[2025] EWHC 1430 (Comm)

My findings above as to the date on which the Aircraft can be said to have been lost make relevant and provide the framework for the arguments which were advanced by reference to the notices to review/cancellation which were served by WR Insurers on DAE, Falcon, Merx and Genesis (the ‘Notices of Review’).

To recap, the WR Covers for each of the Claimants, except AerCap, contained provisions allowing WR Insurers to review, inter alia, the geographical limits of the policies. The effect of the Notices of Review was, in most cases, that from midnight 7 days after the notice was issued, either cover would be cancelled entirely, if the notice were not accepted by the insured, or if they were accepted cover would be amended to exclude the countries specified in the notices from that date.

The Notices of Review which were served are summarised in the table at Annexe 4 to this judgment. DAE, Falcon and Merx do not dispute that Notices of Review could be issued by the Slip Leader on behalf of all WR Insurers and/or by individual WR Insurers. There is a dispute as to the authority of the Slip Leader in relation to Genesis, to which I will return below.

Given my findings as to the date on which the aircraft were lost, what is significant is as follows. For DAE, all the 7 day notices expired after 10 March 2022, except for the IQUW notice issued on 1 March 2022, which expired at 23.59 on 8 March 2022; and for Falcon, all the notices expired after 10 March 2022, except for the Atrium and IQUW notices issued on 1 March 2022 which expired at 23.59 on 8 March 2022. In relation to Merx, all the notices expired after 10 March 2022, except for the Hive and IQUW notices issued on 1 March 2022 which those underwriters say were effective at midnight on 8/9 March 2022. The position in relation to Genesis is more complex, and will be considered below, but WR Insurers’ contention is that the Notice of Review issued by TMK as Slip Leader was effective from midnight on 2/3 March 2022.

It is convenient to address at this juncture a preliminary point taken by Merx. Merx refers to the fact that the WR Endorsement, at Section 5 clause (a), provides that cancellation ‘shall only apply to the Aircraft the subject of the notice.’ Merx further contends that as none of the notices given by WR Insurers actually identified the Aircraft to which they applied, the notices were invalid.

I do not consider that this argument is correct. The terms of the policy did not make the enumeration of the aircraft to which the notice was to apply a condition of a valid Notice of Review. The words relied on by Merx were meant to clarify the extent of any cancellation, namely to make clear that insofar as aircraft were identified by WR Insurers as not the subject of the notice, those aircraft would remain on cover; they were not seeking to impose a requirement of individual enumeration, and the clause would have been differently expressed had that been the intention. Furthermore, the notices which were given would have been understood by a reasonable recipient as applicable to all the aircraft underwritten by the relevant policy.

There are thus, on my findings, a number of WR Insurers whose policies had been temporally or geographically restricted from a point prior to that at which there was a loss of the Aircraft.

WR Insurers contend that, in those cases, there is no cover. The relevant policies each covered losses occurring during the relevant policy period, and given that the loss, on this basis, occurred after the end of the (truncated) period, it was not covered.

In response the relevant Claimants contended that this was not so. They relied, in various ways, on an argument that the loss flowed from a peril which was operative prior to the end of the period of insurance; and they invoked the concepts of ‘death blow’ and ‘grip of the peril’ to say that there was cover notwithstanding that the total loss of the Aircraft and Engines occurred outside the relevant policy period.

The terminology of ‘grip of the peril’, and its distinction from the related concept of a ‘death blow’ was first used, or at least first made common currency, by Rix LJ in Scott v Copenhagen Re Co (UK) Ltd [2003] EWCA Civ 688 at [47]-[48]. As Rix LJ there said, there was in the field of marine insurance a long recognised doctrine, known loosely as that of the ‘death’s blow’, under which, if a vessel has suffered some grievous damage which cannot be said to amount at once to a total loss, or even a constructive total loss, and which only develops into a total loss after the risk expires, nevertheless the total loss is covered under the insurance. This is a doctrine which is associated with the case of Knight v Faith (1850) 15 QB 649, though it was not applied in that case. Rix LJ went on to say that the same or an analogous doctrine, which might be better labelled ‘grip of the peril’, applied in cases of deprivation of possession. He referred to the exposition of this in the then current edition of Arnould by reference to Bailhache J’s judgment in Fooks v Smith [1924] 2 KB 508 at 514. Bailhache J had there said that if a peril insured against occurred, and if in the ordinary course of an unbroken sequence of events following on the peril a constructive total loss became an actual total loss, the underwriters were liable in respect of the total loss. Rix LJ said (at [48]) that it was not clear why, absent express contractual provision, such a doctrine or doctrines were not applicable outside marine insurance.

