapps. 

 

--With assistance from Thomas Hall.

(Updates with expert comments and details from the hearing throughout)

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