Swiss Re and over 20 other insurance companies are facing a major legal dispute in a London court. The case concerns the costs of hundreds of aircraft that have been grounded in Russia since the beginning of the war in Ukraine. The owners of the aircraft in question are demanding more than three billion US dollars in damages for aircraft that are no longer available. The consequences of this legal dispute could have a lasting impact on the aviation and insurance industries.
The problems for international leasing companies began immediately after Russia's invasion of Ukraine in March 2022. According to aviation consultancy IBA, there were 523 foreign aircraft in Russia at the time, financed by Western leasing companies. The Russian authorities responded to the sanctions by transferring the aircraft to the national register and blocking the owners' access to these machines. This mainly affects the airlines S7 Airlines and Aeroflot, which together have hundreds of Western aircraft in their fleet.
The legal implications are complex: the leasing companies argue that they have suffered an insured loss for the non-returnable aircraft. In particular, the Irish leasing giant AerCap has already claimed a total loss of 3,5 billion US dollars for 135 aircraft leased to Russia. Given the enormous value at stake here, it is not surprising that the lawsuit is attracting a lot of attention in the industry.
The dispute in court
The trial, which opened in the High Court in London, addresses key issues relating to compensation for the seized aircraft. The plaintiffs are demanding that the insurance companies cover the financial losses they have suffered as a result of the inaccessibility of their aircraft. Experts also doubt whether the aircraft are in working order, as sanctions have severely restricted access to spare parts in Russia.
However, insurance companies, including Swiss Re, are of the opinion that the aircraft cannot be considered lost. This view is supported by the fact that many of the aircraft are theoretically still in Russia, albeit without access for their owners. Swiss Re had already set aside precautionary provisions of $2022 million in the first quarter of 283 to take into account possible financial burdens from the Ukraine war.
The role of Swiss Re and other insurers
The lawsuit against Swiss Re and the other insurers is not only a legal dispute, but also a test for the entire insurance and leasing industry. The amount of compensation demanded, which totals more than three billion US dollars, could have a significant impact on the balance sheets of the companies involved.
Swiss Re itself did not comment on the lawsuit because the court proceedings are ongoing. Nevertheless, the outcome of the case is of strategic importance as it could potentially set precedents for future disputes regarding insured losses in times of crisis.
The case before the High Court in London could prove to be groundbreaking for the aviation and insurance industry. If the court rules in favor of the leasing companies, this could not only lead to enormous financial burdens for the insurance companies, but also have an impact on future insurance practices in international aviation.
The developments in this legal dispute will therefore be closely monitored. It could affect not only the financial prospects of the companies involved, but also the dynamics within the global aviation industry at a time when the geopolitical environment is changing rapidly.