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Aircraft lessors sue over billions of dollars in unpaid

claims

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Five disputes against different insurers rolled into one

trial

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Hundreds of aircraft remain in Russia after Ukraine

invasion

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Trial marks start of one of biggest UK insurance battles

By Kirstin Ridley and Sam Tobin

LONDON, Oct 2 (Reuters) - Insurers are playing "pass the

liability parcel" in a desperate fight against multi-billion

dollar claims over aircraft stranded in Russia since the

invasion of Ukraine two years ago, lawyers for aviation lessors

told a London trial on Wednesday.

Mark Howard, a lawyer for the world's largest aircraft

lessor AerCap ( AER ), told the first day of a keenly

anticipated trial that insurers must know there was no realistic

prospect that Western-owned jets and engines would be returned.

"The reality is ... that the aircraft and engines are lost,"

he said.

In one of the largest insurance disputes to be heard in

London, AerCap ( AER ), Dubai Aerospace Enterprise (DAE), Merx Aviation,

KDAC Aviation Finance and Falcon are pitched against insurers

including AIG, Lloyd's, Chubb and

Swiss Re.

The fast-tracked case, which is due to close by year-end, is

seen as a bellwether for parallel lawsuits in Ireland and the

United States over who should pay for around 400 planes, valued

at almost $10 billion, left in Russia after the West imposed

sanctions over the war.

The London lawsuit centres on claims related to around 140

jets, along with some engines, that were originally valued at up

to around $4.7 billion. But some settlements with Russia -

albeit at prices below the insured value - have trimmed the

value to nearer $3.0 billion.

Insurers argue in part there is no evidence the aircraft

have been destroyed or damaged, that the assets are no longer

subject to lease agreements or that policies do not cover the

events leading up to their failure to return.

Lessors said in court filings they had sought compensation

from Russia. DAE said its president, David Houlihan, took a

one-week trip to Moscow in March 2022 to meet with lessees - to

no avail, documents show.

Lessors are claiming compensation under "contingent and

possessed" policies that can provide cover under a broad,

all-risks clause for loss or damage to aircraft or under a more

specific war-risks clause.

AerCap ( AER ), which says it has lost 116 aircraft and 15 engines,

is suing for $2.06 billion under its all-risks insurance policy

or, alternatively, $1.2 billion under its capped war-risks

policy, pending further deals with Russia, court filings show.

DAE values its claim for 22 aircraft, one engine and one

piece of equipment at $737.8 million. Merx is claiming $184

million for six aircraft, while Falcon is claiming $43.4 million

for two aircraft and KDAC is suing for $21.5 million over the

loss of one jet, court filings show.

Lessors have separately taken on reinsurers, some of which

lost a battle in March to have the case moved to Moscow, and

some are also tackling insurers over jets stuck in Ukraine.

"These are complex, hard fought claims where the stakes are

high and the long-lasting impact could be seismic," said Garbhan

Shanks, a partner at law firm Fladgate.

"Neither side will want to be left writing the cheques - and

that's because the exposure is enormous."