The Commercial Court has refused to allow London’s major insurance companies to have a multi-billion-pound aviation lawsuit withdrawn from England and ruled by a Russian court.
As a result of sanctions imposed on Russia following their invasion of Ukraine, aircraft owned by leasing companies were stuck on Russian territory. UK and EU companies were banned from leasing aircraft to Russian entities and Russia responded by prohibiting the export of aircraft currently operated on their territory.
It was estimated by Airfinance Journal that in February 2022 approximately 500 foreign-owned aircraft remained in Russia, with a market value greater than £8 billion ($10bn).
Insurers and reinsurers of the leasing companies declined to pay out on the stranded planes triggering legal action. It is understood that the action involves 13 different insurance companies and 10 syndicates.
In the Commercial Court hearing in London, the insurers argued that the reinsurance policies contain exclusive jurisdiction agreements in favour of the courts of Russia. Due to this agreement, the insurers asked the court to stay the proceedings in England.
In an extensive Judgment of over 200 pages, Mr Justice Henshaw rejected jurisdiction challenges brought by the Defendant international reinsurers on the basis that the mostly western owners and lessors of over 200 aircraft were very unlikely to receive a fair trial in Russia.
Mr Justice Henshaw said the “claimants have shown strong reasons why the court should decline to stay these proceedings.” He noted that the “claimants are very unlikely to obtain a fair trial in Russia,” to which he added, “itself is a strong reason to decline a stay.”
Dublin-based Aercap, one of the world’s largest aircraft leasing companies, filed multiple claims in London in June last year against insurers including AIG, Lloyd’s of London, Fidelis Insurance, Swiss Re and Chubb, and is seeking a total of around £2.8 billion ($3.5bn) for over 141 aircraft and 29 aircraft engines that have been left stranded in Russia
Four other aircraft leasing companies – Dubai Aerospace Enterprise (DAE), US-Irish firm Merx Aviation, Ireland-based KDAC Aircraft Trading and Falcon 2019-1 Aircraft, an entity managed by DAE – have also filed similar claims against insurers.
Due to the size and number of claims, the court has condensed the separate legal actions into one massive London trial, which is scheduled to run for approximately 12 weeks
Mark Dutton, executive director W Denis insurance, said: “ This ruling sets a precedent that even though the policy interpretation clause was exclusively subject to Russian Law, the courts can overrule this as they did here on the basis that they didn’t think there would be a fair hearing nor consistent outcome given the global-political situation with Russia at present. The courts overruled and stated that English Law will be used to determine the governance of the reinsurance policies being disputed.”
W Denis place insurance around the world and have direct access to Lloyd’s as well as other international (re)insurance markets, if you wish to discuss your insurance requirements further with a broker at W Denis, please make arrangements with Daniel Moss at daniel.moss@wdenis.co.uk or on 0044 (0)113 2439812.