These principles are stated in Arnould, in the marine insurance context, at [28-05] as follows:

If the subject matter of the insurance has already received its death blow when the risk expires, the fact that the damage has not yet reached such proportions as to make the ship or goods already an actual total loss cannot prevent the assured from claiming for an actual total loss when the work of destruction has been completed.

Similarly, if the assured is deprived of possession or control of the insured property prior to the expiry of the risk by an insured peril, the fact that at the date when the policy expired it could not be said that the assured was irretrievably deprived of his ship or goods, or that their recovery is unlikely, will not prevent him from afterwards claiming for an actual total loss if as a result of a sequence of events following in the ordinary course upon the peril insured against the loss develops into an actual total loss.

In Bennett, the principle is stated thus (at [21.22-21.23]):

The confinement of the insurer’s liability to loss sustained during the currency of the risk is subject to the “grip of the peril” doctrine. According to this doctrine, where the insured property falls into the grip of an insured peril during the currency of the risk, the insurer is liable for any total loss proximately caused by that peril after the expiry of the risk.

The doctrine operates most readily in the context of perils of deprivation of possession. The policy may expire between the insured property falling into the grip of a peril of deprivation of possession and that deprivation maturing into a total loss. However, provided the peril of deprivation of possession that grips the property while the insurer is on risk qualifies as the proximate cause of a total loss that ultimately matures, the insurer will and should be liable for that total loss. Otherwise, the apparent extent of cover against perils of deprivation of possession would be misleading and there would be a significant gap in the ship-owner’s cover, since renewal or alternative cover is unlikely to be available except at prohibitive rates once the vessel is known to have been seized.

It is now clear that the doctrine or doctrines or their analogues are applicable in non-marine insurance. In KAC v KIC [1996] 1 Lloyd’s Rep 664 at 690, Rix J applied what he there called the ‘death blow’ principle, in holding, as an alternative ground, that the loss of the aircraft and spares taken from Kuwait airport was proximately caused by a peril occurring within the policy period. In Wasa International v Lexington Insurance [2010] 1 AC 180, Lord Mance stated, at [39] that ‘damage materialising or developing from [the peril insured against] after the policy period would still be covered.’

Recently, in Sky UK Limited v Riverstone Managing Agency Ltd [2024] EWCA Civ 1567, the Court of Appeal held that deterioration and development of damage to roof timbers occurring after the period of insurance, but as a result of wetting which had occurred during the period of insurance was covered by the policy. This was said to be the correct result as a matter of principle and authority, reinforced by consideration of the commercial consequences. As to principle, a contract of indemnity insurance is one in which the insurer promises that the assured will not suffer the insured damage. If and when the insurer fails to perform that primary obligation, it comes under a secondary obligation to pay damages. The consequence is that the measure of recovery is that provided for by the common law principles governing damages for breach of contract, subject to any express policy terms to the contrary. Such limitation is not achieved merely by the insuring clause identifying the temporal limit of the insured damage. As to authority, Popplewell LJ referred, amongst others, to Lord Campbell’s dictum in Knight v Faith ‘that the insurer is liable for a loss actually sustained from a peril insured against during the continuance of the risk’; to Andersen v Martin [1908] AC 334; to Municipal Mutual v Sea Insurance [1998] Lloyd’s Rep IR 421; to Wasa v Lexington; and to The Renos [2019] 4 All ER 885.

As to the last of these, Popplewell LJ quoted what Lord Sumption had said at [10], as follows:

