World’s largest insurers head to court for high-stakes clash
Today, one of the most anticipated court cases in recent years kicked off in London.
It will see some of the world’s largest companies—insurers and aircraft lessors—battle it out over what could amount to a $10bn (£7.8bn) payout.
The case revolves around the legal state of the planes trapped in Russia following the country’s invasion of Ukraine in 2022.
After the UK and EU levied sanctions against Russia, aircraft lessors were prompted to terminate their leasing policies, with the expectation planes trapped within the country would be returned.
But over two and a half years later, most planes are being flown by Russian airlines with no realistic prospect of their return.
Lessors have turned to their insurance policies to recover their losses. However, insurers and reinsurers have denied liability.
A swarm of litigation related to the cases hit the English Commercial Court last year.
As a result, the court set out a case management plan that would see a test case and a group of up to five claims to be heard together.
The trial for the claimants is led by US-Irish aviation leasing giant Aercap, followed by Dubai Aerospace Enterprise (DAE), US-Irish firm Merx Aviation, Ireland-based KDAC Aircraft Trading, and Falcon 2019-1 Aircraft, an entity managed by DAE.
The cases are against some of the world’s largest insurers, including AIG, AXA, Allianz, Liberty and Lloyds.
Opening the trial, leading barrister Mark Howard KC told Mr Justice Butcher that Aercap has a straightforward claim under the All Risk policy.
However, they will proceed under the War Risk policy if they fail.
The War Risk policies have “an aggregate”, meaning there is a maximum amount of money an insurance company will pay to cover claims, while the All Risk policies do not. Howard KC noted that this was limited to £1.2bn.
The insurers tried to push a parallel case out of the English courts in favour of the Russian court, as they argued a jurisdiction challenge earlier this year. But they lost that challenge.
Despite the fact that there are multiple parties as claimants, the insurers and reinsurers have not settled with any parties leading up to the trial.
With billions of pounds on the line for the sector, the insurers are fighting this claim to the end.
The trial will continue at the Rolls Building for the next 12 weeks.
During this time, parties will cross-examine a number of witnesses, including Aercap’s CEO, Aengus Kelly.
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