UK Court Rules Against Insurers in Russian Aircraft Loss Case
A UK High Court has delivered a landmark ruling in the ongoing battle between global aircraft lessors and major insurers over aircraft stranded in Russia, setting new legal standards for aviation insurance disputes.
In the judgment issued by the High Court of Justice, Business and Property Courts of England and Wales (Commercial Court), some of the world’s largest leasing firms—including AerCap Ireland Limited, Dubai Aerospace Enterprise (DAE) Ltd, Falcon 2019-1 Aircraft 3 Limited, KDAC Aircraft Trading 2 Ltd, Merx Aviation Servicing Ltd, and GASL Ireland Leasing A-1 Limited—brought claims against leading insurers such as AIG Europe S.A., Lloyd’s Insurance Company S.A., and Chubb European Group SE. The dispute arose from the loss of hundreds of aircraft trapped in Russia following the 2022 invasion of Ukraine and the ensuing sanctions.
At the core of the litigation were questions surrounding the interpretation of aviation insurance contracts—specifically, the interplay between “all risks” and “war risks” policies. The court examined when coverage should be considered triggered, how interest on damages should be calculated, and how legal costs should be allocated among multiple parties.
The judgment reaffirmed that insurance contracts exist to hold policyholders harmless for covered losses, meaning insurers are technically in breach as soon as the loss occurs unless the contract specifies otherwise. However, the court allowed a short, reasonable period for insurers to assess claims before interest accrues, recognizing the complexity of such disputes.
In a key finding, the court ruled that pre-judgment interest should follow the US Prime rate as the standard for dollar-denominated awards, rejecting arguments for lower rates tied to lessors’ borrowing costs due to insufficient evidence. It also apportioned legal costs according to each party’s success on major issues, noting AerCap’s reported legal expenses of approximately £81 million.
Crucially, the judge denied permission to appeal, emphasizing the need for finality. “It is desirable that there should be finality as soon as possible so the market knows where it stands,” the court stated, referencing the upcoming related OP trial.
This ruling marks a significant moment for the aviation insurance sector, clarifying how English courts interpret coverage triggers, calculate pre-judgment interest, and distribute costs in complex, multi-party disputes. It underscores the critical importance of precise policy wording and timely, transparent claims handling amid an evolving geopolitical and regulatory environment.
Related News: https://airguide.info/category/air-travel-business/aircraft-finance/
Sources: AirGuide Business airguide.info, bing.com, insurancebusinessmag.com