(Commonwealth_Europe) Aircraft leasing companies have achieved a landmark legal triumph in one of the most significant insurance disputes to come before a UK court, securing billions of dollars in compensation for aircraft stranded in Russia following the onset of war in Ukraine.
The London High Court, in a comprehensive and lengthy 230-page presiding by Mr. Justice Butcher, found in favor of six chief leasing firms, including Ireland-based AerCap and Dubai Aerospace Enterprise (DAE). These corporations had presented a joint $4.7 billion claim against numerous global insurers after Russian airlines failed to arrive at leased planes after the attack on Ukraine in February 2022. The insurers included major names such as AIG, Lloyd’s, Chubb, and Swiss Re.
At the heart of the dispute was whether the insurers were liable under the terms of “war risks” insurance policies. The leasing companies contended that their aircraft had been effectively seized by the Russian government and were therefore lost due to acts of war or political interference. The insurers, on the other hand, claimed that the aircraft was still in Russia due to the choices made by the leasing airlines, not because of direct legislative action.
Justice Butcher rejected the insurers’ defense, resulting in the confiscation of the aircraft by the Russian state. He emphasized a crucial legal turning point: a Russian law accepted on 10 March 2022 that banned the export of aircraft and aircraft machinery. This governmental action rendered it impossible for leasing firms to recover their assets, which the court labeled as a “loss” under the war risks policies. Although the deadline for lease termination under Western sanctions was later that month—on 28 March—Butcher ruled that the aircraft had been irretrievably lost by the earlier March date.
The court’s decision dealt a major blow to insurers, establishing that the loss was not a matter of business dealings gone wrong but a clear case of sovereign intervention that triggered liability under war risk coverage. Russian operatives had leased 147 aircraft and 16 engines, but they never received any reimbursement. AerCap alone accounted for 116 aircraft and 15 engines in the claim, while DAE sought reimbursement for 22 aircraft, regaining only three. The rest were deemed permanently inaccessible starting March 10, 2022.
Other lessors involved in the proceedings included Genesis, Falcon, Merx Aviation, and KDAC Aviation Finance. All maintain operational offices in Dublin, where separate litigation had also been underway. That parallel Irish case—involving a claim of around £2.5 billion—is now nearing resolution, with the Irish High Court recently informed that most claims have been settled or are close to settlement.
The wider allegations of the case have been far-reaching. After the war started, leasing firms were obligated by authorizations to dismiss their contracts with Russian carriers and attempt to reclaim their aircraft. Russia’s rejection sparked political tensions and financial chaos across the aviation sector. Many of the aircraft were unilaterally re-registered in Russia, sometimes resold domestically, and effectively nationalized without compensation or consent.
Insurers argued that because of sanctions imposed by the US and EU, they were legally barred from paying out such claims. But Justice Butcher did not agree, asserting clearly that the agreements did not prevent insurance payments under war risk cover. This clarification disregarded a key argument from the insurers and paved the way for a substantial payout.
The case, which involved a huge legal effort and was labeled a “mega trial” by witnesses, required the synchronization of hundreds of legal experts across multiple authorities. Justice Butcher described the litigation as particularly challenging due to the scope, complexity, and sensitivity of the issues involved. He urged the parties to agree on the next steps based on his findings.
For AerCap, this decision represents a massive financial victory. The firm’s legal counsel, Herbert Smith Freehills Kramer, established that AerCap had secured $1.035 billion through this ruling, in addition to other significant recoveries from prior settlements. The consequence is likely to serve as an example in future cases where governments confiscate assets during geopolitical crises.
