Irish Court Ends Major Aviation Insurance Disputes
SMBC Aviation Capital and CDB Leasing have reached settlements on war risk insurance claims against at least two major insurers, according to a recent hearing at the Irish High Court, as reported by the Irish Times. The developments come amid what is being described as the single largest court case in Ireland’s history, where a number of lessors have taken legal action against some of the world’s biggest insurance firms over war risk and all-risks claims. These claims relate to aircraft retained by Russian airlines following the imposition of Western sanctions in March 2022.
Eileen Barrington, the lawyer representing both SMBC and CDB Leasing, informed the court that settlements have been finalized with Ping An, a prominent Chinese insurer, and Fidelis from the United States. Additionally, the lessors are reportedly on the verge of settling with Chubb Corporation, an American-Swiss insurance firm. This sequence of settlements highlights the progress being made in resolving disputes that have gripped the aviation finance sector for months. The case involves intricate issues surrounding war risk insurance, a coverage designed to protect against losses arising from acts of war, terrorism, and other conflicts.
SMBC Aviation Capital, which is owned by Sumitomo Mitsui Banking Corporation, spearheaded legal action by suing a total of 17 entities, including 16 insurers and one pool of underwriters, under case number 2022/5975/P. In a parallel legal strategy, CDB Leasing—owned by China Development Bank—filed two separate lawsuits: one against 21 insurers (2022/5759/P) and another against four insurers (2022/6502/P). These coordinated legal actions were initiated to recover damages related to insurance claims on aircraft that have been stranded due to the sanctions imposed on Russia. Initially, the total damages claimed exceeded USD8 billion, a staggering figure that underscored the high stakes involved in these disputes.
Over time, several claims have been settled, reducing the overall exposure for the lessors involved. Notably, industry players such as Avolon, BOC Aviation, and Nordic Aviation Capital have already settled all of their remaining claims earlier this year. FTAI Aviation remains the sixth lessor to pursue legal action against insurers in Ireland, further emphasizing the widespread impact of the sanctions and subsequent disputes on the aviation leasing community.
The settlements reached by SMBC Aviation Capital and CDB Leasing not only mark a significant milestone in the resolution of this protracted legal battle but also illustrate the challenges that insurers face in managing risks associated with global geopolitical events. The war risk insurance market has been under intense scrutiny as carriers, lessors, and insurers navigate a landscape of escalating conflicts and regulatory changes. The outcomes of these cases will likely have far-reaching implications, setting precedents for how similar disputes are handled in the future.
As the case continues to unfold, industry observers remain attentive to further settlements and any additional legal maneuvers that may arise. The resolutions achieved so far signal a potential easing of tensions in the aviation finance sector, providing a measure of relief to companies that have been grappling with uncertainty and significant financial exposure in the wake of the sanctions against Russia.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com