[2025] EWHC 1430 (Comm)

It will be necessary to examine certain of the facts, including communications between lessors and lessees, in considerably more detail in due course. At present it is convenient to summarise the basic facts which have given rise to the current claims and to the issues between the parties. This is intended, at this stage, to be a largely uncontroversial summary of key events, and is not intended to be exhaustive.

On 24 February 2022 Russia commenced a military operation in eastern Ukraine, leading to a full-scale military incursion into Ukraine. On the same date the United States Department of Commerce’s Bureau of Industry and Security (‘BIS’) and the US Treasury Department’s Office of Foreign Assets Control (‘OFAC’) implemented heightened export controls, including in relation to aircraft leasing and other activity in Russia concerning most commercial aircraft and aircraft parts, and imposed additional economic sanctions against Russia.

On 25 February 2022, the EU amended Regulation No. 883/2014, which had imposed sanctions in relation to Russia’s annexation of Crimea, by Council Regulation (EU) No. 2022/328 (together the ‘EU Regulation’). The new Regulation introduced a new Article 3c(1) under which, with effect from 26 February 2022, there should be a prohibition on the sale, supply, transfer or export, directly or indirectly, of goods suited for use in the aviation industry to any natural or legal person, entity or body in Russia or for use in Russia. The EU Regulation permitted a wind down period in respect of certain prohibitions, including ongoing leasing agreements which were concluded before 26 February 2022, such that they did not apply until 28 March 2022.

On 26 February 2022, a meeting was held at the Ministry of Transport (‘MinTrans’) in Moscow between Mr Savelyev, Alexander Neradko (the head of the Russian Federal Air Transport Agency or ‘FATA’) and representatives of certain Russian airlines. I will have occasion below to consider in more detail what occurred at that meeting.

On the same date, AerCap sent to Aeroflot, Alrosa, ABC, Atran, Aurora, Azur, Blue Connect/Royal Flight, IKAR, Nordwind, Red Wings, Rossiya, Smartavia, S7, Ural, Yamal and Yakutia formal requests to relocate their AerCap Aircraft to France, Spain or Ireland.

On 27 February 2022, AerCap sent ABC and Atran notices of default, and instructions to ferry their AerCap Aircraft out of Russia.

Also on 27 February 2022 it was reported that the Russian Prosecutor General had made a statement to the effect that charges of treason carrying a prison sentence of up to 20 years might be brought for providing financial, technical, consulting or other assistance to a foreign state or an international or foreign organisation if aimed against the security of the Russian Federation. The statement said that such assistance would ‘contain signs of a crime under Article 275 of the Criminal Code of the Russian Federation (“High Treason”)’.

On 28 February 2022 a meeting was held at MinTrans in Moscow, involving Deputy Transport Minister Igor Chalik, and representatives from Aeroflot, S7, UTair and probably Ural.

On the same day, Merx sent notices of grounding and redelivery to Ural, in respect of MSNs 2175, 2187 and 5055, and to S7 in respect of MSNs 9435 and 9508.

On 1 March 2022 the UK issued sanctions similar to the EU Regulation by way of the Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2022 (the ‘UK Regulations’). With effect from 1 March 2022, the UK Regulations made it an offence directly or indirectly (i) to supply or deliver ‘restricted goods’, which included aircraft and aircraft engines, from a third country to a place in Russia or (ii) to make restricted goods available to a person connected with Russia or for use in Russia. The UK Regulations contained no wind-down period.

On the same day, AerCap received a letter from the European Commission confirming that leasing fell within the scope of the EU sanctions. AerCap sent that letter to Aeroflot, Alrosa, Aurora, Nordwind, Red Wings, Rossiya, Smartavia, S7, Ural, Yamal and Yakutia and reiterated its request for the AerCap Aircraft to be ferried out of Russia.

Also on 1 March 2022, Genesis sent an event of default and grounding notice to NordStar in respect of MSN 33561, and Merx sent grounding and delivery notices to Alrosa.

On 2 March 2022 FATA issued a telegram (No. 020710) requiring airlines to ensure the ‘rigorous submission’ of information about leased aircraft and lessors, including as to any requests from lessors regarding the operation of the aircraft, such as termination of the lease and/or return of the aircraft, by noon on 2 March 2022.

Also on 2 March 2022, AerCap sent notices of termination of leasing in respect of certain aircraft which were outside Russia. AerCap was to recover twelve of the aircraft in respect of which these notices were sent.

