[2025] EWHC 1430 (Comm)

In relation to US Sanctions, WR Insurers’ case is that BIS controls contained in the US Export Administration Regulations (‘EAR’) apply to some of the Aircraft and that insurers’ cover or payment of an indemnity in respect of such aircraft would be prohibited by General Prohibition 10.

General Prohibition 10 (‘GP 10’) provides as follows:

General Prohibition Ten – Proceeding with transactions with knowledge that a violation has occurred or is about to occur (Knowledge Violation to Occur).

You may not sell, transfer, export, re-export, finance, order, buy, remove, conceal, store, use, loan, dispose of, transport, forward, or otherwise service, in whole or in part, any item subject to the EAR and exported, re-exported, or transferred (in-country) or to be exported, re-exported, or transferred (in-country) with knowledge that a violation of the [EAR], the Export Control Reform Act of 2018, or any order, license, license exception, or other authorization issued thereunder has occurred, is about to occur, or is intended to occur in connection with the item.

The EAR only apply to an aircraft or engine which was manufactured in the USA or was manufactured elsewhere but includes more than 25% controlled components of US origin. Accordingly, the EAR only applied to certain of the Aircraft in these proceedings.

In addition, GP 10 only applies to items which are ‘… exported, re-exported, or transferred (in country)’ with the relevant knowledge. It does not apply to all aircraft.

There is a dispute, however, as to whether GP 10 applies at all, even to those of the Aircraft with a sufficient US connexion and which meet the test referred to in the previous paragraph. This is a question of interpretation of GP 10. There are apparently no US judicial decisions interpreting or applying GP 10. BIS has not articulated its own interpretation of GP 10 in any policy statements, FAQs on its website, or settlements or charging letters. In the circumstances, I did not understand it to be in dispute between the experts, Mr Mortlock and Mr Wall, that the approach which should be adopted is to ‘… consider the scope and application of GP 10 as a matter of construction taking into account the plain meaning of the words of the regulation as well as its regulatory and legislative context and its purpose.’

In my view, applying this approach to GP 10, it does not apply to the provision of insurance. Looking at the plain meaning of the words:

The legislative purpose of the statute under which the EAR were made, namely the Export Administration Act of 1979, as amended (50 USC app. 2401-2420), was, as Mr Wall sets forth in his report, to allow the control of exports in furtherance of the national security and foreign policy of the United States. Those objectives would not be furthered by preventing an insurer from providing cover to Western lessors in respect of aircraft or engines kept in Russia against the lessors’ wishes.

Accordingly I conclude that GP 10 does not prohibit either the insurances at issue here, or the payment of any indemnity under them. In any event, the US Sanctions experts agree that ‘… it is possible for parties to apply to BIS for authorization to engage in conduct that would otherwise violate [GP 10] pursuant to EAR § 764.5(f)…’. There is no good reason to believe that BIS would not grant any authorisations necessary, and it is to be noted that BIS has granted authorisations to DAE when DAE has sought them, including authorisations to engage in activities such as moving aircraft and engines and entering into settlements.