Putin’s seizure of 147 leased civil aircraft leads to a multi billion legal victory for firms against insurance companies
President Putin Pic credit: President’s office RussiaCase came as a result of action taken after Russia launched Ukrainian war
An extraordinary ground breaking judgment last week which has received little publicity outside the insurance and legal world has cost the insurance industry, including Lloyds of London, billions of pounds in claims as a direct result of the current Ukraine war.
At the time Russia invaded Ukraine in 2022 Russian civil aviation firms, mainly Aeroflot and S7, a private Siberian airline, were leasing 147 aircraft and 16 spare engines from companies across the world. As soon as this happened the companies wanted their planes back as they came under sanctions against Russia issued by the EU, US, and the UK.
But the move was thwarted by PresIdent Putin who passed a law banning the export of all the planes and the spare engines from leaving Russia and they are still there today.
The decision led to an extraordinary legal case coming before the Commercial Court in London when six of the companies came together to claim against their insurers to get their money back in a joint action that could cost the insurers over £3.4 billion.
Mr Justice Butcher; Pic Credit: Judiciary websiteThe case which has been quietly rumbling on for five months was a lawyers’ bonanza with more than 50 barristers employed on both sides-. It was heard by Mr Justice Butcher who has issued a 230 page ground breaking judgment covering 100 years of case law.
The six leasing companies were Aercap Ireland: Dubai Aerospace Enterprise, Falcon 2019-1;KDAC Aircraft Trading; Merx Aviation Servicing and Gasl Ireland Leasing A-I. Aercap Ireland, based in Dublin, is the world’s largest aircraft leasing company.
The insurance companies involved included Lloyds,AIG Europe; Chubb European Group and the underwriting group Kiln Syndicate 510. KDAC settled with Chubb before the end of the case. To add to complications under Russian law they had also to have insurance from Russian companies.
S7 – the Siberian Airline which leased many of the jetsThe dispute centred round whether the aircraft were covered by ” all risks” policies or ” war risks” polices. The judge ruled that they were covered by “war risks” policies because of the action of Putin in banning them leaving Russia. This will mean the companies will not get all the money they claimed but it will still run to billions of pounds The judge also rejected an argument from the insurers that sanctions against Russia prevented them paying out any money.
The ruling is also significant as it would spark off other claims against insurers and there were 400 leased aircraft in Russia at the time. The insurers have until the end of this week to appeal.
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