On the same day, 2 March 2022, AerCap sent a notice of default and instruction to ferry to Yakutia in respect of MSNs 30669 and 32684. It also attempted to ground an aircraft leased to Blue Connect (MSN 32714) in the Dominican Republic, but this was unsuccessful and the aircraft was permitted to depart. On the other hand, AerCap was successful in preventing an aircraft leased to Nordwind (MSN 28247) from leaving Turkey, where it had been prior to the invasion. AerCap eventually recovered that aircraft.

Also on 2 March 2022 Genesis gave notice of potential claims to its LP WR Insurers.

On 3 March 2022, FATA issued a telegram (No. 031540) recommending that the inter-regional territorial divisions of FATA and all airlines report all instances of the annulment of airworthiness certificates to FATA, and that they do not decide to suspend flights without FATA confirmation. This telegram was posted that day on social media, as well as being reported by the Russian news agencies Interfax and TASS.

Also the same day, DAE sent a grounding notice to Nordwind in respect of MSNs 32639, 32640, 37136, 40233 and 40236. It also sent notices of termination of leasing to: (i) Aeroflot in respect of MSNs 39441, 5536, 5565, 5585, 5578, 5614 and 6060; (ii) I-Fly in respect of MSNs 283, 293, 946, and ESNs 41117 and 41250; (iii) Red Wings in respect of MSN 1950; (iv) Smartavia in respect of MSNs 39420 and 39424; (v) S7 in respect of MSNs 8890 and 9193; and (vi) UTair in respect of MSN 39423. Falcon sent a notice of termination of leasing to S7 in respect of MSNs 5031 and 5106.

Also on 3 March 2022 AerCap sent Aurora a notice of termination of leasing in respect of MSN 2243, which was undergoing maintenance in Taiwan, and recovered that aircraft. AerCap also sent Azur a notice of termination of leasing in respect of MSN 32729 and Royal Flight a notice of termination of leasing in respect of MSN 34970.

On 3 March 2022, AerCap also attempted to prevent MSN 32729, which was leased by AerCap to Azur, from leaving the Dominican Republic, but the attempt was unsuccessful and the aircraft was flown back to Russia.

On the same day, MSN 34970, which was leased by AerCap to Royal Flight, was flown from Russia to Turkey, and subsequently recovered by AerCap.

By an email of 3 March 2022 from Paul Murray of DAE to Robert Normand of its brokers, Aon (the ‘Aon Notice’), DAE notified their LP Insurers as follows:

We ask you to relay the following message to the insurers under DAE’s Possessed and Contingent insurance policies.

By reason of recent and Russia-Ukraine related EU regulations and UK restrictions there are various ongoing insurance and other defaults under the leases between DAE owned and managed aircraft and Russian airlines identified below (the Subject Leases).

As a result, DAE is in the course of repossessing all aircraft and engines leased under the Subject Leases, and, in furtherance thereof, is in the process of issuing termination notices to its Russian lessees and engaging with them on repossession.

On 4 March 2022, it appears that there was a FATA meeting at which FATA’s regional offices were instructed to recommend that airlines submit applications to FATA’s central office for the re-registration of the aircraft they operated in the Russian register.

On 4 March 2022 the head of the Tyumen Interregional Administration of FATA, Pyotr Medvedev, sent a telegram (No. 040634), which said it was ‘extremely urgent for the directors of airlines’, and directed them to submit applications for the re-registration in the Russian register of all foreign-registered aircraft, including leased aircraft, which were being operated, and to then apply for an airworthiness certificate.

Also on 4 March 2022 the Tyumen Interregional Administration of FATA sent a telegram to airlines (No. 040746) stating that if any notices were received from leasing companies demanding termination of leases, it was suggested that airlines should negotiate and correspond with lessors ‘regarding the need to continue to comply with the terms of the leases, and in the event of continued unfounded demands’ notify them of the registration of the aircraft on the Russian registry. On the same date the Krasnoyarsk territorial department of FATA sent an email to multiple airlines which said that if an airline received a notice of suspension of airworthiness certificates, they must start negotiations with the lessor, and should it prove impossible to come to a mutually advantageous solution, proposed that the airline submit an application for the re-registration of the aircraft in the Russian register.

Also on 4 March 2022 FATA sent a telegram (No. 041405) stating that access to the archives of technical records for foreign leased aircraft should be placed under special control.

On 4 March 2022 Russian Federal Law No. 32-FZ was enacted, making it a criminal act in Russia, punishable by a prison sentence or substantial fine, to voice support for the introduction or extension of Western sanctions.

