A California state court ruled in favor of aviation insurers sued for $128 mn by aircraft lessors over three planes stranded in Russia due to the Ukraine war.
San Francisco Superior Court Judge Ethan P. Schulman granted summary adjudication to some defendants, citing exclusions in the “all risk” and “mixed risk” policies for war, hijacking, and other perils.
Defendants included Lloyd’s underwriters, Swiss Re, Chubb, Berkshire Hathaway, Starr, and Tokio Marine Kiln Syndicates Ltd. The plaintiffs were BBAM US LP, BBAM Aviation Services Ltd., ECAF I 41991 EAC, and Horizon 11 Aviation 3 Ltd.
The three aircraft were leased to Russian airlines Aeroflot and Izhavia. In May 2022, the plaintiffs claimed $127.8 mn in losses, including $46.9 mn for each of two aircraft and $34 mn for the third.
9 of the 22 insurers sought summary judgment in August, arguing the plaintiffs suffered no physical loss or damage under the policy. The court denied that motion.
Later, the insurers filed six motions for summary judgment or adjudication, arguing the claims were outside policy coverage for various reasons.
The court ruled that settlements with Aeroflot and Russian insurer NSK did not qualify for contingent coverage. For one aircraft, the court determined the defendants had no obligation to investigate, cover, or pay the claim.
It also ruled the alleged loss did not occur while the planes were under the plaintiffs’ care, custody, or control during repossession attempts.
The court further found that, without coverage, there was no basis for a bad-faith claim.
Dubai Aerospace Enterprise reported receiving $201 mn in settlements over the past three months for aircraft previously leased to airline carriers in Russia. The company confirmed cash proceeds from selected insurance companies, resolving claims related to these aircraft.
DAE announced it has secured a cumulative $319 mn in cash proceeds, including a 2023 settlement involving seven aircraft.
The company stated it will continue litigation in English courts under its insurance policies and remains focused on mitigating losses associated with aircraft formerly leased to Russian airlines.
This development occurs amidst ongoing disputes involving over 40 aviation leasing companies, including DAE, seeking compensation for jets stranded in Russia.
Following sanctions by the US, UK, and EU due to Russia’s 2022 invasion of Ukraine, hundreds of aircraft and engines were left in Russia, prompting legal battles.
