Christopher Loxton (instructed by Fieldfisher for Deep Sky Leasing) for the claimant.
A complex insurance dispute, concerning hundreds of foreign aircraft detained in Russia.
(A) INTRODUCTION
This judgment concerns challenges to the jurisdiction of the English court to hear claims under Operator Policies in respect of aircraft which have remained in Russia following its February 2022 invasion of Ukraine.
The Claimants are owners and lessors, financing banks (or their assignees) or managers of certain aircraft and/or aircraft engines which were leased to Russian airlines under leases governed by English, Californian or New York law (the “Leases”).
The Leases generally required the lessee airlines to insure the aircraft in respect of hull all risks and war risks. Unless the insurer was itself part of the London and international market, the Leases also generally required the lessees to ensure that reinsurance was obtained, for the vast majority of the insured risk, under contracts of reinsurance on the same terms as the underlying insurance and containing a cut through clause (“CTC”).
Following the February 2022 invasion of Ukraine, the Claimants issued default and termination notices under Leases, relying on various grounds for termination, which differed from case to case but which included the imposition of sanctions on Russia by the EU and/or the UK and/or the USA (“Western Sanctions”), material adverse change, failure to maintain insurance/reinsurance required under Leases and/or failure to pay sums due under Leases.
Following the issue of such termination notices, the Russian airlines failed to return the aircraft to the Claimants, and they remain in Russia some two years later. That has led to market-wide litigation, relating originally to 306 aircraft together with 40 engines, and now (after some settlements) to 208 aircraft together with 31 engines. The sums claimed in the present proceedings were originally around US$13.5 billion and are now, after settlements, around US$9.7 billion.
The Russian airlines insured the aircraft, against hull all risks and war risks, with Russian insurance companies, who reinsured the vast majority of their risk with various London and international market reinsurers, including the Defendants and Russian reinsurers. I refer to the Defendants as the “All Risks Defendants” and the “War Risks Defendants”, according to the categories of cover they have reinsured in the present cases.
The Claimants say they were provided with the certificates of insurance and certificates of reinsurance, as required under the Leases, which are said by the Claimants to evidence the terms of the insurance taken out by Russian airlines with Russian insurers and the reinsurances taken out by Russian insurers with reinsurers including the Defendants. The certificates of insurance refer to insurance contracts incorporating AVN67B or similar wording, under which the Claimants’ interests as “Contract Parties” were noted and the Claimants were included as “Additional Insureds”. The certificates of reinsurance also refer to and/or set out and/or summarise the terms of the CTCs said to be contained in the reinsurance contracts.
The Claimants bring claims against the Defendants (relying inter alia on CTCs in or said to be in the reinsurance policies) in respect of the loss of the aircraft, under the all risks cover and/or the war risks cover.
The Defendants have disclosed reinsurance slips which they say contain and/or evidence the reinsurance policies. Each such slip identifies the Russian airline as the Original Insured and its Russian Insurer as the Reinsured, and contains Russian governing law and Russian exclusive jurisdiction clauses (“EJCs”) on which the Defendants rely. These slips also include a summary of some of the terms of the underlying insurance purchased by Russian airlines, and, in most cases, a CTC.
The Claimants say they did not receive copies of the reinsurance slips at the time the reinsurances were placed, and note that the certificates of reinsurance do not refer to the jurisdiction clauses contained in the reinsurance contracts. However, save as noted below, the Claimants accept for the purpose of the present applications that the Defendants have a good arguable case that:
i) the reinsurance policies in relation to which the Claimants bring their claims contain the Russian law and jurisdiction agreements on which the Defendants rely;
ii) the underlying insurance policies placed by the Russian airlines contain Russian law and jurisdiction agreements;
iii) as a matter of Russian law, the Russian law and jurisdiction agreements are valid; and
iv) as a matter of Russian law, the Claimants’ claims referred to above would fall within the scope of the Russian law and jurisdiction clauses.
The AerCap Claimants have confirmed that, for the purposes of the present applications (a) they accept that the Defendants have shown a good arguable case that there are Russian law and jurisdiction clauses in the reinsurances and those of the insurance policies where AerCap has seen relevant wordings for the relevant policy year containing Russian law and jurisdiction clauses; and (b) in relation to those insurances where AerCap has not seen relevant wordings, the AerCap Claimants are nonetheless prepared to proceed on the basis that it is an assumed fact that the insurances contain Russian law and jurisdiction clauses. The GASL Ireland Leasing A-1 Limited (“Genesis”) Claimant does not accept that the Defendants have an arguable case in relation to point (ii) above. In addition, as noted later, Genesis and Shannon Engine Support (“Shannon”) also claim to be entitled to sue under collateral contracts not containing law or jurisdiction clauses.
The Claimants are incorporated in states which, as part of its counter-measures taken in response to the above sanctions, the Russian State categorises as unfriendly. Some of the ultimate beneficial owners of certain Claimants are incorporated in states which are not so categorised.
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