Russian aviation dispute: Commercial Court denies war risks insurers' appeal

On 16 September 2025, Mr Justice Butcher refused 'war risks' insurers’ application for permission to appeal (to the Court of Appeal) from his first instance decision in the long running Russian aviation dispute.   

War risks insurers had until 9 October to seek permission direct from the Court of Appeal and it is understood that the majority of war risks insurers (Fidelis, Chubb and Lloyd's Insurance Company representing all remaining war risks insurers other than Starr) did so. 

However, importantly it is understood that those war risks insurers have not appealed Mr Justice Butcher’s findings on causation/peril, such that there is now no prospect that 'all risks' insurers will be found liable for the losses. All risks insurers are, therefore, removed from the litigation. 

As at the date of writing, it is understood that the Court of Appeal’s decision on the war risks insurers applications for permission to appeal is awaited.

What took place in the Russian aviation 'mega trial'?

By way of reminder, on 2 October 2024 the much anticipated ‘mega trial’ in the Russian aviation leasing claims started in the Commercial Court in London before Mr Justice Butcher. It was originally anticipated to last 12 weeks until Christmas 2024 but ended up running into early 2025.

The dispute involves the concurrent trial of six actions brought by many of the world’s leading aviation lessors (following the non-return of approximately 150 of their leased aircraft by Russian airlines) including AerCap, Dubai Aerospace Enterprise (DAE), Falcon 2019-1 Aircraft, FDAC Aircraft Trading, Global Aerospace, and Merx Aviation, against many leading insurers including AIG, AXA, Allianz, Chubb, Fidelis, HDI, Liberty, Lloyd’s Insurance Co, Swiss Re, and TMK. Originally the claim was valued at up to US$4.7bn.

The Commercial Court was considering whether the losses were covered under either the ‘all risks’ or ‘war risks’ sections of the policy or not at all. 

It is understood that KDAC and DAE settled their claims prior to or during the trial, Merx settled with all war risks insurers apart from Fidelis, and AerCap settled with Swiss Re and HDI. Notwithstanding that, the claims at trial were understood to be more than US$3bn, such that outcome was likely to have considerable implications for both the aviation and insurance/reinsurance sectors. 

The judgment 

On 11 June 2025, Mr Justice Butcher delivered his judgment in favour of the claimant aircraft lessors after consideration of the following main issues:

1. Whether the aircrafts were a total loss within the policy period, and if they were lost after the policy period then whether the ‘grip of the peril’ doctrine was applicable.
2. Whether the claims were covered under contingent cover or possessed cover.
3. Whether the loss was caused by an all risk or war risk peril.
4. Whether payment under the policy would be rendered unlawful by EU or US sanctions.
5. The extent to which the claimants were required to pursue their claims under their operator policies.
6. The amount the claimants were entitled to.

In short, Mr Justice Butcher held that the claimants were entitled to be indemnified under their contingent cover due to losses caused by war risk perils. The ‘grip of the peril’ doctrine was also found to be applicable but only for the period of 5 March 2022 to 10 March 2022. 

The reasoning was as follows: 

1. On 10 March 2022 the aircraft were a total loss because the Russian Government’s GR 311 Order banned the return of leased aircrafts to foreign lessors, which amounted to the lessors being permanently deprived of the aircraft. 
2. The ‘grip of peril’ doctrine applied. This doctrine permits recovery for losses outside the policy period where the insured peril commenced during the policy period. The result is that the claimants can claim for losses during the period between 5 March 2022 and 10 March 2022. The 5 of March 2022 marked the start of successive Russian Government action to prevent the return of Western leased aircrafts.
3. The argument presented by lead war risk insurer Fidelis on the contingent cover was rejected. Fidelis had argued that contingent cover could only apply to losses anticipated and required to be insured against by the underlying lease. 
4. The loss was caused by a government peril which was covered under the war risk policy. Specifically, the GR 311 Order was the proximate cause of loss.
5. Payment under the policy was not precluded by EU or US sanctions.

The impact on the insurance industry

This is a seminal judgment for the aviation (and wider insurance and reinsurance) market to rank alongside those in Dawson’s Field [1972], Kuwait Airways Corp v Kuwait Insurance Co [1999] and Scott v Copenhagen Re [2003]. The impact will be considerable, albeit the claimants claims have effectively been capped at a lower figure under the war risks cover than had they succeeded under the more generous all risks cover. 

As noted above, it remains to be seen whether the Court of Appeal will grant war risks insurers permission to appeal, albeit on narrower grounds than first sought from Mr Justice Butcher. 

Disputes on the horizon: 'Largest trial in Ireland'

Separately, Avolon and BOC Aviation, two of the world's largest aircraft leasing firms, announced the settlement of their lawsuits in the Irish courts against various insurers. Avolon and BOC Aviation were part of a larger group of lessors, including SMBC Aviation Capital, which also reported reaching settlements with two of the 18 insurers it sued, namely Swiss Re and SCOR Europe. 

These settlements were part of a collective legal action involving six lessors in the Irish High Court. The trial, which commenced in June 2024, involved claims worth around 2.5 billion euros (£2.1bn) and was described as the largest ever in Ireland.