UK court decides $10 billion jet dispute to be heard in London, not Moscow
9:50 am Thursday, March 28th, 2024
LONDON (Reuters) -A $10 billion battle between reinsurers and aircraft leasing companies seeking payouts for more than 200 jets stuck in Russia should be heard in London rather than Moscow, London’s High Court ruled on Thursday.
Aircraft lessors, including Ireland’s AerCap and U.S.-listed Carlyle Aviation Partners, are pursuing insurers for losses after Russia’s invasion of Ukraine grounded their jets in Russia.
The lessors argued the legal case should be heard in London rather than Moscow, to avoid the risk of unfair hearings or inconsistent judgments.
However, some major reinsurers including AIG, AXA and some Lloyd’s of London syndicates, wanted the claims heard in Russia, arguing that the policies stipulate a dispute should be heard in Moscow.
Not all reinsurers agreed – around 35 had accepted the jurisdiction of the English courts in the dispute, including heavyweights Swiss Re and Chubb.
Judge Andrew Henshaw ruled the cases should continue in London, stating in a written ruling on Thursday that “the claimants are very unlikely to obtain a fair trial in Russia”.
A spokesperson for Carlyle Aviation Partners, one of the claimants, welcomed the ruling.
“Without further delay, we intend to vigorously pursue our claims against all insurers who have failed to provide coverage for losses in the courts of London, as is the right and proper jurisdiction,” Carlyle said in a statement.
Hundreds of aircraft have been stuck in Russia since Western nations imposed sanctions on the country, prompting a wave of lawsuits against insurers.
Thursday’s judgment turned on “operator” policies, under which Russian airlines leased the jets through international lessors, insured them through Russian insurers, and reinsured those policies through the London market.
Lessors are named as insured and can therefore also claim directly in some instances.
Some lessors led by AerCap, the world’s largest, are also suing insurers under “contingent and possessed” policies in London, Dublin and some U.S. states. A London “mega trial” is scheduled for October.
Deals with Russia, meanwhile, have started shaving the size of claims. Since launching their lawsuits, lessors have secured settlements totalling more than $2.5 billion for more than 100 jets, with ownership transferred to Russian airlines.
The various pieces of litigation in London originally related to 306 aircraft together with 40 engines. After some settlements, they now relate to 208 aircraft and 31 engines, Henshaw said in his ruling.
(Reporting by Sam Tobin and Carolyn Cohn; additional reporting by Iain Withers; editing by William James and Jason Neely)
