AerCap v AIG (TPD)

Hearing date: 19 January 2024

APPROVED JUDGMENT

This judgment was handed down by the court remotely by circulation to the parties' representatives by email and released to The National Archives. The date and time for hand-down is deemed to be 29 January 2024 at 10.30am

This judgment relates to an application by the Claimant (‘AerCap’) for third party disclosure under CPR PD57AD para. 31.17.

Introduction

In these proceedings AerCap has made claims against insurers of its Contingent and Possessed policy in respect of 116 Aircraft and 23 Engines which have not been returned by Russian airline lessees following the invasion of Ukraine. This is one of what have been called the ‘Lessor Policy’ or ‘LP Claims’ which are proceeding before this court. Separately, AerCap has also submitted claims in respect of the same Aircraft and Engines under the policies of insurance obtained by AerCap's Lessees (the Russian airline operators) from, usually Russian, insurers and under policies of reinsurance obtained by those insurers. These policies have been called the ‘Operator Insurance Policies’ and the ‘Operator Reinsurance Policies’ respectively, and, together, the ‘Operator Policies’. AerCap's claims under the Operator Policies are made on the basis that it is or claims to be an additional insured under the Operator Insurance Policies and/or on the basis of a ‘cut-through’ clause in the Operator Reinsurance Policies. AerCap has commenced proceedings in respect of its claims under the Operator Policies, and those actions, together with other claims brought by different aircraft lessors under further operator policies, are proceeding in this court. They have been referred to as the ‘OP Claims’.

The Respondents to this application are brokers in relation to certain of the Operator Reinsurance Policies relevant to AerCap. The Policies in question are listed in Schedule 1 to the draft Order. By this application AerCap seeks an order for disclosure by the Respondents of copies of (a) documents constituting and evidencing the contracts of insurance and reinsurance under the relevant Operator Policies, and (b) any notices purporting to amend or cancel cover on or after 24 February 2022 and any responses thereto given by the reinsurers in relation to the cover provided under the relevant Operator Policies.

The application is not opposed by the Second to Fourth Respondents, although they wish an order to be made. It is opposed by the First Respondent (‘McGill’), principally based on concerns that provision of the documents by it might contravene applicable sanctions.

McGill's role

McGill's role was as follows. From 2 November 2020, McGill acted as a reinsurance placing broker for Sealine Insurance Brokers Ltd (‘Sealine’), a local Russian insurance and reinsurance producing broker. In 2021 Sealine acted as the reinsurance producing broker for three Russian insurance companies, namely AlfaStrakhovanie JSC, Insurance Company of Gaz Industry, and Ingosstrakh Insurance Company, for the placement of various aviation-related reinsurance policies, which were a sub-set of the Operator Reinsurance Policies referred to above. In turn, Sealine, as producing broker, instructed McGill as placing broker to place certain of the Operator Reinsurance Policies. The reinsurance requirements of the Russian reinsureds on the relevant Operator Reinsurance Policies were communicated to McGill by Sealine, and then reinsurances were placed by McGill on Sealine's instructions. Those reinsurances were placed with various non-Russian reinsurers, including London market and international reinsurers.

Background to the application

AerCap requested copies of the documents in question from McGill in early 2022. McGill raised the issue of whether what was then being sought amounted to the provision of insurance intermediation services or services auxiliary to insurance contrary to regulation 29A of the Russia (Sanctions) (EU Exit) Regulations 2019 (‘the Regulations’).

On 24 June 2022, AerCap wrote to McGill, drawing to its attention updated guidance from the FCDO, to the effect that the Regulations did not prohibit the provision of insurance services in circumstances ‘where the insurance is for the benefit of the non-Russian owner of the items, rather than their user or operator. Nor does it apply where the items either remain in Russia as a result of the termination of a lease and against the lessor's will; or are being flown out of Russia in the process of returning them to their owner’.

On 29 July 2022, the Export Control Joint Unit (‘ECJU’) quoted that guidance in response to a request from McGill for clarification as to whether provision of the documents sought would breach sanctions. The ECJU said: ‘From the information you provided it appears that the guidance applies to the situation you describe, however it will be for you to determine that your actions are compliant with this guidance.’

McGill remained concerned. AerCap then wrote to the ECJU on 8 August 2022 and received a response on 15 September 2022. The ECJU said that: ‘In our view, providing copies of contracts to prove that insurance was in place is not an act of providing insurance/reinsurance, therefore this activity is not likely to fall within the scope of regulations 28 and 29A’. The ECJU added that it could not provide licensing advice by email or phone and that if the recipient was unsure about any aspect of the Regulations it should seek independent advice or submit a licence application as appropriate.

On 18 April 2023, in the context of a different LP Claim (albeit one which is being managed with the present LP Claim), I granted an unopposed application for disclosure of lessee airline contracts of insurance and reinsurance brought by Dubai Aerospace Enterprise Ltd against the Second Respondent. AerCap thereafter renewed its request for documents from McGill. On 2 May 2023 McGill responded that it was still of the view that it could not provide the documents, owing to the same concerns as to sanctions previously expressed. It said that it intended to submit a further guidance request to the ECJU. On 7 June 2023, McGill received a response from the ECJU to this further request. This was to the effect that the ECJU could not provide legal advice, nor could it comment by email on whether a particular scenario was licensable; and that if McGill considered that its activities might need a licence, an application should be made through SPIRE. McGill's evidence is that it did not consider that it was appropriate to use the licence procedure to seek to determine whether an activity was licensable, or to make an application for a licence at its own cost.

On 23 June 2023 AerCap sent a draft version of the application to the Respondents and asked for confirmation that they would not oppose it. McGill continued its opposition, and AerCap served the current application on 4 October 2023.

The Requirements of CPR PD 57AD

CPR PD 57AD para. 31.17 provides:

‘31.17 (1) This rule applies where an application is made to the court under any Act for disclosure by a person who is not a party to the proceedings.

(2) The application must be supported by evidence.

(3) The court may make an order under this rule only where—

(a) the documents of which disclosure is sought are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings; and

(b) disclosure is necessary in order to dispose fairly of the proceedings or to save costs.

(4) An order under this rule must –

(a) specify the documents or the classes of documents which the respondent must disclose; and

(b) require the respondent, when making disclosure, to specify any of those documents –

(i) which are no longer in his control; or

(ii) in respect of which he claims a right or duty to withhold inspection.

…’

AerCap contends that the documents sought on the present application fall within sub-paragraph (3) of paragraph 31.17, on the following bases:

(1) That the Defendants in the action allege that the contingent coverage in both Section One and Section Three of its Contingent and Possessed Policy only responds in respect of losses which would fall within the scope of the policies taken out by lessees, and that there has been no such loss in this case. AerCap denies that construction, but if it is correct it will be necessary to investigate the scope of those lessee policies.

(2) Secondly, the Defendants allege that they are only liable under the possessed coverage in both Section One and Section Three of the Contingent and Possessed Policy insofar as there are no...