It was subsequently reported that it was on this day, 4 March 2022, that Aeroflot’s CEO, Mikhail Poluboyarinov, and Pobeda’s General Director, Andrey Kalmykov, had resigned.

On 4 March 2022 AerCap sent Blue Connect, Red Wings, Rossiya, S7, Smartavia, Ural and Yamal default and grounding notices. AerCap also terminated the leasing of the following aircraft: ABC (all aircraft); Atran (all aircraft); Aeroflot (all aircraft); Alrosa (MSNs 32576 and 32658); Aurora (MSNs 3838 and 2222); Royal Flight/Blue Connect (MSN 28835); Rossiya (all aircraft except MSN 1630); S7 (all aircraft); Ural (all aircraft); and Yamal (MSN 2413).

On the same date DAE sent notices of termination of leasing to Nordwind in respect of MSNs 32639, 32640, 37136, 40233 and 40236; and to ABC in respect of MSN 66625.

4 March 2022 also saw S7 announce the cancellation of all flights abroad from 5 March 2022, Smartavia announce the cancellation of international flights until 19 March 2022, Ural announce the cancellation of flights to Thailand from 8 March 2022, and Royal Flight announce the stoppage of flights abroad from 5 March 2022.

On 5 March 2022, FATA published an official information message on its website (the ‘FATA Message’), which stated, in part:

In connection with unfriendly decisions of a number of foreign states in respect of the civil aviation of the Russian Federation, Russian airline companies and passengers have become tools and hostages of the political fight.

The imposed restrictive measures which are contrary to the provisions of international air law and the basic principles of the Chicago Convention, continue to intensify with respect to the civil aviation of the Russian Federation. In addition to restrictions on the use of airspace, foreign States - parties to the sanctions measures have imposed additional restrictions, including arrests or detentions of aircraft of Russian airline companies registered in foreign states and owned by foreign lessors.

In this connection, FATA recommends to Russian airline companies that have aircraft registered in foreign state registries under a lease agreement with a foreign entity the following:

starting from 00.00 a.m. Moscow time on 06 March 2022, to suspend on a temporary basis the carriage of passengers and cargo from points in the territory of Russia to points in foreign states;

starting from 00.00 a.m. Moscow time on 08 March 2022, to suspend on a temporary basis the carriage of passengers and cargo from points in the territory of foreign states to points in the territory of Russia.

This recommendation is caused by the high risk of detention or arrest of Russian airline companies aircraft abroad.

On the same day, Aeroflot announced the temporary suspension of all foreign flights from 8 March 2022, including flights of Rossiya and Aurora; and Azur, Nordwind/Pegas, Pobeda and Royal Flight all announced the imminent suspension of international flights.

On 5 March 2022 Aviatorshina, a specialist aviation Telegram channel which often publishes ‘leaked’ documents from the Russian aviation authorities, reported that MinTrans’ legal department had sent a letter stating that ‘telegrams issued by FATA have no status of regulatory legal acts’.

In the afternoon of 5 March 2022 President Putin visited an Aeroflot training centre, at which he met female air crew to mark International Women’s Day. The event included a question-and-answer session with the President, the transcript of which was published on the Kremlin website on the same day. Amongst other things, President Putin said the following:

[M]uch of what is taking place now, [and] of what we can see and what we come up against are methods of fighting Russia. Incidentally, the sanctions that are imposed on us are like a war.

…

Leasing companies and spare parts - I am not going to go into detail right now, but your former CEO, now Minister of Transport, has some ideas, and he reports them to me regularly, calls me almost every morning. On the whole, I support these considerations. Let’s give him the opportunity to negotiate with his partners. I hope they will agree on things that overlap with their own interests. But I am certain that we will fly.

Also on 5 March 2022 AerCap sent a notice of termination of leasing to: (i) ABC and Rossiya in respect of all engines on lease; (ii) Royal Flight in respect of MSN 27617; and (iii) Nordwind in respect of MSN 1360.

On 6 March 2022 AerCap sent notices of termination of leasing to: (i) Red Wings in respect of both aircraft (MSNs 2793 and 2730); (ii) Royal Flight/Blue Connect in respect of MSNs 28171, 28834 and 38820; (iii) Rossiya in respect of MSN 1630; and (iv) S7 in respect of an A321 NEO aircraft.

On 6 March 2022 MSN 1360, leased by AerCap to Nordwind was flown from Russia to Turkey and subsequently recovered by AerCap.

6 March 2022 marked the last international flights to countries outside the Eurasian Economic Union (‘EEU’) by the Aircraft claimed for which were leased to Alrosa and Royal Flight.

