Lloyd’s of London is facing a mammoth legal battle over hundreds of airliners stolen by Russia’s president Vladimir Putin.
Dozens of claimants, including Dubai’s ruling royal family, have launched multi-billion pound claims against the historic insurance market and underwriters including AIG and Chubb.
The case – the biggest-ever insurance dispute over aviation – has been brought after more than 400 Western jets worth £8 billion were seized by Putin’s government in the wake of his invasion of Ukraine last February. It is alleged the move by senior Kremlin figures was in retaliation against UK and EU sanctions.
Putin set out his position in a public address last March when he stressed that ‘foreign-leased aircraft would not be returned to the foreign lessors’. The Kremlin’s aim was to keep them as a source of spare parts for Russian airlines – such as ex-Manchester United sponsor Aeroflot – which are already heavily reliant on leased foreign aircraft.
Russian engineers are now able to cannibalise stolen Boeing and Airbus aircraft to secure the spare parts which they can no longer buy abroad because of sanctions.
Retaliation: More than 400 Western jets worth £8 billion were seized by Vladimir Putin’s government in the wake of his invasion of Ukraine
This has sparked safety fears among aviation experts and forced the head of Russia’s Federal Agency for Air Transport to issue a statement insisting ‘it has not become more dangerous to fly’ in Russia. Lawyers for Dubai Aerospace Enterprise, led by Sheikh Ahmed bin Saeed Al Maktoum, and other claimants have argued that the planes are ‘likely to be retained’ for years as ‘there is no current prospect of the conflict in Ukraine being resolved’.
The Kremlin is out of the reach of London’s High Court, so the aircraft owners are targeting insurers for billions in losses. But the insurers claim they are not liable because the planes have not been damaged or lost.
They are arguing that Russia’s seizure of aircraft is ‘not sufficiently permanent’ – meaning that leasing firms could still get the planes back when the war ends. Dubai Aerospace Enterprise is leading one case against the insurers, while a parallel claim has also been lodged by Irish leasing giant AerCap, the world’s largest aircraft lessor.
A court hearing is set to take place later this month. A City source said this could attract other interested parties who are yet to file claims.
Leading City lawyer Ned Beale, who has specialised in Russia-related litigation, said: ‘This is the biggest aviation dispute by value of all time. And one of the most politically charged.’
He said he expects the insurers to drag their heels over such a potentially costly settlement, adding: ‘Nobody knows what is going to happen [in the war]. The insurers will hope for a radical change to avoid paying out billions.’
All parties were contacted for comment.
