Insurance dispute over 400 aircraft stranded in Russia lands in court

The latest court case in a series of disputes around the insurance cover for over 400 aircraft that have been stranded in Russia since its invasion of Ukraine has begun in Dublin.

The case sees SMBC, Avolon, BOC Aviation, Carlyle Aviation Partners, Nordic Aviation Capital and CDB Aviation aiming to force insurers from the Lloyd’s market and a number of company market underwriters to indemnify them for the loss of aircraft with an insured value of $2.5bn.

However, insurers say the aircraft have not been destroyed and that there is still the chance that they could be recovered or sold.

There is also a dispute over when, or if, the leasing agreements covering the planes had been cancelled.

The hearing, which is likely to be held for many weeks, is being held in a specially commissioned venue as the number of lawyers involved mean that no Irish court is of a size to accommodate them all. 

Situation

Russia’s invasion of Ukraine led to a number of immediate sanctions, which included the leasing of aircraft to Russian carriers.

However, when the lessors sought to get the aircraft returned, efforts were ignored.

But in some cases, the Russian government and airlines have sought to negotiate with the lessors to acquire some of the aircraft at reduced prices.

Mark Costin, commercial director at London-based Insurtech Insurwave, said: “This is a complex situation that has been made worse by the lack of clarity within the marketplace on behalf of all parties of both what their exposures are and the validity of the coverage that caused the market to feel it was off-risk.

“As a consequence of this, there is increasing appetite on behalf of insurers to look at tech solutions and consolidate their data and view it on a real-time basis.”