On 7 March 2022 Merx sent a notice of termination of leasing to S7 in respect of MSNs 9508 and 9435. It also sent notices of claim under the Merx Policy and under the relevant Operator Policies in relation to the Merx Aircraft on lease to Ural, S7 and Alrosa.

AerCap sent a notice of termination of leasing to: (i) IKAR in respect of MSN 32719; and (ii) Yakutia in respect of MSNs 32684 and 30669.

On 7 March 2022, MSNs 28834 and 28835, leased by AerCap to Royal Flight/Blue Connect were flown from Russia to Egypt, and MSN 32729, leased by AerCap to Azur was also flown from Russia to Egypt. They were ultimately recovered by AerCap. MSN 32707, leased by AerCap to Royal Flight was flown from Russia to Turkey, and subsequently recovered by AerCap.

MSN 40233, leased by DAE to Nordwind, flew into and out of Turkey (back to Russia) on the same day.

Between 6 and 11 March 2022 Mr David Houlihan of DAE visited Moscow to meet DAE’s lessees.

On 8 March 2022, MSN 37136, leased by DAE to Nordwind, was flown from Russia to Mexico City, where it was subsequently recovered by DAE. Also on 8 March 2022 MSN 32639, also leased by DAE to Nordwind, flew from Russia to Hong Kong. It flew back to Russia on 9 March 2022 arriving on 10 March 2022 (local time).

AerCap sent termination of leasing notices to Nordwind in respect of the five remaining aircraft which had not had the leasing terminated (MSNs 3034, 3120, 32841, 1391 and 1351), and to IKAR in respect of the two remaining aircraft which had not had the leasing terminated (MSNs 35718 and 35715).

On 8 March 2022 President Putin signed Presidential Decree No. 100 (“On Application of Special Economic Measures in the Field of Foreign Economic Activities for the Purpose of Ensuring Security of the Russian Federation”) (‘PD 100’). The preamble below the title stated that PD 100 was additional to both (i) Presidential Decree 79 of 28 February 2022 “On the Application of Special Economic Measures in Connection with Unfriendly Actions of the United States of America and Foreign States and International Organisations Siding with It”, and (ii) Presidential Decree 81 dated 1 March 2022 “On Additional Temporary Economic Measures to Ensure Financial Stability of the Russian Federation”.

Amongst other things, PD 100 imposed bans and restrictions on the export from the territory of the Russian Federation until 31 December 2022 of goods and materials to be specified in government lists. The effect of PD 100 was extended until 31 December 2023 by Presidential Decree No. 773 dated 26 October 2022 and further until 31 December 2025 by Presidential Decree No. 540 dated 20 July 2023.

On 9 March 2022 the Russian Government issued Government Resolution No. 311 (“On Measures to Implement Decree of the President of the Russian Federation No. 100 dated 8 March 2022”) (‘GR 311’). It was to come into force on 10 March 2022. Pursuant to GR 311, as originally enacted, aircraft and aircraft engines (amongst other goods and materials) were made subject to an export ban until 31 December 2022. The export ban in GR 311 did not apply to exports to member states of the EEU (Belarus, Kazakhstan, Armenia and Kyrgyzstan) or to ‘transport vehicles of international carriage’ (‘TVIC’s). Under GR 311, the Federal Customs Service (‘FCS’) was to ensure control of the implementation of the export ban. The Minister of the Interior, the Border Control Service of the Federal Security Service (‘FSB’) and the Federal Service of National Guard Troops were to support the FCS.

At the same time the Russian Government issued Government Resolution 312 (“On the introduction on a Temporary Basis of a Permit Procedure for the Export of Certain Types of Goods from the Territory of the Russian Federation”) (‘GR 312’). This, as with GR 311, came into force on 10 March 2022. Under GR 312, as originally enacted, the export of listed goods and materials, including aircraft and aircraft engines, to member states of the EEU was only permitted with the prior approval of the Ministry of Transport in the form of an export permit. By paragraph 2, the export permit requirement did not apply to TVICs.

Both resolutions were extended by Government Resolution No. 1959 of 2 November 2022 (effecting an extension of a year until 31 December 2023) and then re-extended by Government Resolution No. 2285 of 23 December 2023 (effecting an extension of a further two years, until 31 December 2025).

On 10 March 2022 AerCap terminated the leasing of MSN 28825 to Yakutia, of two A321 NEOs on lease to Ural, and the remaining 737-8 MAX on lease to S7.

