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.