An $80m insurance claim for commercial aircraft lost in Russia following the country’s invasion of Ukraine is being pursued despite the claimant not having had sight of the relevant policy documents.
The claim by Shearwater Aircraft Leasing relates to the loss of two commercial aircraft it had leased to Russian aviation group Nordwind. As is common with many Russian airlines, Nordwind failed to return the aircraft at the start of the Ukraine war, continuing to use them despite repeated attempts by Shearwater to remove them from Russia.
The aircraft were insured for $40m each by Nordwind with a group of Russian insurers, backed by reinsurance led by Allianz Global Corporate & Specialty, Liberty Speciality Markets.
In a legal claim issued directly against the reinsurers, Shearwater claims the actions of Nordwind in retaining the aircraft has led to their effective loss. Like many other aircraft leasing companies with similar claims, Shearwater is suing for what it claims to be the total loss of their aircraft.
The claim document states: “Nordwind has continued to operate and fly each of the Aircraft in and across Russia, contrary to the demands and/or instructions of the Claimants, and despite the fact that the BCAA Certificates for each of the Aircraft have been withdrawn and/or revoked and/or that the leasing of each of the Aircraft has been terminated.
While the defence documents have yet to be filed, in other similar cases insurers have refused to pay out arguing that as the aircraft still exist the insurance policies cannot be called upon. Over 20 cases are currently going through the courts relating to unpaid claims for aircraft lost in Russia. What is unusual in the Shearwater case is that the party making the claim is suing on the back of an insurance policy, or policies, that were taken out by its client, the lessee of the aircraft, Nordwind – which continues to use the aircraft. Also, instead of pursuing Nordwind or the primary insurers, all of whom are Russian and subject to sanctions, the claimant is suing the reinsurers. Perhaps due to this disconnect Shearwater has had difficulty even accessing the reinsurance policy contract.
The claim document states: “Despite repeated requests … the Claimants have not been provided with a copy of the Insurance Policies.”
Suing an insurer through the High Court is tricky enough in normal circumstances; costs are substantial, standard contracts are often insurer-friendly and the court process is long and laborious. Attempting to pursue this path without even having the benefit of the full insurance contract is challenging in the extreme. Other features of this case, notably the presence of two sets of Russian companies in the contractual chain linking Shearwater to the reinsurers ultimately writing their risk, will only make matters more complicated. What may go in Shearwater’s favour though is the weight of similar cases currently going through the courts which could provide useful legal precedent before this case goes to trial. We await the outcome.
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