Maritime Observer Newsletter #5
Royal Romance faces detours, Egypt Boat Show announced, NEOM announces new superyacht-based development
Welcome back to Leisure & Legal, a newsletter following the rise of the Middle East superyacht sector and covering the legal developments of the global superyacht fleet.
In recent years, the superyacht industry started to feel a shift. Occasioned by the growing number of ultra-high net worth individuals, the average age of owners dropped significantly, and a new purpose of yachting chiefly attributed to the global pandemic, redefining the meaning of luxury to go toward more experience-based living. Therefore, to accommodate this new era of superyacht ownership, there became a need for new cruising grounds and commensurate luxury destinations. The Middle East, principally Saudi Arabia and the UAE, is one of the chief regions investing in infrastructure to create these alternative yachting hubs, providing winter or all-year-round destinations. With this exponential rise, this newsletter was established to chronicle the latest news, developments, and moves as this industry grows.
Now, we are officially six months into 2024. For the superyacht sector and the region in particular, we’ve seen further developments made by several markets. Saudi Arabi continued with plans to build a superyacht destination, with luxury island NEOM and Red Sea Global, amidst reemerging concerns of piracy and political strife. The Kingdom also introduced a six-month temporary entry regime for foreign vessels to cruise the area. In the UAE, a newly introduced Maritime Code allows non-Emirati owners to fly the UAE flag on their sternsElsewhere, Qatar announced a new boat show in an effort to position the country as another premiere yachting hub in The Middle East, with the expansion of Old Doha Port as the show’s official home this November, and Egypt’s developed an active superyacht hub in the Suez Canal. , replete with new hotels, moorings, and commercial projects. with Isamilia Yacht Marina.
From a legal front, 2024 has largely dealt with, and continues to deal with, the fate of the seized assets, following the 2022 Russian invasion of Ukraine, owned by sanctioned individuals. In February, Russian businessman Sergei Maumenko lost his appeal at the UK Appellate Court over his 60-meter motor yacht “PHI” and now plans to take matters to the Supreme Court. Another seized motoryacht, Royal Romance, is currently under new ownership by the Ukrainian government with ongoing negotiations to find a suitable auctioneer. In the United States, a class-action lawsuit targets major brokerage houses and listing services, accusing the defendants of participating in a conspiracy to inflate brokerage commissions.
To keep up with the happenings sure to come for the second half of the year, please consider signing up for this complimentary newsletter as I continue to provide the latest news, highlight remarkable individuals, and spotlight fascinating projects of this exciting time.
Wishing you a prosperous June,
Faisal
Business Bay Marina undergoes rebranding; now known as Marasi Bay Marina
In September 2023, Gulf-based real estate development group OMNIYAT announced the acquisition of Business Bay Marina. The marina was previously owned by marina management company D-Marin, who will continue to oversee its day-to-day operations.
The marina is now known as Marasi Bay Marina. Marasi Bay accommodates 157 berths for vessels up to 35 meters in length. The rebrand of Marasi Bay is occasioned by the opening of The Lana Hotel, the first Dorchester Collection in the Middle East.
NEOM announces new development Jaumur
NEOM announces new coastal community Jaumur. A superyacht-based community situated alongside the coast of the Gulf of Aqaba, Jaumur is designed to host 6000 residents residing in 700 villas and 500 marina-surrounding apartments. The development will also see two hotels with over 350 rooms and a boarding school. Meanwhile, the marina promenade will feature all-year-round entertainment and cultural experiences. For superyachts, the revolutionary marina will see a 1.5-kilometer aerofoil that will accommodate the largest builds on the water.
Egypt International Boat Show Announced for July 11-14 2024
After a 13-year hiatus, the 6th edition of the Egypt International Boat Show was announced for July 11-14, 2024. The event will take place at Marassi Marina Yacht Club, located on Egypt’s North Coast. The show plans to display luxury yachts and motorboats, along with water sports equipment and accessories. Exhibitors include UAE-based builder Gulf Craft’s Majesty and Nomad lines and Azimut.
Troostwijk Auctions no longer the central agent to seized motor yacht Royal Romance
- After the Asset Recovery and Management Agency ( ARMA) of Ukraine confirmed the auction of the seized motoryacht ROYAL ROMANCE with Troostwijk Auctions, plans for the auction have fizzled out. In a statement shared with The Maritime Observer, the auction house states “Troostwijk will not be the auction platform to enable the sale. While we strongly support Ukraine and their efforts, there were too many questions and unresolved issues that we had to decline the opportunity”
ARMA in talks with Boathouse Auctions for the selling of seized motor yacht Royal Romance
- Days after auction house Troostwijk Auctions announced they are no longer in talks withARMA to sell the seized motor yacht Royal Romance, a potential central agent has entered in it’s place. Boathouse Auctions, an online yacht auction marketplace based in the United States, has entered into the initial negotiations for the sale of the 92-meter yacht, ARMA announced.
