UK High Court to Hear $10 Billion Aircraft Lessors’ Claims Against Reinsurers Over Grounded Russian Planes

The UK High Court has established its authority to preside over a $10 billion dispute involving aircraft lessors and several global reinsurers over airplanes stranded in Russia since 2022. This landmark decision paves the way for lessors to potentially recover losses for aircraft that they have been unable to repatriate following the termination of lease agreements with Russian airlines.

Global Sanctions reports that the court’s ruling was significantly influenced by concerns over the fairness of trial proceedings in Russia. Specifically, doubts were raised about the Russian legal system’s adherence to the leases’ governing laws amidst the backdrop of Western sanctions and Russia’s countersanctions, which may affect the repatriation of leased aircraft.

The original claims were filed in the English court by lessors after concluding their lease contracts with Russian carriers, who found themselves unable to retrieve the grounded planes. Seeking to recoup their financial losses, these lessors are now turning their sights on international reinsurers like AIG and AXA, which had underwritten some of the risks associated with the leased aircraft.

Reinsurers had challenged the jurisdiction of the English court, arguing that the insurance policies in question were subject to Russian law. However, the court’s decision to claim jurisdiction sets a significant precedent and schedules the trial for October 2024.

In a related development, Dubai Aerospace Enterprise (DAE) announced in December that it had received a $118 million insurance settlement from NSK, Aeroflot’s insurer, for seven aircraft and their engines. While DAE agreed to drop its claims against Aeroflot and related insurance entities, it confirmed its intention to continue pursuing litigation in English courts under its insurance policies. Additionally, DAE remains committed to mitigating its losses related to aircraft previously leased to other Russian airlines.

This ongoing legal saga underscores the complex international legal challenges arising from aircraft leasing and insurance in the context of geopolitical tensions and sanctions, spotlighting the critical role of jurisdictions like the UK in resolving these disputes.

Sources: AirGuide Business airguide.info, bing.com, insurancebusinessmag.com