The High Court has declined to hear a dispute over aircraft which have been grounded in Ukraine following Russia’s invasion. It followed arguments that the case could not be heard in Ukraine due to power outages in Kyiv caused by Russian shelling.

The claims are being brought by a group of owners and lessors, financing banks or other persons with an interest in aircraft and/or aircraft engines which were mainly leased to Ukrainian airlines under leases governed by English or Irish law, the court heard. The defendants to the claims, insurance companies, argued that a hearing in an English court would breach exclusive jurisdiction clauses in favour of the courts of Ukraine.

The claimants argued there was an ongoing risk of power outages impacting on the functioning of the courts and Ukrainian lawyers since Russia’s invasion of Ukraine in February 2022.

It was also common ground the the Ukrainian courts have a backlog of cases - including 654 unresolved insurance cases in 2022 - and problems with understaffing which existed before the war but which the claimants argued had been exacerbated since.

Some of the claimants alleged the defendants’ reliance on the jurisdiction clauses was an attempt to take advantage of the difficulties and delays in the Ukrainian court. It was pointed out that the defendants are reinsurers operating in the London market and domiciled in England or Ireland with no material connection to Ukraine.

But in Aercap Ireland v PJSC Insurance Mr Justice Henshaw concluded there was ‘no sufficient basis on which to infer bad faith or abuse’, but said there were ‘cogent reasons’ why the defendants may legitimately want the cases heard in Ukraine. These included ‘the importance of Ukrainian law to the issues and availability of appeals, the location of evidence and witnesses, the avoidance of duplicative litigation’, the judge explained. 

As well as ‘the desirability of the Ukrainian insurers’ knowledge and experience being brought to bear in the same proceedings in which the defendants are sued, and likely lower legal costs in Ukraine’.

The judge said: 'The defendants have the better of the argument that the exclusive jurisdiction clauses in the reinsurance contracts are binding and enforceable.'

 

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