The Agency went on to add: "ARMA has already received an official confirmation from the American auction house Boathouse Auctions that negotiations with their representatives have been initiated. We are currently discussing in detail all legal issues and legal safeguards for the auction. This is the first time that Ukraine has faced the issue of selling a seized asset of this scale abroad.”
Moreover, ARMA also announced the new status of the yacht. Royal Romance now flies the Ukranian flag and adheres to Ukrainian jurisdiction.
The Protracted Journey of Royal Romance
The superyacht industry continues to feel the effects 2022 Russian Invasion of Ukraine, where countries including the US, EU, and UK imposed sanctions on Russia with the aim of pressuring individuals or entities to cease actions destabilizing Ukraine or threatening its territorial integrity. The damage was felt in different parts of the sector. From a brokerage perspective, the first quarter of 2024 presented an overall decline of sales by 14.3% from the same period in 2023, partly attributed to the sanctions and paucity of Russian clients. Meanwhile, figures of ownership by nationality have plummeted for the second consecutive year when it comes to Russian owners, falling from 9.1% in 2022 to 7.8% in 2024.
As for the Russian-owned superyachts in the fleet, we have witnessed the highly publicized seizures and detentions made by several jurisdictions, so much so that a dedicated Wikipedia page was created to follow the progress of all 29 affected vessels. The 60-meter Phi continues to be embroiled in legal battles in the UK, while the 135-meter Flying Fox returned to the charter market after her seizure by the US government. Perhaps the most glaring example of a seized asset’s journey, however, is the 92-meter Royal Romance. Delivered by Feadship in 2015 to owner Viktor Medvedchuk, Royal Romance was seized in 2022 as she was docked in Croatia. Medvedchuk is known to be a close ally of Russian President Vladimir Putin and was placed under sanctions by the United States.
Far from a sinuous path, the vessel continues to face uncertainty amidst efforts to auction her off. After a Croatian court ruling granted ownership of the yacht to the Asset Recovery and Management Agency ( ARMA) of Ukraine, ARMA spearheaded plans to auction Royal Romance with a bidding competition to find a suitable central agent. The stipulations provided that the entrants were not to be placed under any sanctions list, not to have representatives of the aggressor countries, to have a minimum of three years experience in organizing yacht sales, and to have "an impeccable business reputation."
All seemed hopeful when the Agency notified the public of the winner in May 2024, selecting auction house Troostwijk Auctions. However, the first detour arrived when negotiations between the two parties fizzled out a few days following the announcement. In a statement shared with The Maritime Observer, the auction house stated “Troostwijk will not be the auction platform to enable the sale. While we strongly support Ukraine and their efforts, there were too many questions and unresolved issues that we had to decline the opportunity”. An update from the Agency arrived days after, announcing the participation of Boathouse Auctions, an online yacht auction marketplace based in the United States, who entered into the initial negotiations for the sale of the 92-meter yacht.
In the next step taken to implement the auction, ARMA has confirmed Royal Romance’s new flagged status under Ukrainian Jurdisiction, calling it a “historic moment for our country”, and for the first time where “a seized asset located abroad has received state registration to Ukraine.” Yet, Royal Romance continues to experience delays due to a more protracted process, and this is owed to several factors.
When the auctioning of Royal Romance was made known, it was noted that proceeds of the sale“ will be used to support Ukraine's defense capability,". For any prospective bidder, this may bring reluctance in deciding whether to go through with purchasing the yacht, not only from an optical standpoint but with the turbid waters surrounding the sale and what would follow. Moreover, per Ukrainian legislation, Medvedchuk’s case is categorized as a criminal case. Should he be acquitted, funds of the sale will be returned to him.
Conversely, the first Russian-owned superyacht to have been listed for auction, Axioma, saw a more seamless path from her seizure to sale. Seized in Gibraltar, the 72.5-meter yacht was originally owned by Dmitry Pumpyansky, who owed more than $20 million to US investment bank JP Morgan but could not pay back the loan due to sanctions imposed on him following the Russian invasion. Therefore, Gibraltar courts ordered the yacht to be sold. It was sold to an undisclosed buyer for $37.5 million in September 2022 to the successful bidder, with the proceeds going to the bank and a clean title awarded. It is a contrast of different legal considerations when it comes to different jurisdictions. Royal Romance and Axioma, two high-value assets were placed under international sanctions with different timelines and outcomes. It remains to be seen what happens with Royal Romance if it will eventually find a new owner and the ramifications that would follow post-sale.
Recommended: Deputy Executive Director for Legal Affairs at Transparency International Ukraine Kateryna Ryzhenko sheds light on the vessels' handling. [SuperyachtNews.com]