On 11 March 2022 Merx sent a notice of termination of leasing to Alrosa in respect of MSN 32659.

On 12 March 2022 Bermuda announced that it had suspended the certificates of airworthiness of aircraft operating in Russia.

On 12 March 2022, Merx sent to Ural a notice of termination of leasing in respect of MSNs 2175, 2187 and 5055.

On 14 March 2022 President Putin signed Federal Law No. 56-FZ (“On Amendments to the Air Code of the Russian Federation and Certain Legislative Acts of the Russian Federation”), which had been adopted by the State Duma and approved by the Federation Council on 11 March 2022. These amendments made it possible for FATA to issue certificates of airworthiness for foreign-leased aircraft on the Russian registry and for those aircraft to continue operating in Russia. By Article 11 of Federal Law No. 56-FZ, the Russian Government was given the power to determine the particulars of (i) performance of foreign aircraft lease agreements by Russian airlines, and (ii) registration of the aircraft on the State Register of Civil Aircraft of the Russian Federation and in the Register of Aircraft Rights and Transactions.

On 15 March 2022 the Russian Government stated that it was suspending the Russia-Bermuda Agreement 1999 which had been concluded on the basis of Article 83bis of the Chicago Convention.

On 17 March 2022 the Russian Government Resolution No. 390 (“On amendments to and recognition as inoperative acts of the Government of the Russian Federation”) (‘GR 390’) came into force. GR 390 added paragraph 2(1) to GR 311, providing for the possibility of exporting banned goods pursuant to a permit from the Government. GR 390 also amended GR 312 to introduce a new paragraph 4(1) authorising a number of federal executive bodies to exercise control over the implementation of GR 312.

On 19 March 2022 the Russian Government adopted Resolutions Nos. 411 and 412, providing details regarding the implementation of Federal Law 56-FZ. Government Resolution No. 411 (‘GR 411’) came into force on 23 March 2022 and Government Resolution No. 412 (‘GR 412’) on 31 March 2022. GR 411 detailed how registration was to be implemented; GR 412 detailed how foreign aircraft leases were to be performed, including that export outside Russia of foreign aircraft and engines was to be in accordance with PD 100. Under the registration procedure introduced by GR 411 neither the lessor’s consent nor confirmation of de-registration from the original state of registry was required.

On 22 March 2022 Minister Savelyev spoke at a meeting of the Federation Council Committee on Economic Policy. As regards aviation, Mr Savelyev said:

[…]

Well aviation is something that we can’t live without. You won’t be able to cover a territory of 17 million square kilometres with trains. Special thanks to all of you for the decision on the 56-FZ, which made it possible for us to develop. We have passed a resolution whereby the companies were forbidden to give away aircraft.

Now we are transferring to the Russian register even foreign-leased aircraft, and this is happening all over the world. For example, we would transfer Bermuda aircraft. We have already transferred almost 800 aircraft; we insure them with a Russian insurance company.

The aircraft are staying here.

We are looking for ways, legal ways to reach an agreement with the lessors and resolve this issue. So far, however, we have not been able to [achieve this] because there is a ban and demands for a return.

They do not want to enter into negotiations for us to compensate them with payment and buy the aircraft from them into the property of Russian airlines.

Nevertheless, we do not lose hope. We cannot let go of the aircraft because giving them up means leaving ourselves without aviation.

Do you understand this? That is why the government has made such a decision. We have 114 registered airlines in our country, 111 of which are operating.

Three airlines have not confirmed the certificates of airworthiness but this is a matter of time, or... But 111 operating companies is plenty.

Let me remind you that last year, we transported 111 million people, 87.5 million of them within Russia, and this is 20% more than in pre-COVID 2019. …

Our objective is to preserve our aviation sector. At present it is in dire straits. We are currently facing tough times. We have stabilised the situation. And now our airlines, if we return to the current situation, they have stabilised, it will not be long, but, we will now fly for several months based on the specific algorithm that we have elaborated. We had in total 1,367 aircraft in the country at these 111 airlines. Today we are left with … We lost 78 aircraft, they were attached during flights, in friendly countries, in Turkey, Azerbaijan, Armenia – they had also received instructions, they hampered us. We lost these 78 aircraft – that is it. We drew a line. Now we only fly abroad using aircraft which are Russian planes or had already been registered from the outset as Russian.

…

[Question: Mr Bryskin] Does this mean that for a period of time, in two or three years, we will not be able to service these aircraft in the territory of Western countries in the same place where they service them?

[Answer] They will not be serviced in the West; they will not even be released due to the fact that we took someone else's property.

