A significant legal battle has begun in the High Court regarding aircraft stranded in Russia.
- Aercap Ireland Limited is pursuing compensation from insurers over jets stuck amidst Ukraine conflict sanctions.
- Over 400 aircraft worth nearly $10 billion remain in Russia due to sanctions imposed by the West.
- Insurers contest payouts, questioning the physical loss of aircraft and impact of Western sanctions.
- The trial could set critical precedents in the application of war-risk versus all-risk insurance policies.
A major judicial confrontation has commenced in London’s High Court concerning aircraft belonging to Aercap Ireland Limited, which have remained in Russia following sanctions due to the Ukraine conflict. This case is notable for its complexity and predicted expense, ranking among the most significant ever at the Rolls Building.
The dispute involves more than 400 aircraft, valued at around $10 billion (approximately £7.6 billion), which have been stranded in Russia since Western nations imposed sanctions. Aercap, alongside at least four other lessors, argues for compensation from their insurers, escalating this high-stakes litigation to the London courts.
Insurers are challenging the claims, arguing there has not been a concrete loss of the aircraft. They assert that without a current lease agreement and with existing sanctions, the coverage is not applicable. Prominent barristers representing the insurers suggest a potential resolution to the conflict based on international political developments could alter the status of the aircraft.
Aercap is demanding $3.5 billion (£2.6 billion) from insurers, including AIG and Lloyd’s, under its all-risks policy. Alternatively, it seeks $1.2 billion (£915 million) under the war-risks insurance policy, dependent on the legal interpretation of the policy terms and the situation’s impact on them.
This trial, presided over by Mr Justice Butcher in Court 15 of the Rolls Building, is particularly critical as it examines whether the aircraft’s situation triggers war-risk insurance, which often has capped payout limits, or falls under the all-risk policies, which do not.
Mark Howard, representing Aercap, reiterated in a preliminary hearing that recovery under a war risks policy should be deemed inevitable, highlighting the financial implications of the aircraft’s continued detainment in Russia.
The outcome of this trial will have far-reaching implications for insurance practices amidst international conflicts.
