Fidelis’ Irish arm joined AerCap’s $3.5 billion lawsuit over seized jets in Russia

An Irish arm of international specialty insurer Fidelis has been cleared by the High Court in London to act as a defendant in a £3.5bn lawsuit.

The lessor made the insurance claim after 116 of its jets and 23 engines were seized after Russia invaded Ukraine.

The court had hinted earlier this month that it would join Fidelis and upheld the decision in a published judgment this week.

AerCap, of which Gus Kelly is CEO, sued insurance giants AIG and Lloyds last summer after insurers refused to honor the landlord’s claims. The leasing company is the world’s largest aircraft lessor.

After Russia invaded Ukraine last February, the European Union imposed a series of sanctions on Russia. These included banning lessors from leasing aircraft and parts to Russian airlines.

AerCap told its Russian leasing customers in early March that they would have to return all leased assets.

However, Russia effectively confiscated the aircraft from AerCap and other lessors.

On March 24 last year, AerCap filed a lawsuit with its insurers for nearly $3.5 billion for the alleged total loss of 116 aircraft and 23 engines that the lessees failed to return, despite AerCap’s requests.

Insurers did not accept AerCap’s claims, and the landlord filed a lawsuit against them in June.

Insurance companies have argued that they don’t have to pay for the AerCap damage because the jets and engines could ultimately be returned to the lessor.

Fidelis is one of several insurers who have signed sections of the relevant insurance policy from AIG and Lloyds.

The war led to a series of legal claims between landlords and insurance companies, as well as between landlords and Russian airlines.

“Fidelis has good reason to want to defend itself,” said the High Court judge hearing the insurer’s application.

“Specifically, she wants to maintain a consistent position across her business portfolio: that is, there is no damage within the scope of the policy or similar contingent policies, but if there is, it was caused by an all-risk hazard,” Justice Butcher noted.

He added, “Additionally, in Florida and California, Fidelis or its affiliates are facing allegations of bad faith that appear to be based in part on the representative defense filed on behalf of Fidelis and others in the present lawsuit, as they their stance in the US litigation.”

AerCap initially had no objection to Fidelis conducting its own defense provided neither AIG nor Lloyds objected. But AIG ultimately disagreed, and on that basis, AerCap disagreed with Fidelis conducting its own defense.

“AerCap has made it clear that it is their ‘single concern’ to ensure the process is carried out in the most efficient manner possible and that if Fidelis’ accession must not result in duplication and waste, they have not objected” , the court stated .

AIG had objected to Fidelis joining as a defendant, arguing that Fidelis did not qualify for joining as a party and could be represented by Lloyds in the action.