Aviation Law | International Arbitration | Geopolitics

In one of the most consequential insurance rulings in recent years, the UK High Court has ruled in favor of multiple aircraft leasing companies—including AerCap and Dubai Aerospace Enterprise (DAE)—in a multibillion-dollar dispute against global insurers over aircraft stranded in Russia. The judgment, delivered on June 11, 2025, affirms that the losses suffered following Russia’s 2022 invasion of Ukraine are covered under war risk insurance policies.

This high-profile decision is expected to significantly reshape risk modeling in the aviation insurance market and underscores the growing complexity of geopolitical risk exposure.

The Background: Planes Stranded by War and Sanctions

Following Russia’s invasion of Ukraine in February 2022, Western sanctions compelled leasing firms to terminate aircraft leases with Russian airlines. In retaliation, Russian authorities blocked the return of roughly 400 foreign-owned aircraft, effectively seizing the planes in violation of contractual obligations and international norms.

Insurers—among them AIG, Chubb, Lloyd’s of London syndicates, and Swiss Re—argued that the circumstances either did not trigger coverage or were excluded due to the sanctions regimes in place. Lessors countered that the aircraft were “lost” under the terms of war risk coverage and that sanctions did not exempt insurers from liability.

The Ruling: Coverage Affirmed

Justice [Name Redacted in Report] ruled that the loss of operational control and de facto seizure of 147 aircraft and 16 engines constituted a compensable loss under the terms of the relevant war risk insurance policies. The court held that:

• The loss was caused by a hostile or warlike act of a sovereign power.
• Sanctions did not negate insurers’ payment obligations, particularly as the aircraft were lawfully insured at the time of loss.
• Attempts by Russia to retain or repurpose the aircraft amounted to constructive loss.

AerCap alone is set to receive approximately $1.035 billion, with additional substantial payouts expected for other lessors including Falcon, Genesis, Merx Aviation, and KDAC Aviation Finance.

This ruling is one of the largest insurance judgments in UK history and may set a critical precedent for how geopolitical risks are evaluated in future war risk coverage.

Industry and Legal Implications

The decision carries substantial implications for:

• The aviation insurance market, which now faces significant unanticipated liabilities;
• Contractual drafting of war risk and force majeure clauses, which will be revisited industry-wide;
• International asset protection protocols, especially in regions prone to political instability.

“This decision underscores the importance of clear war risk wording,” said Eleanor Marsh, a partner at Clyde & Co. specializing in aviation and insurance litigation.
“It also sends a clear message that insurers cannot use sanctions as a blanket defense when the triggering event predates enforcement mechanisms.”

A Broader Legal Landscape

This UK ruling joins a patchwork of related legal battles unfolding globally. Similar litigation is pending in U.S. federal courts and in Irish commercial courts, with lessors seeking recourse for dozens of other aircraft stranded across Russian-controlled territories.

In parallel, some lessors have struck settlements exceeding $2.5 billion with Russian state entities, transferring ownership of seized planes to local airlines via Russia’s state insurer, NSK—a separate track from claims against Western insurers.

Conclusion: Global Crises Raise the Stakes

The UK High Court ruling is a definitive legal and financial victory for aircraft lessors, validating their interpretation of war risk coverage in the face of systemic and geopolitical upheaval. It sends a strong signal that insurers will be held to policy terms even in the face of international crises—raising the stakes for how insurers underwrite, and how lessors manage, geopolitical risk in global aviation.