The first point to be made is that as a general rule, the loss under a hull and machinery policy occurs at the time of the casualty and not when the measure of indemnity is ascertained. A claim on an insurance policy is a claim for unliquidated damages. The obligation of the insurer is to hold the assured harmless against an insured loss, from which it follows that where the insurance is against physical damage to property the insurer is in breach of that obligation as soon as the damage occurs: Chandris v Argo Insurance Co Ltd [1963] 2 Lloyd’s Rep 65, 73-74, Firma C-Trade SA v Newcastle Protection and Indemnity Association (The ‘Fanti’) [1991] 2 AC 1, para 35 (Lord Goff of Chieveley). As Megaw J pointed out in the former case, at p. 74, the result is that “it is not a condition precedent – it is not a fact which must exist and be pleaded – that the plaintiff has quantified the amount of his claim; or even that all the facts exist at the date of the writ which will enable the proper amount of the claim to be determined.” These are “matters of evidence, not prerequisites of a cause of action”. The rule that the loss is suffered at the time of the casualty applies notwithstanding that the loss developed thereafter, unless it developed as a result of something that can be regarded as a second casualty, breaking the chain of causation between the first one and the loss. For that reason, it has been held that the fact that the policy expires before the loss has fully developed will not affect the assured’s right to recover under it in full: Knight v Faith (1850) 15 AB 649, 667 (Lord Campbell CJ); Wasa International Insurance Co Ltd v Lexington Insurance Co [2010] 1 AC 180, para 39 (Lord Mance). For the same reason, as the editors of Arnould, 19th ed (2018) point out at para. 29.07, if a casualty occurs within the policy period, and the loss develops after its expiry into one which is constructively total, there is still a constructive total loss under the policy.

As to commercial consequences, Popplewell LJ said that the conclusion he had reached accorded with commercial common sense. Business people, he said, would expect an insurance to yield the result that there was cover for deterioration and development damage; and it would have serious and unacceptable adverse consequences if this were not so, ‘because it would make deterioration and development damage occurring after the expiry of the period of insurance uninsurable under any separate and subsequent property insurance cover.’

By the end of the trial, it was not in dispute that there would be cover under non-marine policies such as those at issue here in respect of a development, after the end of the policy period, of physical damage proximately caused by a peril operating during the policy period. But WR Insurers argued that the present facts were not of that sort, and that the ‘death’s blow’/‘grip of the peril’ doctrine as it has been developed did not apply so as to mean that the losses in this case occurring after the expiry of the periods specified in the Notices of Review were covered under the policy.

Two particular arguments or groups of arguments arose in this connexion.

In the first place, WR Insurers contended that there was no room for the application of the ‘death’s blow’/‘grip of the peril’ doctrine where the policies were written on ‘loss occurring during’ terms: i.e. on terms which insured against losses occurring during a specified period, and that the present policies were written on that basis. This was so either because of the terms of the insurances themselves, or because the nature of the Notices of Review ousted any application of the ‘grip of the peril’ doctrine.

The first answer which was given to this by Genesis was that its policy was not, or was not simply, written on a ‘loss occurring during’ basis. It contended that its Contingent WR Cover was ‘against all risks of physical loss or damage howsoever occasioned, sustained during the insurance period’ and that this was against risks which had been sustained during that period. Genesis thus argued that if a peril had started to operate or occur during the policy period, which caused loss and damage developing or manifesting then or later, it was covered. Merx adopted this argument insofar as its wording was similar.

I was not persuaded that this wording was materially different in effect from the words of, for example, the DAE Policies, which insured against ‘loss or damage to aircraft and/or spares’ within the policy period. Specifically, I consider that the natural meaning of the Genesis clause is that the ‘physical loss or damage’ must be ‘sustained’ during the policy period; and the insurance is against the risk of such loss or damage being sustained. As to when loss is ‘sustained’ for the purposes of these words, I consider that this is when loss or damage occurs. I would, however, agree, that a connotation of the word ‘sustained’ is that the adversity undergone may develop: as with the common usage, ‘sustained a wound, of which he later died’. To that extent, the Genesis wording may be said to provide some textual support for the applicability of that aspect of the ‘death’s blow’ or ‘grip of the peril’ doctrine or doctrines.

For their part, DAE/Falcon accepted that their relevant covers were on a ‘loss occurring during’ or ‘LOD’ basis. I agree with their submission, however, that coverage wording such as found in their policies, or in typical LOD covers, does not prevent or oust the application of ‘death’s blow’/‘grip of the peril’ principles. While those principles were originally developed in cases involving the differently worded Lloyd’s SG Form, they have been recognised in marine insurance cases involving the New Marine Policy Form and ITC Hulls (1/10/83) clauses. Municipal Mutual involved a series of annual marine liability insurances on the MAR form. Hobhouse LJ described them as ‘time contracts whereby the cover provided was defined inescapably by reference to a period of time’ (at 426 rhc), and further said that ‘the cover is defined … in the present case by reference to when the physical loss or damage occurred’ (at 436lhc). Nevertheless, Hobhouse LJ acknowledged the applicability of ‘grip of the peril’ principles at 432 rhc, when he said that ‘the problem of dates in relation to time policies is not a new one and is covered by authority’, cited Knight v Faith and Anderson v Marten, and stated that ‘[t]he loss is attributable to the policy year in which the loss was caused not that in which it was capable of quantification’.

