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At a hearing in the Russian Aircraft Lessor Policy Claims on 15 and 16 September 2025 Mr Justice Butcher denied all grounds of War Risk Insurers' application for permission to appeal and ordered War Risk Insurers to pay interest on the judgment sum in the region of USD 240 million.
This follows the High Court judgment finding that AerCap's 116 aircraft and 23 engines which had been on lease to Russian airlines and which could not be recovered following Russia's invasion of Ukraine were lost as a result of a government order and covered under the lessors' contingent war risk insurance policies. War Risk Insurers were ordered to pay over USD 1 billion to AerCap and a summary of this judgment can be found here. Herbert Smith Freehills Kramer represents AerCap.
Below we set out a brief summary of Mr Justice Butcher's oral rulings at this hearing which will be further detailed in a written judgment. This written judgment will also consider the issue of how the costs of these proceedings will be assessed and paid between the parties (including by way of interim payments on account) on which submission were made at this hearing but on which Mr Justice Butcher reserved determination pending this written judgment.
Interest to be paid by insurers
Interest is generally awarded on judgment sums by the Commercial Court to compensate claimants for being deprived of damages amounts by defendants. In this case Mr Justice Butcher had deferred the question of what sum insurers had to pay to lessors by way of interest until after judgment was handed down.
War Risk Insurers had argued that AerCap was not due any pre-judgment interest.
However, Mr Justice Butcher held that simple interest should be awarded on AerCap's claim (a) at the US Prime rate and (b) from 9 June 2022 (the date AerCap commenced its claim) until the date that each War Risk Insurer paid its share following judgment in June 2025. Since US Prime increased significantly in this period (reaching 8.5% at one point) interest on the over USD 1 billion awarded to AerCap is expected to be in the region of USD 240 million.
Permission to appeal
War Risk Insurers and Chubb had sought permission from the High Court to appeal Butcher J's judgment on the basis that it was wrongly decided. They advanced a number of grounds of appeal including arguing:
- On coverage, that the scope of the lessors' contingent policies did not cover the loss of the aircraft because, for example: (a) the Russian lessees remained in possession of the aircraft; (b) there were ongoing claims under operator policies; and/or (c) settlements had been entered into by AerCap with certain of the Russian operator insurers.
- On loss, that to establish loss by deprivation of possession, the claimant must prove that there is 'no more than a mere chance of recovery'. War Risk Insurers argue that this evidential hurdle had not been overcome, because the lessors: (a) had failed to prove there was no more than a mere chance of recovery over the entire length of the commercial lifetime of aircraft; and in any case (b) the lessors had been able to enter into settlements with the Russian insurers of certain lessees.
- On causation, that the loss did not fall within the scope of the war risks policies because (a) the airlines wanted to retain some aircraft independent of any government order, and (b) the war risks exclusion in the hull all risks policies did not apply in circumstances where the loss was caused independently by a peril which was not excluded (via the Wayne Tank principle – discussed here under 'Legal Issues as to Causation').
War Risk Insurers now have until 7 October 2025 to seek permission to appeal directly from the Court of Appeal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
