The two previous lessons showed a sanction from one's own side that found no policy. This one shows the case where it does find one, and it is the largest loss the market has paid for a political event with no physical damage at all. On February 25, 2022, Regulation (EU) 2022/328 inserted an Article 3c into Regulation No 833/2014: it prohibited selling, supplying, transferring or exporting aircraft and their parts to Russia or for use there, and it counted leasing as supply. Leases concluded before February 26 could be performed until March 28, 2022 at the latest. After that date, a European lessor was no longer allowed to leave its aircraft with a Russian airline: it had to terminate and demand the aircraft back.
Russia responded within days. On March 5, its Federal Air Transport Agency advised airlines to stop flying leased aircraft abroad. On March 10, Russian Government Resolution 311 banned the export from Russia of a list of goods that included aircraft, and a law soon allowed them to be registered in Russia. Russia is nonetheless a party to the 2001 Cape Town Convention, which organizes the repossession of an aircraft by its creditor, but those acts neutralized its effect. None of them seized, confiscated or destroyed an aircraft: they prevented return. The regulation affected some six hundred aircraft leased to Russian airlines; about four hundred were still in Russia after March 28. The world's largest lessor alone took a charge of about 2.7 billion dollars on its stranded aircraft.
To understand who had to pay, one must see how a leased aircraft is insured, on two levels. The lease requires the airline to insure the aircraft, for hull and for war risks; the lessor enters those policies through an endorsement, AVN 67B or its variant, which makes it an additional insured and the loss payee in a total loss. Those policies were written by Russian insurers, under Russian law, and partly reinsured in London. The lessor also buys its own policy, known as contingent and possessed: its contingent part responds when the airline's policy fails to pay although it should have, its possessed part covers the aircraft once the lessor has taken it back. Each part exists in an all risks and a war risks version, with different underwriters. The first level depended on insurers subject to the state that was holding the aircraft. The second remained.
The two sections of that second level then passed the loss back and forth. An aircraft all risks policy excludes, through the standard clause AVN 48B and its paragraph (e), confiscation, nationalization, seizure, restraint, detention, appropriation or requisition by order of any government or public authority; the war risks policy takes those perils back almost word for word. The war risks insurers argued that the aircraft had been lost through a commercial decision of the airlines, which chose to keep them, and therefore through an operator's act falling under all risks. The all risks insurers argued the reverse: the cause was an order of the Russian state, therefore a restraint, therefore a war risk. The amount kept the argument alive: the six actions tried together in London concerned 147 aircraft, 16 engines and one item of equipment, for more than 4.5 billion dollars of insured value.
On June 11, 2025, after fifty days of hearings, Mr Justice Butcher of the Commercial Court in London ruled ([2025] EWHC 1430 (Comm)). The proximate cause of the loss was an act of the Russian state, Resolution 311, and not a decision of the airlines. A restraint within paragraph (e) requires neither an order legally binding on the lessor nor any physical act on the aircraft: an order by authority that prevents return is enough. The aircraft were treated as restrained from March 5 and lost on March 10, 2022, and the loss fell under the war risks section, which pays the agreed value less the sums the lessors had already received in settlements. Permission to appeal was refused on September 16, 2025.
The lesson for this course lies in the order of the acts. The EU regulation, an act of the lessors' home country, made no aircraft lost: it triggered a demand for return. It was the response of the airline's state, the export ban, that caused the loss, and that is what the policy saw. A sanction from one's own side becomes a loss only when another state responds with an act that holds, takes or prevents, and it is that act that has to be dated and classified. The judgment confirms it by contrast: had the loss been an operator's commercial decision, the all risks section would have borne it. The two previous lessons take their meaning from this: a freeze or a closed market opens no claim as long as the host state has not responded, and they often open one on the day it does.
The second lesson is about underwriting, and it goes beyond aviation. The contingent part had been priced as a niche, because a simultaneous failure of many airlines and their local insurers seemed improbable. Sanctions produced exactly that correlated failure: a single act of state triggered hundreds of policies on the same day, across every lessor, in a war risks market that was unknowingly carrying a political loss with no physical damage. The accumulation key was not the aircraft, it was the state. And the story is not over: the trial of the claims against the reinsurers of the Russian airlines' policies, more than 12 billion dollars, opens in London in October 2026, the Commercial Court having accepted jurisdiction in March 2024 despite the Russian jurisdiction clauses.
An Irish lessor leased a narrow-body aircraft to a Russian airline in 2019, at an agreed value of 38 million dollars. The lease requires the airline to insure the aircraft for hull and war risks; its policy, written by a Russian insurer and reinsured in London, carries an AVN 67B endorsement in the lessor's favor. The lessor also has a contingent and possessed policy, with an all risks section and a war risks section, placed with two different groups of underwriters. It terminates the lease on March 4, 2022 under the EU regulation and demands the aircraft back. The aircraft keeps flying on Russian domestic routes and is registered in Russia in the spring. In 2023, the lessor receives 9 million dollars in a settlement with the Russian insurer. It claims a total loss under its contingent and possessed policy. Which section, which date, what amount?
The section first. The aircraft was neither destroyed nor seized by any physical act, and that is what opened the argument: the airline kept operating it, which looks like a commercial decision, and therefore like an event for the all risks section. The reasoning of the June 2025 judgment leads elsewhere. The airline could not have returned the aircraft in any case, since Resolution 311 of March 10 prohibited its export, and it is that order by authority that is the proximate cause: a restraint within paragraph (e) of clause AVN 48B, excluded from all risks and covered by war risks. The date next. The aircraft was restrained from March 5 and lost on March 10, 2022, not on the day of its Russian registration, which merely followed; that date fixes the policy period and the terms that apply. The amount last. The war risks section pays the agreed value, 38 million dollars, less the 9 million already received from the Russian insurer, so 29 million, since the lessor cannot be indemnified twice for the same loss. What the file teaches beyond the aircraft remains: the termination of March 4, imposed by the Union, made the lessor lose no property. It put the lessor in a position to demand the aircraft back, and it was the Russian state's response that caused the loss the policy saw.
- 01The EU regulation of February 2022 made no aircraft lost: it obliged lessors to demand their return, and it was the Russian response that caused the loss.
- 02A restraint under clause AVN 48B requires neither an order binding on the lessor nor a physical act: an order by authority that prevents return is enough.
- 03The proximate cause retained, Resolution 311 of March 10, 2022, moves the loss from all risks to war risks.
- 04The war risks section pays the agreed value less what the lessor has already received in settlements.
- 05The accumulation key of a contingent cover is the state, not the aircraft: a single act triggered hundreds of policies on the same day.