[2025] EWHC 1430 (Comm)

Chubb raised a number of defences based on the RISs made by AerCap. At least to some extent, at the end of the case, Chubb took the stance that these could not be resolved at this trial, and needed to be considered at a Phase II trial. I saw no reason why those points should not be decided now, and will consider each of those which I understood to be maintained below.

The first is that Chubb contended that entry of the RISs breached AerCap’s duty in General Condition 1(d) of the Policy not to act ‘to the detriment or prejudice’ of Chubb; and/or of an implied term to the effect that AerCap should not deal with its rights against third parties in a manner prejudicial to Chubb’s interests as its insurer. Chubb contended that those obligations were breached because of terms which the RISs contained.

As to the allegation of breach of General Condition 1(d), I accept the statement of the law in Hemsworth, Law of Insurance Contracts (March 2024 update) that:

… bona fide (bilateral) settlement by the insured of his claim against the third party is not a breach of the contract of insurance, even though the settlement prevents subrogation against the third party. Settlement does not prejudice the insurer, provided that the settlement is indeed bona fide: the court will be alert to the possibility of collusion between victim and tortfeasor.

In the present case, I am satisfied on the evidence which has been adduced, and especially that of Mr McCray Smith, that the RISs concluded by AerCap were not only bona fide and reasonable, but the only option for AerCap to recover promptly any value for the Aircraft from parties in Russia. They were the product of extensive negotiations and were carefully evaluated to ensure compliance with applicable sanctions. The terms of which Chubb complains were themselves the subject of negotiation and were part of the overall deal represented by the RISs. They cannot be considered in isolation.

I do not accept that the term Chubb contends should be implied is to be implied if and insofar as it is said to have any effect wider or different from General Condition 1(d). In any event, I find that AerCap did not deal with its rights against OP Insurers/reinsurers in a manner prejudicial to Chubb, for the reasons I have given.

The second point is that AerCap has been indemnified ‘in part’ under the OPs and cannot therefore claim under their Contingent Cover. This point I have considered and rejected above.

The third point is Chubb’s contention that the Contingent Cover required AerCap to take reasonable steps to make and pursue a claim to be indemnified under the OPs, and that, by entering into the RISs, it has not done so, and that Chubb is therefore entitled to damages or an indemnity as a result. I do not accept that AerCap was under the obligation alleged. It is not express and cannot, in my view, be implied. Where the policy intended to place an obligation on the assured to pursue a third party, this is expressly stated. In any event, I do not consider that AerCap has failed to take reasonable steps. Its RISs, which were entered into in circumstances where the Russian interests had a strong bargaining position, have reduced its claim in the present proceedings by some US$1.3 billion.