Washington, D.C. (April 21, 2023) – Lewis Brisbois has commented extensively on the impact of the Russia-Ukraine conflict on the insurance industry. Adding to its four-part series on the fallout of the Russia-Ukraine conflict on the insurance industry – including (1): Coverage, Exposure, and Losses; (2) Availability of Insurance; (3) Aircraft Lessors Sue For Damages Related to Aircraft Stuck in Russia; and (4) A Look at the Reinsurance Market and its Impact on Ship Insurance – is a look into a giant, consolidated lawsuit set to be heard in London's High Court beginning in October 2024. See AerCap Ireland Ltd. v. AIG Europe SA and another, case number CL-2022-000294, the High Court of Justice of England and Wales. The case involves insurers of aircraft leasing companies. The insurers successfully merged several lawsuits filed by aircraft leasing companies arising from their claims for planes stranded in Russia as a result of the conflict and subsequent sanctions.
Similar lawsuits were filed against insurers by AerCap Holdings NV, Dubai Aerospace Enterprise Ltd. (DAE), KDAC Aircraft Trading, Merx, and Falcon. The aircraft leasing companies opposed the merging of the lawsuits, arguing that it would cause delay and complicate settlement. However, defendant AIG successfully argued in favor of the consolidation of AerCap's claims with those filed by the aforementioned aircraft leasing companies. Judge Christopher Butcher reasoned that the lessors' cases should be heard together; however, as of last month, the inclusion of Merx and KDAC remained under review.
The insurers' position, in part, is that there has not been a physical loss of the planes yet, the jets and engines are no longer subject to a lease agreement, and Western sanctions prevent the insurers from providing coverage. The aircraft leasing companies claim that they terminated their contracts with Russia in compliance with the sanctions and demanded the return of their aircraft and engines, which Russia ignored. Further, they argue that any losses resulting from this chain of events should be covered by either the all-risks insurance policies or war-risk policies.
A significant amount of money is at issue. AerCap is suing AIG, Lloyd's Insurance Company, and Fidelis Insurance for $3.5 billion. DAE and Falcon are suing 11 insurers, including Lloyd's of London, AIG, Chubb, and Swiss Re over aircraft and equipment valued at $900 million under all-risks policies, or for just under $800 million under war-risks policy limits. Merx is claiming more than $255 million over the alleged loss of aircraft, engines, and records. KDAC is suing for $21.5 million over the loss of one jet.
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