INSURANCE: An Introduction

Russian Aircraft Litigation

The insurance litigation scene in 2024 has been dominated by the Russian aircraft litigation that has arisen in the shadow of the Russian invasion of Ukraine, following which Western-leased aircraft worth billions of dollars have not been returned to their lessors, who have claimed under their contingent and possessed insurances. This has given rise to a multi-billion-dollar dispute between the policyholders and their all risks and war risks insurers. The trial before Butcher J began in October 2024 and was due to finish at the end of December, but due to the unfortunate illness of the judge it will in fact be completed in February 2025. The essential issue in the case is whether, if the aircraft are total losses, liability falls to the all risks or the war risks insurers. That turns, in essence, on whether the aircraft were lost as a result of the actions of the Russian government or a series of decisions by the Russian airlines to keep the aircraft.

In addition to claims under the contingent and possessed (C&P) policies, there are also claims under the aircraft operator policies, most of which are subject to Russian law and jurisdiction. Claims were brought under those policies by the lessors, and this gave rise to a jurisdiction challenge heard by Henshaw J in February 2024. In short, Henshaw J accepted that the Commercial Court had jurisdiction over the claims, and they are therefore due to proceed in the Commercial Court in 2025. However, the fate of these claims may well depend upon the outcome of the trial before Butcher J. This will become clear during the course of 2025. Taken together, the Russian aircraft litigation ranks amongst the highest-value and most significant insurance litigation in the history of the Commercial Court.

COVID-19 Business Interruption Claims

The volume of litigation arising from the COVID-19 pandemic has slowed somewhat, but there was still substantial work relating to it. This included important appeals (heard together) against arbitration awards in Covea v Unipol / Markel v General Reinsurance AG [2024] EWHC 253. These appeals concerned reinsurance collections of COVID-19 business interruption (BI) claims and in particular the effect of the “hours clause”, which has existed in the market in property reinsurance in its current form since the late 1960s. There was also a significant Court of Appeal judgment about BI coverage which contained a damage requirement in Bellini NE Ltd v Brit [2024] Bus. L.R. 1611. The judgment of the Master of the Rolls contains important statements of principle about contractual construction.

Two further COVID-19 BI test cases were also completed during the course of the year. The first, Gatwick Investment Ltd v Liberty Mutual Insurance [2024] EWHC 124 (Comm), was a test case on prevention of access clauses. There was also an important Court of Appeal judgment which dismissed the appeal against the judgment in London International Exhibition Centre v Allianz [2024] EWCA Civ 1026, which was the culmination of the “at the premises” test case.

Other Significant Cases

Aside from aviation and COVID-19, a significant marine insurance dispute was decided in Delos v Allianz [2024] 1 Lloyd's Rep 489. This was a constructive total loss (CTL) claim for the detention of the MV Win Win. The judgment contains important statements about the duty of fair presentation under the Insurance Act, as well as issues concerning fortuity, the scope and applicability of an exclusion for customs, and quarantine detentions. There is an appeal outstanding which is due to be heard in 2025.

Another significant and interesting insurance case which did not involve COVID-19 or aircraft was Hamilton Corporate Member v Afghan Global Insurance Ltd [2024] EWHC 1426 – a dispute arising from the loss of a warehouse formerly used to supply US troops to the Taliban in August 2021, when the US withdrew from Afghanistan. The case considered the scope of cover under a political violence policy and specifically the meaning of “physical loss and damage” in this context.

A potentially significant appeal to the Supreme Court about insurable interest in Quadra Commodities v XL Insurance [2023] EWCA Civ 432 was due to be heard in June, but it settled shortly before the hearing.

Looking Ahead

Looking ahead to 2025, the most significant development is likely to be the conclusion of the Russian aircraft trial before Butcher J in February. As noted above, this seems likely to have a knock-on effect on the claims brought under operator policies, the fate of which will be revealed later in 2025. The wider (re)insurance implications of the Russian aircraft litigation are likely to be felt for several years to come, as with the COGID-19 BI litigation. In addition to this, there are potentially significant insurance disputes in the early stages involving warranty and indemnity insurance, the Nord Stream pipeline and satellite insurance, amongst other emerging areas.