Yacht Royal Romance: сlaim against Croatia increases to €196 million following unlawful government actions
Croatia is obligated to pay compensation of €196 million to Lanelia Holdings Ltd in connection with unlawful actions by Croatian authorities and the inspection of the Royal Romance yacht by a Ukrainian delegation.
The District Court of Split decided to extend temporary measures and prohibit the sale of the yacht until the conclusion of the criminal case and a decision on confiscation is made. The court emphasized that “the yacht has not been transferred to the disposal of ARMA, but only under management until a final decision is made,” and “there is currently no legal basis for the sale of the yacht.” Thus, any attempts to force a sale without the consent of the owner, Lanelia Holdings Ltd, are illegal.
Intentions of Ukraine
The National Agency of Ukraine for the Detection, Search and Management of Assets Derived from Corruption and Other Crimes (ARMA) announced plans to send a delegation to Croatia to conduct an inspection and subsequent sale of the Royal Romance yacht.
It was planned that the delegation would also hold a conference in Zagreb with key ministries of Croatia, including the Ministry of Justice, Ministry of the Sea, Transport and Infrastructure, Ministry of Foreign Affairs, as well as the Ministry of Physical Planning, Construction and State Assets. The main agenda of the meeting was to seek Croatia’s assistance in the swift sale of the Royal Romance yacht at auction.
However, under Croatian and European Union laws and international legal norms, the confiscation of seized property is possible only based on a court decision following the consideration of a criminal case. As mentioned earlier, the District Court of Split issued a prohibition on the sale of the Royal Romance yacht. Nonetheless, Ukraine’s unlawful actions prompted retaliatory measures from the yacht’s owner. Lanelia Holdings Ltd, the yacht’s owner, urgently took measures to protect its rights.
Firstly, the company applied to participate in the planned working meeting (however, its participation was rejected, and information about the conference was not made public). Secondly, objections were filed with the District Court of Split against the inspection and intrusion of unauthorized individuals onto the vessel without the owner’s permission. Thirdly, notifications of the unlawfulness of ARMA’s assistance in the sale of the yacht were sent to each of the Croatian ministries.
Despite the prohibition on actions regarding the sale of the yacht and its disposal by ARMA established in its own decision of January 31, 2024, on February 23, 2024, Mladjan Prvan issued a document to ARMA contradicting this decision: this permit was called “Dozvola.” This document allowed the Ukrainian delegation to inspect the Royal Romance yacht on February 29, 2024, accompanied by police officers from the Split Maritime Police Station.
According to the information in the document, the permit was issued at the request of the Office of the Prosecutor General of Ukraine for the provision of international legal assistance in criminal cases. However, Croatian legislation lists only certain documents that a judge can issue, and a document called “Dozvola” is not included in this list. A written order or court decision is required for a search within the framework of a criminal case.
Ukrainian legislation prohibits Ukrainian officials from exercising their powers on the territory of another state. This is provided for by Article 6 of the Law of Ukraine “On Civil Service,” according to which executive bodies act within the limits defined by the Constitution of Ukraine and the laws of Ukraine. The sovereignty of Ukraine extends to its entire territory in accordance with Article 2 of the same law. Therefore, the exercise of powers by Ukrainian officials on the territory of the Republic of Croatia violates the sovereignty of this country and constitutes an act of aggression.
The fact that a judge first prohibits certain actions and then allows them may indicate political pressure being exerted on him.
On the day of the inspection on February 29, 2024, Lanelia Holdings Ltd filed a motion to disqualify Judge Mladjan Prvan and other judges of the District Court of Split. The reason for this motion was suspicions of bias against the Ukrainian side and/or personal interest in the outcome of the case.
Inspection of the yacht under the auspices of ARMA with the participation of law enforcement agencies
In late February 2024, representatives of Lanelia Holdings Ltd, lawyers from an international law firm, officers of the maritime police of the city of Split, a delegation from Ukraine, and Judge Mladjan Prvan of the District Court of Split arrived at the port of Trogir to inspect the yacht.
Neither the owner company of Royal Romance, Lanelia Holdings Ltd, nor the captain consented to the inspection. Since intrusion onto the yacht without legal basis and the owner’s permission is unlawful and violates property rights, lawyers of Lanelia Holdings Ltd demanded a written order for the inspection. The required order was not provided.
