LONDON (Reuters) - More than 40 aviation leasing firms, locked in a battle with insurers over who should bear up to $10 billion in costs for 400 jets stuck in Russia, are urging the High Court to allow a reinsurance dispute to be heard in London, not Moscow.
Lessors have not received any insurance payments for planes stranded following sanctions on Russia, and are suing insurers across several jurisdictions, including London.
London's High Court is next year due to hear five cases involving lessors including AerCap and Dubai Aerospace Enterprise over what are known as contingent insurance policies.
But lessors are separately challenging the jurisdiction for reinsurance disputes, which reinsurers say should be heard in Russia.
In the reinsurance cases, Russian airlines leased the planes through the international lessors and insured them through Russian insurers. Those policies were then reinsured through global firms such as AIG (NYSE:AIG) and Lloyd's of London. Lessors were also covered by these policies.
The reinsurers say these claims should be heard in Russia on the basis of jurisdiction clauses in the reinsurance policies naming Russian courts for any dispute, according to court documents submitted for a case management hearing on Friday.
The lessors, including AerCap and Carlyle Aviation Partners, say it will not be possible to get "substantial justice" in Russia, according to court documents.
"To...insist the cases should be heard in Moscow is not only completely unworkable given the grave situation that exists today, it is also a gross exploitation of Russia’s invasion of Ukraine and further avoids paying out on legitimate claims,” a spokesperson for Carlyle said in an emailed statement.
A legal source cited Russia's decision to call its invasion of Ukraine a "special military operation" rather than a war. Some of the reinsurance claims are for war risk.
Sanctions would also make getting legal experts to Russia for any trial difficult, the source aded.
Lessors and Russian airlines are also continuing talks behind the scenes about selling the lessors' stranded jets to the airlines to resolve the dispute more quickly, a second legal source and an insurance source said. The sources declined to be named, citing confidentiality.
Such a deal should be possible under the current European Union sanctions regime, this legal source said, adding that 60-70 cents to the dollar might be a level at which such a commercial deal could be agreed.