In Sky (UK) Ltd in the passage I have already quoted, Popplewell LJ said that the ousting of the principle that cover will be provided for the loss caused by the casualty, including the deterioration or development of damage sustained in the casualty, will not be ‘achieved merely by the insuring clause identifying the temporal limit of the insured damage’. The insuring clause in the construction all risks policy there at issue provided cover for ‘physical loss or damage to Property Insured, occurring during the Period of Insurance’; and it is thus clear that the type of clause which Popplewell LJ was referring to as insufficient to oust the principle he identified included an express LOD clause.

Sky (UK) Ltd involved physical damage, but ‘death’s blow’/‘grip of the peril’ principles are also applicable in cases where there is a deprivation of possession within the policy period, and it remains to be seen whether that will develop into a total loss after the policy period, notwithstanding that the cover is written on LOD terms. That this is so is supported by the decision of Rix J in KAC v KIC. In that case, the insurance covered ‘loss of or damage to the [aircraft and spares]’ and specified the policy period as one year from 1 July 1990. On 2 August 1990 Iraqi forces had captured Kuwait airport, and with it 15 KAC aircraft which were on the ground there, together with a large amount of spares. All but one of the aircraft had been flown out by the end of 8 August 1990; that plane and some of the spares were taken away after 9 August 1990. A cancellation of the war risks cover had taken effect from midnight on 9 August 1990. Rix J found that all 15 of the aircraft had either been lost by a peril insured against by midnight on 9 August 1990 ‘or to have been lost after that time by reason of the operation of a peril insured against before that time’ (see at 693 rhc). As Rix J said at 690:

Secondly, even if I had not found that KAC’s loss was complete already on Aug. 2, because of the “wait and see” principle espoused by Mr Webb, I would have found that the ultimate loss of all the aircraft and spares taken out of Kuwait airport was proximately caused by a peril insured against taking effect within the period of the policy…. I do not regard the actual flying out of the aircraft, followed by the spares … as new and separate proximate causes, but merely the working out of something which had already occurred.

WR Insurers drew attention to what was said by Rix LJ in Scott v Copenhagen Re. That was a case in which the reinsurance was expressly on ‘losses occurring during [specified one year period] terms’. Rix LJ, in what were expressly obiter remarks said that ‘it is to be noted that the period clause in the policy under consideration appears to be emphatic that the loss must occur precisely within the contract for it to be covered’ (at 215). On this basis, and on the basis that ‘Moore v Evans would seem to be against [the] submission’, Rix LJ doubted that the loss of the BA aircraft dated back to the initial date of deprivation. With respect, I am not able to agree with this reasoning (which, I reiterate, was not necessary to the decision in the case). I do not understand how Moore v Evans was contrary to the submission being considered. More importantly, I do not consider that ‘losses occurring during’ language has the effect that, to be covered, all loss must occur precisely within the policy period. The language used was not different in effect from that considered in Municipal Mutual or more emphatic than that examined in Sky UK Ltd. The rationale for the recognition of ‘grip of the peril’ principles, to which I will revert, applies just as, if not more strongly in the case of LOD wording than, in cases where other language is used in the insuring clause.

For essentially the same reasons which I have set out above, I do not consider that the terms of the Notices of Review in the present case are sufficient to prevent or oust the application of ‘death’s blow’ or ‘grip of the peril’ principles. The effect of the Notices of Review was to accelerate the date at which the WR Cover expired for Russia from the date originally agreed as the end of the period of insurance to the date and time when the Notices of Review took effect. They did not alter the scope of any cover provided for losses eventuating post expiry. In other words, if the insuring clause admitted of ‘death’s blow’ or ‘grip of the peril’ principles at the end of the policy term, the early expiry of cover in respect of Russia would have admitted of the application of the same principles, and simply brought forward the relevant date for the application of those principles.

The second group of arguments raised refined questions as to the ambit of the ‘grip of the peril’ doctrine, and as to whether there was cover for partial loss by way of deprivation of property under the relevant insurances.

