SMBC and Avolon challenge Russian carriers in Irish courts

  • Western sanctions on Russia following Moscow's Ukraine invasion resulted in over 400 planes being grounded, leading to lease terminations.
  • As the trial date is set for June 4, 2024, logistical challenges arise, particularly in finding a sufficiently large venue in Ireland.
  • AerCap's CFO communicates the delicacy and uncertainty surrounding potential settlements with Russian insurers.

DUBLIN — Major aircraft lessors and insurers globally are bracing themselves for a courtroom showdown scheduled for June 2024. This litigation pertains to the contested insurance claims over aircraft that remain grounded in Russia, as revealed by a representative lawyer for the lessors. The trigger behind this dispute was the Western sanctions imposed on Russia in response to Moscow's aggressive actions in Ukraine, subsequently causing more than 400 aircraft to stay grounded and prompting the termination of several leases.

Among those pursuing legal recourse are the world's second and third largest lessors, SMBC and Avolon. Other key players joining them include BOC Aviation, CDB Aviation, Nordic Aviation Capital, and Carlyle Aviation Partners. Their claims are being processed in Ireland, which holds the distinction of owning or managing over 60% of the world's leased aircraft. Kelley Smith, legal counsel for Avolon, confirmed during a hearing that all involved entities are targeting a trial commencement date of June 4, 2024. However, certain logistical nuances need to be ironed out before this, notably securing an appropriate venue. Smith foresees around 180 attendees present daily at the trial, presenting a significant challenge. This was also highlighted by Justice Denis McDonald, who had previously remarked on the absence of any Irish court spacious enough to accommodate such a hearing.

In a parallel development, the globe's premier aircraft lessor, AerCap, headquartered in Ireland, has chosen to advance its insurance claims through London's esteemed High Court. Shedding light on the ongoing situation, AerCap's Chief Financial Officer, Peter Juhas, divulged that the firm remains engaged in dialogues with Russian insurance entities. This conversation focuses on potentially striking a settlement regarding the aircraft that are still stranded within Russian boundaries. But Juhas emphasized the need for discretion, noting, "Given the sensitive nature of those discussions and the uncertainty regarding any potential recovery, we're not going to comment further."