[…]

[Question: Mr Bryskin] So, these aircraft will never leave the territory of the Russian Federation?

[Answer:] Never, only to friendly countries, only to friendly ones.

[…]

On 23 March 2022 Minister Savelyev made a speech to the Federation Council. One part of that speech was:

The thing is, there are northern regions and the Far East where small planes like AN- 2, AN-24, AN-26, and TR-72 operate. We cannot leave these companies without support, so our main issue is quite serious and involves a lot of money. First, we need to decide with the government what the airlines that we essentially encouraged to keep their aircraft, should do. Should the planes be bought out or not? Because the companies still have to continue making lease payments, but the lessors are unwilling to sell us the planes. The companies are trying to negotiate, but so far without success.

Also on 23 March 2022, during a video conference with President Putin and other members of the government, Prime Minister Mishustin stated that the government had ‘helped carriers keep their fleets of foreign aircraft since the very first days’ and that ‘we have limited the return of these aircraft and aircraft engines to the owners’.

On 24 March 2022 MinTrans issued Order No. 99:

On Approval of the Procedure for Issuing Permits for the Export outside the Territory of the Russian Federation of Certain Types of Transport Vehicles, their Parts and Components […]

On 28 March 2022 the EU prohibition on leasing aircraft to Russian entities took effect, and the UK’s General Trade Licence permitting the provision of aviation insurance for aircraft for use in Russia or to persons connected with Russia expired.

On 31 March 2022 President Putin spoke at a meeting on the development of air transport and aircraft manufacturing. He referred to ‘the economic war that [the ruling Western elite] are trying to unleash, or in fact have already unleashed against Russia’; and said that Russian airlines were ‘among the first to feel the consequences of the improper decisions by the Western countries’, and that ‘we must certainly respond to them. I suggest proceeding from the premise that we will not be maintaining cooperation with our former partners in the near future’. President Putin also announced that subsidies would be paid to airlines, saying:

A few things I would like to say in conclusion. As I said at the start of our meeting, it is certainly necessary to support operations of the Russian air companies, but it is of fundamental importance not to do this at the expense of passengers, as our colleagues have just said. I fully share this view. This certainly should be kept in mind. It is necessary to make air tickets widely available to people and on this basis to expand the potential of air transport, rather than force people to incur additional costs.

Let me outline a specific target: this year, the volume of domestic service should grow in comparison to what it was last year, and the passenger traffic, as of the year end - we have just discussed this and I fully agree with this figure - should reach no less than 100 million people.

Therefore, in addition to the state support measures already in effect, including the reduced-fare tickets for travel to the Russian Far East and other regions, I ask the Government to launch the large-scale programme we have just spoken about, a programme to compensate part of the air fare for domestic flights. I am referring to flights to be performed, as it was also mentioned, between April and October of this year, the most active flying period.

The Minister of Transport has just described the specific parameters of this programme (I am aware of the debates on this matter), but, of course, I suggest that we primarily be guided by this. Nevertheless, the figure that is being mentioned - 65 billion [rubles], or 47 billion, or 113 billion, since there is no unity in the Government as to how to calculate these subsidies - let us, for starters, put the figure at 100 billion.

If we have in view even ten percent of the reserves, the resultant figure will be exactly 110 billion. But we should also be mindful of the fact that this money comes in with a delay, as Mr Belousov said, and so we will be able to see, during the next four to six weeks, how this programme is implemented and, if necessary, allocate additional funds as needed. But I suggest that the calculations be based on the methodology proposed by the Ministry of Transport.

On 1 April 2022, the European Commission sent the Aviation Working Group and Aircraft Leasing Ireland a letter expressing the Commission’s view as to the application of the EU sanctions to insurance and reinsurance. That letter stated, in part:

… It follows that, in our view, nothing in Regulation (EU) No. 833/2014 prohibits the provision of insurance and reinsurance by EU insurers/reinsurers for the benefit of other EU parties, even after 26 February 2022, as long as the goods and technology in Annex XI under insurance/reinsurance are not intended for a person in Russia or for use in Russia.