WR Insurers’ argument was that the basis of any ‘grip of the peril’ principle was that there had to be a breach of contract by the insurer, in the sense described by Popplewell LJ in Sky UK Ltd by reference to Chandris v Argo and The ‘Fanti’ within the policy period; and if there is not, there can be no recovery in respect of loss or damage arising after the policy period. Further, as I understood it, WR Insurers argued that a temporary deprivation of the Aircraft, under the policies at issue here, is not a loss of the Aircraft, and is not insured against; and there is no breach of contract in its occurrence. Accordingly a temporary deprivation of the Aircraft within the policy period cannot be relied on as giving rise to the secondary obligation to pay damages spoken of by Popplewell LJ in Sky UK v Riverstone.

DAE’s answer to this was, in the first place, to contend that a temporary deprivation of the Aircraft was a partial loss and, though it did not give rise to an obligation on the part of the insurers to pay, nevertheless constituted an insured loss, and thus a breach of the primary obligation. Insurers were liable to pay the damages flowing from that loss, and in particular for a total loss if it was proximately caused by the peril which had caused the partial loss by way of temporary deprivation. As a secondary argument, DAE contended that the position would actually be no different if there could not be said to be a partial loss by reason of a temporary deprivation within the policy period, because the ‘grip of the peril’ principle should apply in any event, whatever its precise legal basis.

In its submissions on the subject, AerCap’s emphasis was rather different. AerCap, in Mr Howard KC’s reply submissions, contended that the answer given by the courts to issues of whether there was cover for loss which was in some sense in train at the expiry of a period of insurance had to be one which made sense in the ‘real world’; and that in that world, neither insureds nor insurers would have intended that a loss would fall into a ‘black hole’ which was neither covered under the expiring policy, nor insurable, save perhaps at a prohibitive premium, under any replacement policy. Mr Howard KC’s submission was that, in the case of temporary deprivation within the policy period followed by permanent deprivation after it, it is awkward and confusing to seek to analyse that as a partial loss within the policy period followed by total loss thereafter; and preferable simply to recognise that provided the insured is in the grip of the peril during the policy period, loss suffered later is treated as occurring during the policy period; and that if that is not right, then in the alternative, the court should say that a temporary deprivation does constitute a partial loss.

The idea that a temporary deprivation of the aircraft amounted to an insured partial loss was one which was only raised, by any of the parties, in the present context. I do not consider it to be correct. As was stated by Bankes LJ in Moore v Evans, and has been assumed in many non-marine cases, ‘Mere temporary deprivation would not under ordinary circumstances constitute a loss.’ That is to say, when property policies such as those at issue here refer to ‘a loss’ of the property, that is to be understood, in the absence of express terms to a contrary effect, to mean, in relation to deprivation of possession, only permanent deprivation. The present policies do not, in my view, provide differently. The DAE policies contain no provision in relation to partial loss. In the relevant AerCap (clause 8), Merx (clause 1.5) and Genesis (clause 1.13.2) policies, there is reference to partial loss but only in relation to physical damage and the cost of repairs.

DAE relied on two cases as authority for the proposition that temporary deprivation would amount to a partial loss. The first of these was Empresa Cubana de Fletes v Kissavos Shipping Co SA (The Agathon) (No. 2) [1984] 1 Lloyd’s Rep 183. That was not an insurance claim; the issue in the case was whether insurance against detention constituted insurance of an ‘interest’ in the vessel for the purposes of a clause in a time charter under which the expense of such insurances would be reimbursable by charterers. In holding that it did, Hobhouse J’s conclusion that a detention of the vessel can be a partial loss for the purposes of marine insurance was only one of the reasons for his decision. Furthermore, his reasoning on the point is heavily dependent on the terms of s. 56 Marine Insurance Act, which provides that ‘Any loss other than a total loss … is a partial loss.’ Hobhouse J himself recognised that in non-marine policies the word ‘loss’ may be used ‘in a sense which is confined to actual total loss only…’ and referred to Moore v Evans (at 190 rhc).

The other case relied upon by DAE is Integrated Container Service Inc v British Traders Insurance Co Ltd [1984] 2 Lloyd’s Rep 154. That was also a case of a marine insurance policy. It was, furthermore, a case in which there was an entitlement on the part of the insured to be indemnified within the policy period for sue and labour expenses.

