3VB successful in market-wide Russian aviation insurance dispute

The Court has today handed down judgment in a series of jurisdiction challenges made in the context of a market-wide insurance dispute concerning a substantial number of aircraft detained in Russia.

Tom Weitzman KC, Philip Hinks and Kate Holderness acted for lead claimant group in this matter. David Quest KC acted for another of the claimant groups.

The claimants are all owners and lessors of aircraft which were leased to Russian airlines. The aircraft were insured by the airlines with Russian insurers and reinsured in the London and international market.

Following Russia’s invasion of Ukraine in February 2022, the claimants terminated the leasing of the aircraft and demanded their return. However, the Russian airlines failed to return the aircraft and, to this day, they remain in Russia.

This has led to market-wide litigation relating to 208 aircraft and 31 engines, the sum claimed being approx. $10 billion.

The claimants have brought claims in the Commercial Court against reinsurers pursuant to ‘cut-through clauses’ contained in the reinsurance policies. However, those policies also contained exclusive jurisdiction clauses in favour of the Russian courts. On the basis of those clauses, the reinsurer defendants applied for a stay and dismissal of the claims.

The jurisdiction challenges were heard over four days in February 2024. In a judgment handed down today, Mr Justice Henshaw dismissed those challenges, and thereby concluded that – notwithstanding the exclusive jurisdiction clauses in favour of the Russian courts – the claims should proceed here rather than in Russia.

In dismissing the jurisdiction challenges, the Judge found that there were strong reasons for not giving effect to the jurisdiction clauses. Chief amongst those reasons was the Judge’s conclusions that the claimants are “very unlikely to obtain a fair trial in Russia”; to stay the claims in favour of the Russian courts would give rise to a risk of inconsistent judgments; and there was a risk of personal attacks on individuals who in the ordinary course would attend any trial in Russia (at [557]).

Tom, Phil and Kate were instructed by Paul Mesquitta, Peter Sharp and David Waldron of Morgan Lewis & Bockius UK LLP. David was instructed by Alison Proctor, Solomiya Boyar & Simon Schindler of Wordley LLP.

The judgment is available here.