Furthermore, the lawyers attempted to ascertain the authority of Ukrainian officials abroad, the purpose of the inspection and its legal justification but did not receive answers to their questions. After several hours of numerous threats, Judge Mladjan Prvan insisted on access to the yacht, threatening arrest and “serious trouble” for the lawyers.
Following the refusal of the maritime police of Split to raise the gangway, the judge ordered the mainland police from Trogir to be called. Ultimately, the captain was forced to allow the ARMA delegation and the judge aboard the vessel.
In early March 2024, Lanelia Holdings Ltd filed a complaint with the Internal Control Service of the Ministry of Internal Affairs of the Republic of Croatia regarding the actions of the police in Trogir, demanding an investigation and accountability for officers who exceeded their authority.
Neither the captain nor the lawyers, as representatives of the yacht owner, allowed the filming of photos and videos. Additionally, there is a ban on photography in the port of Trogir, of which the Ukrainian delegation and Judge Mladjan Prvan were informed by the port director. Despite this, the judge threatened to arrest anyone interfering with the “official judicial proceedings.” After the inspection, Lanelia Holdings Ltd appealed to the Supreme Court of Croatia, demanding supervision of Judge Mladjan Prvan’s behavior, which they believe to be criminal. The company requests measures to protect the fundamental principles of the rule of law.
Unlawful actions of the Ukrainian delegation
Although recognized by the Asset Recovery and Management Agency (ARMA) as representatives of Ukraine, members of the Ukrainian delegation refused to present their official credentials. Nevertheless, a protocol was drawn up confirming that Ukrainian officials performed official actions outside Ukraine.
This case is considered a unique violation of sovereignty, wherein foreign state authorities act on the territory of another state. Actions by Ukrainian officials outside their country are viewed as violations of sovereignty and abuse of power.
The actions of Ukrainian officials, Croatian police officers and Judge Mladjan Prvan constitute an unprecedented violation of property rights: the unlawful search of property in private ownership, illegal intrusion onto the yacht and filming of photo and video materials against the owner’s will. These actions contradict the Constitution of Croatia, fundamental guarantees and norms of international law.
Unlawful interference in private property has been expressly prohibited by the European Convention on Human Rights and Fundamental Freedoms since 1950 – a key document of European legal order.
Since March 1, 2022, Ukraine has declared derogation due to the imposition of martial law, which means deviating from its obligations under the European Convention on Human Rights (including the right to legal remedies and the right to respect for property). However, none of the EU member states has declared derogation. EU legislation continues to bind EU member states. Croatia joined the EU on July 1, 2013. Croatian state authorities and officials are obliged to comply with the provisions of this Convention, as well as the Constitution of Croatia.
Despite all legal standards, ARMA Chief Elena Duma promotes the idea of asset confiscation without a court decision at official meetings. In late February, several meetings were held within the framework of BAMIN (Balkan Asset Management Inter-Agency Network), where these ideas were also voiced by Elena Duma. This information is published on the official ARMA website. Croatia is a member of BAMIN, but what is even more interesting is that Belgium has observer status.
The reaction of the European Union must be unequivocal: to protect the European legal order and prevent political pressure from Ukraine.
Croatia is obliged to pay compensation of €196 million to Lanelia Holdings Ltd
In February 2024, Lanelia Holdings Ltd filed a lawsuit against Croatia for damages in the amount of €36 million caused by the arrest of the Royal Romance yacht. The illegal actions of Croatian and Ukrainian authorities were aimed at depriving Lanelia Holdings Ltd of the ability to use its property. Moreover, the temporary restrictive measure imposed in March 2022 has signs of confiscation without legal grounds. Despite efforts by Ukrainian and Croatian officials, Lanelia Holdings Ltd remains the lawful owner of the Royal Romance yacht.
As a result, on March 4, 2024, an application was filed with the Commercial Court of Split (Croatia) to increase the claims by €160 million, which corresponds to the assessment of the yacht’s value at the time of its acquisition by Lanelia Holdings Ltd. Thus, the total amount of damages to be compensated by Croatia is €196 million.
