Lloyds and Berkshire Hathaway are among a group of 12 global insurers that will benefit from a ruling by the High Court.
Last year a slew of legal actions by international aircraft lessors – almost all of them with headquarters in Ireland – began in Dublin. The cases were taken by lessors including Avolon, SMBC Aviation Capital, BOC Aviation and CDB.
They sued a number of insurers – also including AIG, Chubb and Swiss Re – for allegedly declining to cover their losses either under “all risks” or “war risks” policies.
The action involved about €2.5bn worth of claims. About 13 legal teams, including more than 200 lawyers, were involved in the proceedings.
By March of this year, however, the cases were all but settled.
Like all the other lessors in the action, CDB’s “all-risks” policy expressly excluded war. CDB could only ever successfully claim on one type of cover. If CDB succeeded on war-risk cover, it could not also succeed on “all risks”.
It was possible that CDB might not succeed under either cover.
The court was told in March that all the claims made by the lessors had been or were in the process of being settled. The only outlier was the resolution of matters between CDB and 12 of the more than 20 defendant insurance firms in the action.
That meant the only case being pursued in the broader proceedings was by CDB Aviation under its “all-risks” cover against the relevant insurance company defendants. But on March 20, lawyers for CDB wrote to the insurance firms informing them that the lessor, having reached a “satisfactory resolution” with war-risks and mixed-risks insurers, would not continue to purse an alternative claim against the remaining “all-risks” insurers that accounted for 28pc of the all risks cover.
Later that month, lawyers for those remaining insurers wrote to CDB.
“Our clients have been obliged to defend these proceedings at very considerable effort and expense since they were commenced in 2022,” they said.
“Your client’s decision to drop its claim against the remaining all-risks insurers plainly gives rise to cost consequences.”
The default legal position is that having abandoned its specific action, CDB must be held liable for the defendants’ costs. CDB urged the High Court not to make such an order in favour of the 12 defendants. Alternatively, it asked the court to cap an order for legal costs.
The High Court has refused CDB’s requests, however.
“CDB made a tactical decision to sue the remaining all-risk defendants and to keep them in the proceedings until discontinuing against them on day 93,” Ms Justice Eileen Roberts said. “CDB were fully entitled to litigate in this manner, but they must bear the costs consequences of their decision to do so.”
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