Neither case, in my judgment, establishes that, for the purposes of non-marine policies worded as those at issue here are, there is a partial loss in the case of temporary deprivation of possession of the Aircraft. However, with that said, I do not consider that the question of whether there can be recovery under an expiring policy for a permanent loss of possession occurring after expiry but arising from a temporary loss of possession occurring prior to expiry should depend on the technicality of whether the temporary loss of possession can be regarded as a partial loss. To put this point another way, I do not think that the application of the ‘grip of the peril’ principles does or should rest solely on whether it can be said that there has been technically a breach of contract (even if it is one in respect of which no indemnity is payable) of the type identified by Popplewell LJ in Sky UK in the passage quoted above within the policy period.

Instead, I consider that the relevant ‘grip of the peril’ principle is that, if an insured is, within the policy period, deprived of possession of the relevant property by the operation of a peril insured against and, in circumstances which the insured cannot reasonably prevent, that deprivation of possession develops after the end of the policy period into a permanent deprivation by way of a sequence of events following in the ordinary course from the peril insured against which has operated during the policy period, then the insured is entitled to an indemnity under the policy. To my mind, and as suggested by Rix LJ in Scott at [47], that has now evolved as a principle distinct from the ‘death’s blow’ principle deriving from Knight v Faith, and which was referred to in The Renos and applied in Sky (UK) Ltd. That principle applies most readily to cases of physical damage, where the loss which occurs after the policy period is proximately caused by a casualty suffered during that period. It is an application of principles of proximate causation. The insurer is in breach from the moment when the casualty is suffered, though the quantification of the consequences of that breach may only be completed after the end of the policy period.

By contrast, on the approach I have indicated in the previous paragraph as to the ‘grip of the ‘peril’ principle’, it is not necessary to establish that the insurer was technically in breach of contract during the policy period. The legal basis of the principle, in my view, is that it is implicit in the terms of the policies. Specifically, on the proper construction of the policies, there can be no justification for considering that there should be a difference between the treatment of pre-expiry physical damage developing into a subsequent total loss, and pre-expiry deprivation/detention developing into a subsequent total loss. I would further say, however, that if this approach is not available, then, as AerCap submitted, it would be appropriate to recognise that the temporary deprivation within the policy period did constitute a partial loss, and that there was a technical breach of contract at that point. One or the other route is, in my view, correct, and necessary to avoid the ‘black hole’ identified in AerCap’s submissions which, I also consider, would be inconsistent with the intentions of the parties to the contracts.

If I am right in my preferred approach identified in the previous paragraph, how does it apply in the present case? In this regard, it is necessary at the outset to record that it was DAE/Falcon’s clearly stated position that they were not contending that it was sufficient if an AR Peril was operating before the expiry of the policy, and there was then a loss by reason of a WR Peril after its expiry. While I can see arguments to the contrary, I consider that this concession was correctly made. I do not consider that it can be said to be implicit in the WR Cover that it should respond, after expiry, to a loss arising out of a matter which, during the policy period, had only involved the operation of an AR Peril. The relevant questions therefore are (a) whether there was a WR Peril, which in concrete terms means an operative restraint or detention, operating on the Aircraft prior to the point(s) at which the Notices of Review took effect in such a way as to deprive the insured of possession of the Aircraft, and (b) whether that deprivation of possession developed in a sequence of events following in the ordinary course into the loss of the Aircraft, which as I have held, occurred on 10 March 2022.

In my assessment, and as I have already set out, there were operative restraints or detentions prior to 10 March 2022, namely of the Aeroflot Group’s aircraft and engines from 26 February 2022, and of all relevant aircraft and engines from 5 March 2022 by reason of the FATA Message. I would also hold that the loss of the Aircraft on 10 March 2022 arose in a sequence of events which followed in the ordinary course from those restraints or detentions. This is because those earlier restraints/detentions represented the Russian Government exercising measures of control over Western Leased Aircraft, which it was always envisaged would be developed and formalised by subsequent official steps, and which were actually developed and embodied in GR 311.

The facts of the present case can, in my view, be distinguished from those in Stonegate v MS Amlin and others [2022] EWHC 2548 (Comm). In that case, losses sustained as a result of government closures of hospitality venues in response to a second wave of COVID-19 cases could not be regarded as following in the ordinary course from previous closures in response to the first wave of cases. In that case the successive government actions related to different underlying situations (different waves of cases). In the present case, the successive government actions of the 5 March FATA Message and GR 311 were in response to the same underlying situation, i.e. the Western sanctions and lessors’ attempts to recover their aircraft from Russia in consequence. GR 311 reflected the full working-out of a process of which the FATA Message was an earlier stage.

