Russian aircraft leasing insurance dispute yields costs and interest guidance

Following the substantive judgement handed down in June 2025 regarding insurance claims for aircraft stranded in Russia, Mr Justice Butcher has now ruled on the consequential issues of interest, costs and permission to appeal in these consolidated proceedings.

The claims arose from the detention of leased aircraft in Russia following the invasion of Ukraine in March 2022. Various aircraft lessors, including AerCap Ireland Limited, sought recovery under their insurance policies, with disputes arising between all risks and war risks insurers as to which coverage applied.

Interest awards

The court determined that pre-judgement interest for AerCap should commence from 9 June 2022, being the date of the claim form, rather than the date of loss. This allowed insurers reasonable time to consider their position whilst recognising the insured's entitlement to promptitude given the circumstances.

The default rate of US Prime was confirmed as appropriate for dollar-denominated awards, rejecting insurers' arguments for a reduced rate based on AerCap's actual borrowing costs. The court noted that defendants wishing to contend for rates below Prime must properly plead such a case, which had not occurred here.

Compound interest was refused. Whilst acknowledging commercial reality, the court found no adequate pleading or proof that losses should be calculated by reference to compound borrowing costs. Simple interest at US Prime under section 35A of the Senior Courts Act 1981 was deemed just.

Costs determinations

The costs analysis required careful consideration of the parties' respective successes and failures across multiple issues. AerCap recovered 65% of its costs from war risks insurers, reflecting its success overall but accounting for its primary case on peril having aligned with those insurers.

All risks insurers succeeded against AerCap but with a 10% reduction for unsuccessful arguments on non-peril issues. They were awarded 90% of their costs, with 65% recoverable directly from war risks insurers by Sanderson order and 35% from AerCap.

The court rejected arguments that war risks insurers' liability for costs should be joint and several, instead ordering several liability based on respective policy lines, though with liberty to apply if non-payment occurred.

Payments on account were ordered conservatively given concerns about proportionality, particularly regarding AerCap's £81 million total costs claim, which the court described as raising "unusually serious issues".

Permission to appeal refused

War risks insurers' 23 grounds of appeal and Chubb's 5 grounds were refused. The court emphasised the high threshold for appeals from detailed fact-finding exercises, noting that the trial was "not a dress rehearsal" and that appellate courts should not "island hop" through extensive evidence.

Many grounds amounted to challenges to factual findings or evaluations of expert evidence, areas where appellate intervention is rare. The subsequent settlement of the DAE and Merx claims removed several potentially stronger grounds.

The court found no realistic prospect of success on construction issues, causation findings or loss determinations, and identified no compelling reason warranting appeal given the desirability of market certainty before forthcoming related proceedings.