UK court to rule on aircraft lessors’ claims against reinsurers

The dispute over aircraft grounded in Russia will be heard by the UK High Court

UK court to rule on aircraft lessors’ claims against reinsurers


By Mika Pangilinan

The UK High Court has declared its jurisdiction to adjudicate claims amounting to US$10 billion, initiated by aircraft lessors against several reinsurers concerning planes that have been grounded in Russia since 2022.

According to a report by Global Sanctions, the court’s decision hinged on concerns that the lessors might not receive a fair trial in Russia.

The court found that Russian courts might not adhere to the governing laws of the leases, especially in light of Western sanctions. It also underscored doubts about the Russian judiciary’s capability to objectively assess whether the country’s countersanctions impeded the return of the leased aircraft.

The initial claims were brought forward in the English court by lessors that had terminated their lease contracts with Russian airlines. These lessors have been struggling to reclaim their grounded aircraft and are now looking to recoup their losses from global reinsurers, including AIG and AXA.

Russian airlines like Aeroflot had initially insured the leased aircraft with local insurers, who then transferred a portion of the risk to reinsurers.

In response to the lessors’ claims, reinsurers contested the English court’s authority to oversee these cases, citing documents indicating that the policies are governed by Russian law.

A trial date has been set for October 2024, according to Global Sanctions.

One aircraft lessor has already received cash insurance settlement proceeds from Aeroflot’s insurer, NSK.

Dubai Aerospace Enterprise (DAE) said in December that it received US$118 million from “claims under Aeroflot’s insurance and reinsurance policies relating to seven aircraft and associated engines.”

DAE also agreed to release its claims against Aeroflot and its insurer and reinsurers but added that it will “continue to actively pursue its litigation in the English courts under its own insurance policies.”

The company will also “continue its efforts to seek to mitigate its losses in respect of its aircraft that were previously leased to other Russian airlines,” the statement released in December said.

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