There remain two further issues which still require to be considered. The first is WR Insurers’ argument that aircraft cannot be regarded as having been ‘in the grip’ of the earlier restraints or detentions if, after their implementation, those aircraft flew out of Russia; and that this is so even where an aircraft subsequently returned to Russia. The argument is that, upon the return of that aircraft, it would have been subject to a new peril operating on it from when it arrived back in Russia, and if, by that point, the policies excluded Russia there would have been no operative WR Cover that could grip because there was then no cover for Russia.

Insofar as this argument was directed to aircraft which may have flown out of Russia after 10 March 2022, it is, in my judgment, wrong because, on my findings, the aircraft had been lost on that date. Any subsequent flights out of Russia did not alter that fact. And, in practical terms, subsequent flights only took place to destinations where Western Leased Aircraft could not be arrested or repossessed by lessors. Insofar as the argument was directed to aircraft which flew out of Russia prior to 10 March 2022, it has a limited significance. Given that, putting Genesis to one side for the moment, all Notices to Review were effective after 10 March 2022 except some which were effective as at the end of 8 March 2022, it would seem to apply only to the DAE/Falcon or Merx Aircraft which flew out of or arrived back in Russia on 9 March 2022. If they were in Russia as at the end of 8 March 2022 and stayed there they were caught by the restraint or detention constituted by the 5 March FATA Message until they were, on my findings, lost on 10 March 2022.

As I understand it, this point therefore only potentially applies to three aircraft: Merx’s MSNs 2187 and 2175, leased to Ural, which flew to Tajikistan and Uzbekistan respectively; and DAE’s MSN 32639, leased to Nordwind, which flew to Hong Kong. I do not consider that the argument has any force in relation to the Merx aircraft. The restraint or detention imposed on 5 March 2022 by the FATA Message of 5 March 2022 was expressly directed at ensuring that aircraft were not arrested abroad, and appears to have been understood as permitting flights to countries, such as Tajikistan and Uzbekistan, where there was no risk of that. Accordingly, the fact that aircraft flew to Tajikistan and Uzbekistan does not show, in my view, that they were not in the grip of the detention/restraint imposed by the FATA Message.

MSN 32639 requires separate consideration, since this aircraft flew to Hong Kong, a jurisdiction in which the arrest of Western Leased Aircraft might at least have been a possibility, on 9 March 2022. This raises two issues. The first is whether the journey to Hong Kong should be taken to have broken the chain of causation between the operation of the 5 March FATA Message and GR 311, such that the latter did not follow ‘in the ordinary course’ from the former. The second issue is whether, during the period in which MSN 32639 was in Hong Kong, DAE could reasonably have prevented being permanently deprived of the aircraft by procuring its arrest.

As to the first, the circumstances surrounding the Nordwind flight to Hong Kong are, in some respects, obscure. Mr Akpinar had informed Mr Houlihan on 9 March 2022 that MSN 32639 was flying to Mexico City, but instead it landed in Hong Kong on the same day. Moreover, Mr Houlihan’s evidence (supported by that of Antonio Lopes, DAE’s Chief Technical Officer) was that the aircraft departed from Hong Kong earlier than had been scheduled. I cannot make firm findings as to the reasons for these facts. In my view they must be taken alongside the fact that Nordwind was at this time and continues to be a business domiciled in Russia, and that MSN 32639 has flown only in Russia, or to Cuba or Venezuela. Taken as a whole, I conclude that the FATA Message, in respect of its stated aim to prevent the arrest of aircraft abroad, continued to operate on MSN 32639 while it was in Hong Kong. There was no break in the chain of causation.

As to the second, I am of the view that DAE could not reasonably have effected the arrest of the aircraft. The available time to prevent the departure of the aircraft was very short, partly due to DAE’s lack of notice of the aircraft’s destination and the aircraft’s early departure from Hong Kong. Within that time DAE took several steps, including hiring local lawyers, requesting the assistance of the airport and Hong Kong aviation authorities, and procuring the sending of a notice from the Bermuda Civil Aviation Authority to the Hong Kong aviation authorities. I therefore conclude that, notwithstanding its flight to Hong Kong on 9 March, MSN 32639 was in the grip of the peril by virtue of the FATA Message when it was lost on 10 March.