London insurers will have to compensate lessors over aircraft stranded in Russia following the invasion of Ukraine after Mr Justice Butcher held today that they were officially lost in a landmark dispute valued at more than $4.5bn.

The eagerly awaited Commercial Court ruling in the so-called Russian aviation insurance litigation focused on lessors’ policies in AerCap Ireland v AIG Europe and Lloyd’s Insurance Company/Dubai Aerospace Enterprise Ltd v Lloyd’s Insurance Company SA and others.

The judge found that the aircraft were permanently lost due to the war-related circumstances in Russia, entitling the claimants to recover their losses under their war risks policies rather than all-risks policies.

Beyond the immediate financial stakes, the trial addressed foundational issues concerning policy coverage, exclusions and the interpretation of war-related risks, marking a watershed moment in aviation and insurance law.

The case concerned 147 aircraft, 16 standalone engines and other equipment which became stranded in Russia after President Vladimir Putin refused to permit their departure in response to the imposition of sanctions by the UK, the EU and other countries.

Many aircraft were insured or reinsured in the London and international markets. Initially, the quantum was estimated at more than $10bn, but it was later reduced to the current $4.5bn figure following settlements with insurers and Russia.

Butcher held that the claimants were entitled to recover their losses under the contingent and not under the possessed covers of their insurances.

He also ruled that the aircraft had been permanently lost in March 2022 when legislation banned the export of aircraft from Russia.

Given the timing and cause of the losses, he determined that recovery for the claimants should come from the war risks insurers, rather than the all-risks insurers.

The legal battle has involved multiple parties, including AerCap Ireland, Dubai Aerospace Enterprise (DAE), AIG Europe and Lloyd’s. At the same time, reinsurers and syndicates have closely monitored the developments in the Lloyd’s market.

Among the many law firms involved were Herbert Smith Freehills Kramer, Kennedys, Clyde & Co, HFW, Wikborg Rein, Clifford Chance, RPC, Morgan Lewis and Pennington Manches Cooper.

Insurance set 7 King’s Bench Walk supplied a preponderance of leading and junior counsel, alongside Essex Court Chambers, Brick Court, Fountain Court and others. More than 50 counsel were instructed.

The scale of the proceedings was considerable. Six sets of claims were consolidated into a single “mega-trial”, which ran for five months from October 2024 to February 2025. Preparatory case management conferences (CMCs) took place in 2023, following the initiation of proceedings in June 2022.

Insureds, which included AerCap, sued insurers to recover losses, with some lessors, including Avalon and BOC Aviation, settling their claims before trial.

DAE secured a settlement with insurer AXA at the opening of proceedings in October. Among the defendants were insurers including AIG, Lloyd’s, Chubb, and Swiss Re. There are also parallel proceedings in the US and Ireland.

Butcher also ruled on a separate issue regarding whether EU or US sanctions prevented the insurers from indemnifying the claimants for the loss of aircraft that had been leased to Russian airlines. He concluded that this was not the case.