The $1.03bn award for AerCap, whose chief executive is Gus Kelly, is on top of previous recoveries it has secured in past settlements related to jets and engines stranded in Russia.
AerCap, the world’s largest aircraft lessor, had 116 jets and 23 engines seized in Russia following its invasion of Ukraine.
The Irish company had initiated legal action in London against a slew of insurance and reinsurance firms including Lloyds, Liberty Mutual, Chubb, Fidelis and Swiss Re.
In 2023, it secured $572m in a full settlement of claims under insurance policies of Russian carriers Ural Airlines and S7 in respect of a total of 47 aircraft and five spare engines. These were owned by AerCap entities and were leased to the airlines at the time of the Russian invasion of Ukraine in 2022.
The action just concluded in the High Court in London followed a 12-week trial that included five other aircraft lessors, with AerCap acting as the lead claimant. AerCap was represented by international law firm Herbert Smith Freehills Kramer in the action.
The other claimants included Dubai Aerospace, KKR’s KDAC Aviation, Merx Aviation and a leasing unit ultimately owned by US-based MassMutual. During the course of the trial KDAC settled with its insurers, and its action was dismissed.
There was a dispute between all-risk insurers and war-risk insurers
The insurers had previously unsuccessfully challenged the jurisdiction of the UK court to hear the action, arguing it should be staged in Moscow.
The judgment released on Wednesday relates to a total of 147 aircraft, 16 standalone engines and one other piece of equipment. The insured value of these amounted to over $4.5bn.
A key issue concerned whether the lessors’ aircraft had been lost to the claimants, and if so when and what caused such a loss.
In particular, there was a dispute between all-risk insurers and war-risk insurers as to whether the cause of any loss of the aircraft was a commercial decision of the Russian airlines leasing the aircraft.
In that case the all-risk insurers would be liable to the claimants, or an act or order of the Russian government, in which case the war-risks insurers would be so liable.
Mr Justice Butcher found in favour of AerCap and the other lessors, ruling that their war-risk insurance policies were triggered following the seizure of their aircraft.
He concluded that the aircraft had been lost, and that the loss occurred on March 19, 2022, when a piece of Russian legislation banned the export of aircraft and aircraft equipment from their country.
There was also an issue as to whether EU or US sanctions prevented the insurers from indemnifying the claimants for the loss of aircraft which had been leased to Russian airlines. The judgment concluded that insurers were not so prevented by sanctions.
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