Plane owners brace for ‘mega-lawsuit’ in dispute with insurers over jets stuck in Russia

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A multibillion-dollar legal battle over who will foot the bill for hundreds of aircraft stuck in Russia will begin this week in London as their owners try to secure payments from insurance companies in one of the most complex and expensive cases that will be heard by the High Court.

Groups including AIG, Chubb and Lloyd’s of London face what one litigant described as a “mega-lawsuit” over claims they refused to cover owners of mainly Boeing and Airbus jets stranded in the country after who invaded Ukraine.

The owners of the planes – including the world’s largest commercial jet leasing company, AerCap – are seeking a combined total of about $3 billion from insurers in proceedings set to begin on Wednesday and scheduled to last until Christmas.

Parallel proceedings covering the reinsurance are also ongoing, with a High Court hearing scheduled for November.

The aviation insurance sector is facing the biggest loss in its history, with losses exceeding those after 9/11. More than 500 aircraft worth an estimated $10 billion were stuck in Russia following the February 2022 invasion of Ukraine.

Western lessors have managed to recover some of the aircraft, but most remain in Russia and are still flown by Russian airlines.

At the trial, which is due to take place at a “super court” in central London, several of England’s leading commercial lawyers are expected to argue on behalf of insurers that it is too early to declare a total loss, not lastly because the aircraft has not been destroyed and can still be recovered.

They are expected to point out that the conflict between Russia and Ukraine could still be resolved, depending on the outcome of the US election, and also point out that the way the insurance policies have been worded means landlords are not covered.

Ned Beale, co-head of commercial disputes at law firm Hausfeld, said: “The interests of the London insurance market are in direct conflict with those of the aviation industry, with hugely significant financial consequences.”

The case is the latest legal dispute involving the insurance industry, which has also faced a wave of lawsuits over non-payment of business interruption claims following the Covid-19 pandemic.

Data from litigation analysis group Solomonic shows claimants brought High Court cases totaling at least £10.2 billion in the insurance sector last year, the highest total of any industry.

In addition to determining whether aircraft lessors have insurance coverage, the court will need to determine which insurers are liable and under what types of policy: war coverage or “all risks.”

To do this, the judge will try to rule on the legal “cause” of any loss – whether the aircraft was seized by the Russian state or stolen by the airlines.

Several lessors, including AerCap, are also involved in the related reinsurance claims battle. These relate to policies concluded by Russian airlines with Russian primary insurers, which in turn concluded reinsurance with Western companies, including AIG.

Western reinsurers argued that the case should be tried in Moscow, but the High Court ruled in March that it could continue in London.

AerCap declined to comment on the upcoming lawsuit this week, in which it is seeking damages for more than 100 aircraft.

The lessor has separately entered into some agreements with a number of Russian airlines and their insurers. It recouped a total of $1.3 billion in 2023. AIG, Chubb and Lloyd’s also did not comment.