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Zephyrus Aviation Partners v Fidelis Underwriting Limited [2024] EWHC 734 (Comm)

2nd Apr 2024

The Commercial Court has handed down judgment in Zephyrus Aviation Partners v Fidelis Underwriting Limited [2024] EWHC 734 (Comm), dismissing jurisdiction challenges brought by aviation reinsurers relying on Russian exclusive jurisdiction clauses. Henshaw J held that (among other things) the claimants were unlikely to obtain a fair trial in Russia.

The claimants are owners of aircraft which were leased to Russian airlines. The aircraft were insured by the airlines with Russian insurers and reinsured in the London and international market.

Following Russia’s invasion of Ukraine in February 2022, the claimants terminated the leasing of the aircraft and demanded their return. However, the Russian airlines failed to return the aircraft. Two years later, those aircraft remain in Russia.

The claimants brought claims in the Commercial Court against the insurers and the reinsurers of the aircraft, seeking a total sum of c.US$10 billion. Initially, all of the reinsurers challenged the jurisdiction of the English court, relying on exclusive jurisdiction clauses in favour of the Russian courts. By the date of the hearing, most of the all risks reinsurers had submitted to the jurisdiction, but the war risks markets – with a few exceptions – maintained their challenges. A four-day hearing took place from 7 February 2024.

In a judgment handed down on 28 March 2024, Henshaw J dismissed the reinsurers’ jurisdiction challenges, holding that there were strong reasons not to enforce the Russian jurisdiction clauses. The principal basis for the Judge’s conclusion was that the claimants were unlikely to obtain a fair trial in Russia, including because the Russian courts would be unlikely to objectively determine whether the loss of the aircraft was caused by war perils; the Russian state had an interest in the outcome of the litigation; and the claimants are from what the Russian state considers to be “Unfriendly Foreign States”. The Judge also considered that there would be a risk of inconsistent findings if the claimants’ claims were to proceed in Russia.

Stephen Hofmeyr KC, Michael Holmes KC, Josephine Higgs KC, Sarah Martin, Stephen Du, Henry Moore and Douglas Grant acted for the lead group of claimants, instructed by Paul Mesquitta, Peter Sharp and David Waldron of Morgan Lewis & Bockius UK LLP.

Alistair Schaff KC, Alexander MacDonald and Frederick Alliott for another group of claimants, instructed by Julian Acratopulo and Philip Hill of Clifford Chance.

John Bignall acted for certain Hull All Risks Defendants, instructed by DLA Piper.

The judgment is available here.