It is our view that insurance and reinsurance of the goods and technology in Annex XI are not “for a person in Russia or for use in Russia” where it is provided for the benefit of the non-Russian owner of those goods and not for the benefit of the actual user or operator of the goods, even when they remain in Russia against the will of their non-Russian owner and despite the latter’s demand for their return. …

On 12 May 2022 Russian Government Resolution No. 850 (‘GR 850’) dated 11 May 2022 entered into force, amending GR 311. Following the amendment, GR 311 provided:

The measure provided for by paragraph 1 of this Resolution shall not apply to: transport vehicles of international carriage, except for aircraft exported for the purpose of their return to lessors, leasing companies under agreements of financial lease (leasing), lease concluded with lessors, leasing companies of foreign states included in the list of foreign states and territories committing unfriendly acts against the Russian Federation, Russian legal entities and individuals approved by Directive of the Government of the Russian Federation No. 430-r of 05.03.2022.

On 9 June 2022 AerCap issued the Claim Form in its present action.

On 21 June 2022, Minister Savelyev was reported as having said, during an interview on the Rossiya-24 TV Channel, inter alia:

I also want to point out that it is not the case that we did not return the aircraft and seized them. No, we did not expropriate anything from anyone. Our airlines continue to accumulate rouble leasing payments on S accounts at the Central Bank, and if the owner wants to obtain the payment, they just convert and collect it, but the sanctions do not enable us to pay in a foreign currency, even though the companies would be able to pay, on the one hand. On the other hand, they are not ready to convert the money that we transfer to the S accounts, that is the truth of the matter.

On 25 June 2022, Mr Mishustin, the Russian Prime Minister, approved a programme described by Russian authorities as a comprehensive development programme for the Russian air transport industry to 2030. This plan included the following features:

On 15 September 2022 there appeared an article in Kommersant, a mainstream Russian news outlet focussed on business and finance, which gave some information as to the possible availability of funds from the Russian Government with which some of the leased aircraft could be ‘bought’. It said, in part:

Kommersant has learned that the Russian Government has offered the airlines to buy out the airplanes of foreign lessors with the help of the National Wealth Fund. The Ministry of Transport is asking the companies to estimate how many airplanes they want to buy and for how much in total. For this purpose the carriers may be given soft loans for 15 years at 1.5%. Sources in the aviation industry believe that the deals will be sporadic at best, but more likely they will not develop at all: the conditions of EU and U.S. sanctions do not allow foreigners to make such settlements.

Kommersant has learned that the Ministry of Transport has offered the airlines to buy the aircraft of foreign lessors at the expense of the National Wealth Fund. In a letter sent on August 30 to the 20 largest airlines (Kommersant has it), the Ministry proposes carriers to estimate how many of the planes that they have, they are ready to buy out.

It is assumed that for the repurchase they will be able to receive funds from the National Wealth Fund at a rate of 1.5% for 15 years.

The Ministry of Transport has also asked the carriers to substantiate the market value of the planes and the reasoning behind buying aircraft that are more than 20 years old. In addition, the Ministry asked for legal expertise of "the risks of safe and smooth settlements" with lessors and "possible subsequent claims" from their side.

On 21 September 2022 President Putin attended an event at the Novgorod Technical School, at which he made some remarks about civil aviation. In particular, he said that:

The Ministry of Transport has retained in Russia aircraft which had been taken out on a leasing basis, simply retained them, and that’s it, because they held - and correctly held: the lessor had no right to seize them earlier than the contract. They started seizing them - the Ministry of Transport simply refused to hand them over. We fly on them, but how long will we fly on them still - one year, two, three?

On 21 October 2022 DAE issued its Claim Forms in the present proceedings.

On 16 November 2022 Falcon issued its Claim Form in the present proceedings.

On 29 December 2022 Merx issued its Claim Form in the present proceedings.

On 9 February 2023 President Putin and Minister Savelyev attended a meeting with aviation industry representatives to celebrate the centenary of Russian civil aviation. The following exchange is recorded to have taken place between them:

Mr Savelyev: Dear Vladimir Vladimirovich! First of all, on behalf of everyone who works in civil aviation and myself personally, may I thank you for the difficult decision that you took in light of the sanctions – you kept the planes in Russia.

Mr Putin: It was you who kept them – I just agreed to it.

Mr Savelyev: I agree with that correction, but without you it would not have been possible. Thanks to all of this, we preserved the civil aviation industry and we continued our work in a stable manner.

On 1 March 2023 the Russian edition of Forbes magazine published an interview with Tatiana Fileva, shareholder in S7 and daughter of its founder Vladislav Filev. This contained, amongst others, the following questions and answers:

— You resigned as CEO in October. Why? To what extent was your decision affected by 2022?

