AerCap Ireland Limited v AIG and others [2023] EWHC 96 (Comm)

Dominic Kendrick KC, Peter MacDonald Eggers KC and Rebecca Jacobs acted for Fidelis Insurance Ireland DAC (“Fidelis”) in its successful application to be joined as a defendant to the proceedings.  The Court’s judgment on the application contains an important restatement of the nature and purpose of the rules regarding joinder of parties and representative actions under CPR Part 19.

Following Russia’s invasion of Ukraine, AerCap Ireland Limited (“AerCap”), the world’s largest aircraft leasing company, sought to terminate its leases with Russian airlines. Its aircraft have not yet been returned. AerCap issued proceedings for a claim under its contingent aviation insurance policy (the “Policy”) for the total loss of its aircraft, claiming US$3.5 billion under the All Risks Section, alternatively US$1.2 billion (the aggregate limit) under the War Risks Section.

Fidelis is an insurer under both sections of the Policy. AerCap chose to commence its proceedings using the representative procedure in CPR rule 19.6, suing one insurer (AIG) as representative of the others under the All Risks Section, and one insurer (LIC) as representative of the insurers under the War Risks Section. Fidelis wished to be allowed to conduct its own defence and therefore applied to leave the representative structure and to be joined as a separate defendant in the proceedings. Its application to do so was opposed by AIG. AerCap did not consent.

Butcher J granted Fidelis’ application. Accepting Fidelis’ submissions he held, adopting the reasoning of Proudman J in PNPF Trust Co Ltd v Taylor [2009] EWHC 1693 (Ch) and a line of authority cited therein, that the rules which allow one defendant to be sued as representative of others are not intended to preclude a defendant from being able to conduct its own defence at its own risk as to costs. As made clear by Proudman J, it is only in exceptional circumstances that a party with substantial sums at stake should be forced, against its will, to remain part of a representative class. There were no such circumstances here.

It was not necessary for Fidelis to show, as had been submitted by AIG and AerCap, that it could ‘bring something to the party’, or that it had a ‘sufficiently different and differentiated perspective’ from its representatives, in order to be allowed to represent itself. However, even if that was the test, it was satisfied, given Fidelis’ desire to adopt a consistent position across its War Risks and All Risks exposures in all litigation in which it is involved, both here and in other jurisdictions.

The Judgment is therefore an important clarification of the purpose of representative proceedings and joinder of parties in an insurance context: particularly that the rules which enable one insurer to be sued as representative of others do not prevent an insurer which faces a significant potential liability from representing itself where it wishes to do so.

Dominic Kendrick KC, Peter MacDonald Eggers KC and Rebecca Jacobs were instructed by Naomi Vary and Paul Baker at RPC.

Please click [here] to view a copy of the Judgment.