Aercap Ireland Capital Designated Activity Company and Others v PJSC Insurance Company Universalna and Others

Hearing dates: 19, 20 and 21 March 2024

Further written submissions: 25 March 2024

Draft judgment circulated to parties: 23 May 2024

Approved Judgment

(A) INTRODUCTION

This judgment concerns challenges to the jurisdiction of the English court to hear claims under Operator Policies in respect of aircraft which have remained in Ukraine following the Russian Federation's February 2022 invasion of Ukraine. The Claimants are owners and lessors, financing banks or other persons with an interest in aircraft and/or aircraft engines which were leased (with one exception) to Ukrainian airlines under leases governed by English or Irish law.

The defendants represented on these applications (“ the Defendants”) apply to set aside the relevant claim forms, alternatively for a stay of the proceedings, on the basis that the Claimants' claims have been issued in breach of exclusive jurisdiction clauses (“ EJCs”) in favour of the courts of Ukraine.

It is common ground that the English court will stay proceedings brought in England in breach of an EJC in favour of an overseas court, unless the claimant can satisfy the court that “ strong reasons” exist to allow them to continue ( Donohue v Armco Inc[2002] 1 All ER 749 §§ 24–25).

The Claimants dispute that the proceedings are brought in breach of EJCs, and in the alternative contend that there are strong reasons for allowing the cases to proceed here. The Claimants contest the applications on three main grounds:

i) that the EJCs are not binding on the Claimants and/or applicable to the claims which they advance;

ii) that the EJCs are unenforceable because they fail to specify a specific Ukrainian court; and

iii) that even if the EJCs are enforceable, binding, and applicable to the Claimants in respect of any of their claims, there are strong reasons not to enforce them by staying the proceedings.

In summary, the Defendants' position is that:

i) the EJCs apply to the Claimants in respect of all of the claims made and are enforceable notwithstanding the matters relied on by the Claimants; and

ii) the factors relied upon by the Claimants as ‘strong reasons’ do not come close to surmounting the high bar required to justify the claims proceeding in England despite EJCs nominating the courts of Ukraine.

There is, in addition, a debate about whether the Defendants are entitled to argue on these applications that, quite apart from the EJCs, Ukraine is clearly the more convenient forum for resolution of these disputes; and, if so, whether or not that is the case.

To the extent that this judgment reaches, or might be construed as reaching, conclusions on factual matters, particularly any of relevance or potential relevance to the underlying merits of the claims, all such findings are provisional only and are made solely for the purposes of the present applications (cf Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV[2019] 1 WLR 3514 § 79).

I have come to the conclusion that the EJCs are binding on the Claimants and enforceable, and apply to all their claims; and that there are not strong reasons to allow the claims nonetheless to proceed here. The claims must therefore be stayed (if not struck out). I shall hear counsel on the appropriate form of relief.

(B) BACKGROUND

(1) The claims

(a) AerCap

The AerCap Claims are:

i) Case CL-2023-000547 (the “ AerCap/Azur Claim”) brought by AerCap Ireland Capital Designated Activity Company (“ AerCap Capital”), and

ii) Case CL-2023-000679 (the “ AerCap/Celestial Claim”) brought by Celestial Aviation Trading 69 Limited (“ Celestial”).

AerCap Capital is the lessor of a Boeing 777–300ER that was leased to Azur Air LLC (a Russian domiciled entity). The lease was novated to Azex Leasing Limited (“ Azex”) (an Irish entity). The aircraft was subleased to Skyline Express Airlines LLC, formerly Azur Air Ukraine Airlines LLC (“ Azur”), a Ukrainian airline. Azur is the insured under the relevant insurance arrangements. AerCap Capital brings its claim against:

i) PJSC Insurance Company Universalna (“ Universalna”), the Ukrainian insurer who underwrote the insurance policy, and

ii) the reinsurers who reinsured 99.99% of the risk pursuant to an Airline Hull (Including Spares and Equipment) and Hull Total Loss Only War and Allied Perils Insurance and Reinsurance policy with unique market reference number B1752GE2100345000 (“ the FIN Group Policy”).

The Defendant reinsurers subscribing to the FIN Group Policy who challenge the jurisdiction are Lloyd's syndicates or insurance companies domiciled or with branches in England. The lead reinsurers are Lloyd's Syndicate 1880 TMK and Lloyd's Syndicate 510 KLN, which are managed by Tokio Marine Kiln Syndicates Limited, a Lloyd's managing agent domiciled in London.

Celestial is the lessor of an Embraer EMB195-LR that was leased to PJSC Ukraine International Airlines (“ UIA”), a Ukrainian airline which is the insured under the relevant insurance arrangements. Celestial brings its claim against:

i) PJSC BUSIN Insurance Company (“ Busin”), the Ukrainian insurer who underwrote the insurance policy, and

ii) the reinsurers who reinsured 99.99% of the risk pursuant to the FIN Group Policy.

The AerCap Claimants each assert claims as:

i) an “ Additional Insured” under the insurance policies between the lessee and the insurer, and

ii) “ an additional insured and/or as the person to whom settlement must be made under and/or pursuant to a cut-through clause” or “ CTC” contained in the FIN Group Policy.

Universalna and Busin are named as defendants to the claims but have not yet been served with the proceedings.

(b) Genesis

The Genesis Claim is Case CL-2023-000445, brought by Genesis Ireland Aviation Trading 3 Limited (“ Genesis”).

Genesis claims as owner and lessor of an Airbus A320–214 that was leased to Wind...