Aercap Ireland Capital Designated Activity Company & Ors v PJSC Insurance Company Universalna & Ors
[2024] EWHC 1365 (Comm)
Zephyrus Capital Aviation Partners 1d Limited & Ors v Fidelis Underwriting Limited & Ors
28 March 2024
[2024] EWHC 734 (Comm)
High Court
Companies that leased planes to Russian airlines sued insurance companies in England, even though the insurance contracts said disputes must be settled in Russian courts. An English judge decided that it's too risky for the leasing companies to try their case in Russia, where the government might interfere because of the political implications. The judge also considered that having many similar cases in both England and Russia would lead to confusing and inconsistent rulings, so allowed the cases to stay in England.
Key Facts
- •This judgment concerns jurisdiction challenges in English courts to hear claims under Operator Policies for aircraft remaining in Russia after the February 2022 invasion of Ukraine.
- •Claimants are aircraft owners, lessors, financiers, or managers whose leases with Russian airlines contained English, Californian, or New York law governing clauses and required hull and war risk insurance.
- •The insurance was placed with Russian insurers, who reinsured with London and international market reinsurers (Defendants). Reinsurance slips contained Russian governing law and exclusive jurisdiction clauses (EJCs).
- •Claimants contend they lacked knowledge of the Russian EJCs in reinsurance contracts, relying on Certificates of Insurance and Reinsurance which omitted this information.
- •Following the invasion, Claimants issued termination notices based on various grounds, including Western sanctions and Russian counter-measures.
- •Defendants argue that the EJCs should be enforced unless Claimants demonstrate ‘strong reasons’ not to.
- •Claimants argue that a fair trial in Russia is unlikely due to state interference, public policy considerations (undermining sanctions), and multiplicity of proceedings.
- •A significant number of Defendants submitted to the English court's jurisdiction during the proceedings.
Legal Principles
The English court will grant a stay of proceedings in favour of an exclusive jurisdiction clause unless the claimant shows ‘strong reasons’ not to.
Donohue v Armco Inc [2001] UKHL 64
Strong reasons must go beyond mere convenience and relate to the interests of justice.
The Eleftheria [1970] P 94; Donohue v Armco Inc
Foreseeable factors of convenience are generally irrelevant when considering an exclusive jurisdiction clause.
British Aerospace plc v Dee Howard Co [1993] 1 Lloyd’s Rep 368
A real risk of denial of substantial justice (e.g., an unfair trial) is a strong reason to refuse a stay, even if foreseeable.
Various cases including The Britannia Steamship Insurance Association Ltd, Banco Atlantico SA v British Bank of the Middle East, Golden Ocean v. Salgocar, Lungowe v. Vedanta Resources
The court will not enforce a foreign right if doing so violates fundamental principles of justice or public policy.
Dicey, Morris & Collins; Kuwait Airways v Iraqi Airways
A lack of genuine desire for trial in the contractual forum, with only tactical advantages sought, may be a strong reason to refuse a stay.
The Vishva Prabha, The Atlantic Song, The Pia Vesta
Outcomes
The court declined to stay the proceedings.
The Claimants demonstrated strong reasons, primarily the unlikelihood of a fair trial in Russia due to state interference and the risk of inconsistent judgments in multiple proceedings.