Sanctioned Russian billionaire’s yacht attracts 63 bids at Gibraltar auction

The M/Y Axioma, a luxury yacht formerly owned by sanctioned Russian billionaire Dmitry Pumpyansky, was sold for an undisclosed sum at auction in Gibraltar on 23 August. It was the first public auction of an asset seized since the start of the war in Ukraine.

The 72-metre yacht was impounded in Gibraltar in March and was put up for sale after US bank JPMorgan Chase & Co. called in a USD22 million loan tied to the vessel. Whilst the vessel was not itself sanctioned by the UK or the EU at the time of its arrest, Pumpyansky, who was the ultimate beneficial owner and a personal guarantor of the loan, was sanctioned by the EU on 9 March.

Pumpyanksy was the sole shareholder of Pyrene Investments, which he used to take out the loan with JP Morgan. When Pumpyanksy was put on the sanction list it became illegal for any bank to accept repayments from him, which meant that JP Morgan was able to seize the yacht and then sell it to repay the loan.

The five-deck yacht can accommodate 12 guests and 20 crew members. It was designed by the famed superyacht designer Alberto Pinto and built by Dunya Yachts in Turkey in 2013. Originally named Red Square before being renamed Axioma, it was available for charter for USD558,500 a week.

As a result of the EU sanctions, both Axioma’s flag, the Malta Registry, and class organisation, the American Bureau of Shipping (ABS), terminated their associations with the vessel. As it was then deemed to be cruising without an operational certificate, it was ordered by the Malta Registry to report to the nearest port.

Axioma was then returning from the Caribbean and passing the Portuguese island of Madeira. However, the Portuguese government denied its request and sent a military escort to ensure the vessel stayed outside the territorial limits of Madeira.

This left Axioma in a challenging situation, with limited fuel and the continued removal of services in line with the sanctions restrictions. Its difficulties were compounded by contradictory instructions. The Malta Registry maintained that the vessel should still approach Madeira, the owner’s management that it should “go anchor off Africa and wait a few days”, while JP Morgan requested the vessel to head to Gibraltar.

The communications and clarifications with JP Morgan progressed and, after the complete legal picture was made clear, Axiom sailed to Gibraltar, where it was arrested. JP Morgan then obtained a court order in Gibraltar in July allowing for the sale of the yacht.

Pumpyansky was further sanctioned as a ‘Putin Enabler’ by the US Office of Foreign Assets Control (OFAC) on 2 August, at which time the vessel was “identified as blocked property in which Dmitriy Aleksandrovich Pumpyanskiy has an interest”.

The vessel was reportedly valued at £63 million, although it was expected to sell below that price. The broker conducting the auction said 63 bids were received and these were currently under consideration by the Admiralty Marshall in Gibraltar. Triay Lawyers, acting for JP Morgan in Gibraltar, said the bank would ultimately recover all amounts owing to it.

A spokesperson for Gibraltar Courts Service said: “The Axioma was arrested following the filing of an admiralty claim in the supreme court. Given that the sale is by auction, pursuant to an order of the court, the Admiralty marshal cannot say how much it is expected to sell for or how many people have expressed interest.”

“In the volatile world of shipping, disputes and defaults are an unfortunate fact of life,” said Gabriel González, head of Sovereign Marine Services, the leading yacht registration and management company in Gibraltar. “Gibraltar, with its legal system based on English law, has a strong reputation as a highly competent jurisdiction for ship arrest, consistently handling admiralty cases to deliver the best result, quickly.”

Other superyachts owned by Russian oligarchs have been impounded following Russia’s invasion of Ukraine. The 135-metre superyacht Crescent, thought to belong to the sanctioned chief executive of Russian oil giant Rosneft, was seized by Spanish officials in Catalonia in March. The Crescent is worth USD600 million and registered in the Cayman Islands.

This news surfaced after two superyachts owned by Chelsea FC owner Roman Abramovich were moved to dock at Turkish ports. Abramovich’s 163-metre yacht Eclipse docked at Marmaris port, while his other yacht, Solaris, moored at Bodrum port. Turkey has not imposed economic sanctions on Russia.