[2025] EWHC 1430 (Comm)

This judgment relates to claims made under insurance policies by aircraft leasing companies in respect of aircraft and aircraft engines which those companies contend have been lost to them following the Russian invasion of Ukraine in February 2022.

Each of the Claimants had leased aircraft, and in some cases, engines, to Russian airlines or airlines which operated in Russia. I refer to these of the Claimants’ aircraft and engines, as a whole, as the ‘Aircraft’ and the ‘Engines’ in this judgment. I refer to all the aircraft leased into Russia as of February 2022 by entities affected by EU/UK/US sanctions as the ‘Western Leased Aircraft’. Following the February 2022 invasion the Claimants issued default and termination notices under their leases with lessees. The Aircraft and Engines have not been returned. As a result the Claimants have made claims under their insurance policies.

The policies with which this judgment is directly concerned are insurances taken out by the aircraft lessors in respect of their interests in the Aircraft and Engines. They have accordingly been described as ‘Lessor Policies’, or by way of shorthand ‘LPs’. They are to be distinguished from the policies which were taken out by the lessees, or operators, of the Aircraft, which have been called the ‘Operator Policies’ or ‘OPs’.

The relevant coverages of the LPs under which the lessors have claimed an indemnity are the ‘Contingent Cover’ and the ‘Possessed Cover’. These are generic types of insurance which aircraft lessors take out in respect of leased aircraft. The respective scope of these coverages was fiercely contested and I set out the relevant terms in due course.

The six actions before the court at the outset of the trial were as follows:

These claims have been managed and tried together as a result of a series of orders of the court. In particular, at a CMC on 13 March 2023, I ordered that the AerCap, DAE, Falcon, KDAC and Merx actions should be tried concurrently, with the trial to start on 2 October 2024. Subsequently, at a CMC on 21 July 2023, I ordered that the Genesis action should be tried concurrently with the LP claims already ordered to be tried in October 2024, excluding an alternative claim made by Genesis for actual or constructive total and/or partial loss by reason of the physical deterioration of its aircraft.

During the course of the trial, KDAC settled with its insurers, and its action was dismissed. It will not be necessary to say anything further about that claim.

As already mentioned, the LP claims which have been the subject of the trial before me and are the subject of this judgment are distinct from the OP claims. The OP claims are a group of claims brought by owners and lessors, financing banks (or their assignees) or managers of aircraft and/or aircraft engines leased to Russian airlines. These claimants include, but are not limited to, companies in the AerCap, DAE, Falcon, Merx and Genesis groups.

Under aircraft leases, the lessee airlines were generally required to insure the aircraft in respect of hull all risks (frequently abbreviated to ‘AR’) and war risks (similarly abbreviated to ‘WR’). Russian lessees arranged an insurance policy or policies in respect of leased aircraft with a Russian-registered insurance company, in compliance with the requirements of Russian law. The leases generally required the lessee also to ensure that reinsurance should be obtained, at least for most of the risk, under contracts of reinsurance on the same terms as the underlying OP insurance, and containing a ‘cut-through’ clause.

In accordance with such requirements, OP insurances were typically reinsured under reinsurance policies, primarily with London and international market reinsurers and, often, with one or more Russian co-reinsurers. The operator airline would generally be identified as the insured in the relevant OP insurance and as the ‘original insured’ in the OP reinsurance slip. Lessors were typically named as an ‘additional insured’ or as a ‘contract party’ under such OP insurances.

Claims by lessors have been brought under OP insurances and reinsurances principally in this jurisdiction. In relation to a significant number of these claims it is the case, or is arguable, that the OP insurances contained Russian law and jurisdiction clauses, and that the OP reinsurances likewise contained Russian law and jurisdiction agreements.

Challenges were brought to the jurisdiction of the English court to hear a number of claims under OP reinsurances, on the basis of Russian law and jurisdiction clauses which they were said to contain. These challenges were rejected by Henshaw J in a judgment handed down on 28 March 2024 (Zephyrus Capital Aviation Partners 1D Ltd v Fidelis Underwriting Ltd and Others [2024] EWHC 734 (Comm); [2024] 4 WLR 47).

In brief, Henshaw J decided that, for a number of reasons, the claimants in those actions were very unlikely to receive a fair trial in Russia, and that those actions should not be stayed.

The Commercial Court is managing together the OP claims which are proceeding in this jurisdiction, including those which were the subject of Henshaw J’s decision on jurisdictional challenges. A trial of those OP claims has now been fixed for Michaelmas 2026.

In this judgment I make some reference to a ‘Confidential DPSI Schedule’. This Schedule contains Designated Personal Security Information (‘DPSI’) as defined in a Consolidated Confidentiality Order dated 23 August 2023 and subsequently amended. The information contained in the Confidential DPSI Schedule, while relevant to particular points, is limited in scope and the fact that some material appears in it does not prevent any of my analysis or conclusions from being fully understood without reference to it.