— What happened at the end of February 2022 was something that I didn’t personally expect, and couldn’t even imagine. I remember how the Ministry of Transport was holding a meeting on Saturday, 26 February, attended by representatives of all the airlines who were at a loss and did not understand how to go on. And I felt just as confused. After that meeting, we had a family meeting where my dad said: “You realise that this is really bad? Are you ready to keep on standing firm?” At this point I wondered: what is one of my greatest fears? And I understood that I was afraid of letting down my mother who had built the company, believed in us as a family and believed in me. How can I fail her? For example, if S7 were to cease operations or, what was more likely, become part of another state-owned company? And I said to my dad: “Look here, I will stand my ground.” I came home, called my son’s grandparents from my husband’s side, and asked them to pick up my grandson so that he could live with them during the most difficult period.

— What did you hear at this meeting, why did you have such a reaction? What did you know about the subsequent fate of S7 and aviation this year?

— At that time, no specific decisions had been taken at the first meeting on 26 February. At first, everyone was just confused, to be honest. The decisions followed later. And subsequently, we stood our ground, it was hard, at times we just lost heart, but we managed to cope. I knew that it was critical to stay with the team at that point. I saw how other airline executives left at the beginning of March, and management began to change. Meanwhile our key team has survived - and these are people who have worked at S7 for virtually their entire lives, many of them right straight from university. And together we normalised the situation somehow. And then I told a small circle back in late March that once the situation had stabilised, I would resign as CEO and Operations Director.

On 15 March 2023 Minister Savelyev addressed a meeting of the Russian Committee on Transport and Transport Infrastructure Development of the Duma. In his statement he said that:

Let me say a few words about civil aviation. You know very well that aviation is always a very sensitive type of transport. That is why all the cataclysms that occur in our country, starting with Covid, all manner of previous pandemics, as well such as swine flu, have an immediate impact on aviation. We had just managed to deal with the pandemic, and then something started that you know about, and we apprehended what was going on very quickly, we picked up on all these issues and talked to the airlines.

Yes, I must admit that airlines, a number of airlines were bewildered, because they had received demands, first and foremost, for the handover of their aircraft. For good measure, out of necessity, they wanted to seize 595 planes from us. However, this is beyond all reason. We would simply not be able to fly, and many airlines, unfortunately, were compelled or agreed to hand over their planes. In the end we lost 75 planes, of which approximately a quarter of them were undergoing maintenance checks abroad, were ready for loading, they remained there, so we lost 75 planes. Well, what else is there to say? This is when we passed a law which prohibits companies from taking planes outside the country. Then they were, so to say, unable to hand over aircraft, we covered them with this law, they understand that they cannot take the aircraft out of the country without approval, and it goes without saying that we will not give such approval. We are trying to buy the aircraft from the foreign lessors, we understand this issue well, and the government has already allocated approximately - can we disclose these figures publicly or not? - about 300 billion roubles, and I do not know there, that is, you know this story, and Aeroflot has already used the funds to buy 10 long-haul aircraft…And the aid that was assigned by the budget in total to us with the support of the President equalled 174.2 billion – this the biggest amount of financial assistance in the history of aviation…the airlines met their targets - we carried 95 million people. If we had added another 19 million ([from carriage via] the closed airports), we would have even reached the figure achieved in 2021, we would have carried 114 million people. Therefore, the situation in the aviation sector in Russia is effectively difficult, but the sector is still operating, and we are working with you now to develop aviation and to redirect it, to focus it on domestic flights.

On 15 March 2023 Genesis issued its Claim Form in the present proceedings.

On 7 February 2024, Minister Savelyev addressed the Federation Council and took questions about Russia’s transport strategy. He told the assembled senators that:

I want to share the following with you. When we faced the situation, when the sanctions were introduced, and when we, together with you, retained our fleet within Russia – the Russian aviation – we realised what we would face. It was not only about aircraft maintenance and personnel management. In fact, we went through a difficult period when the airlines were confused... I want to tell you that the issue was quite sensitive for everyone because the airlines did not understand where and how they would fly. Then, in 2022, thanks to President Vladimir Vladimirovich Putin, a decision was made to allocate 174 billion roubles to support the aviation industry, including 110 billion for passenger transportation. We made a decision at that time that not everyone liked, but it proved effective. We did not hand out money to the airlines because there was no guarantee that, upon receiving the money, they would do anything with the aircraft. They could simply park the aircraft, sell it, or quit altogether.

As you know, we have prohibited by law the export of domestic, apologies, foreign-made equipment. All the aircraft remained in Russia. So, we provided funds based on passenger kilometres. In other words, we gave a fishing rod rather than a fish – if they wanted to earn money, they needed to carry passengers. And the companies carried. We fully utilised the 174 billion roubles.