(Article from Insurance Law Alert, June 2026)
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Holding
The English Commercial Court struck out and granted summary judgment dismissing contribution claims brought by two contingent war risk insurers against primary war risk reinsurers, holding that the contingent reinsurers’ claims were for subrogation, not contribution. The Russian Aircraft Litig. – Operator Policy Claims [2026] EWHC 1134 (Comm) (13 May 2026).
Background
This dispute arose following Butcher J’s judgment in Re Russian Aircraft Policy Claims [2025] EWHC 1430 (Comm), which concerned claims by AerCap and Merx, aircraft leasing companies that owned aircraft and engines leased to Russian airlines. Following Russia’s invasion of Ukraine in February 2022, AerCap and Merx sought coverage under insurance policies taken out to protect their interests as lessors (the “Lessor Policies”). Pursuant to the Butcher J judgment, two Lessor Policy insurers together paid over US$340 million to AerCap and Merx.
Having paid their share of the judgment, those two Lessor Policy insurers then brought contribution claims against the war risk reinsurers of insurance policies taken out by the lessees, or operators, of the aircraft (the “Operator Policies”), contending that those Operator Policy reinsurers bore primary responsibility for the loss. The claims rested on: (i) indemnity principles applicable where a secondary obligor discharges a primary obligor’s liability; (ii) double insurance; and (iii) the Civil Liability and Contribution Act 1978. The Operator Policy reinsurers applied to strike out the claims, or for summary judgment.
Decision
The court struck out the contribution claims on all three bases.
On indemnity and reimbursement, the Court held that payments made by the Lessor Policy insurers did not discharge any liability owed by the Operator Policy reinsurers under the Operator Policies. Applying the fundamental principle that a payment by an insurer to its insured is a matter between those two parties alone and does not discharge any third-party liability, the Court held that the paying insurer’s remedy must lie in subrogation rather than a direct claim.
The Court next rejected the attempt by the Lessor Policy insurers to characterize the case as one approximating double insurance, or in the alternative, as something similar to a guarantee as “both novel and wrong in principle.” Double insurance requires co-ordinate liability between insurers, i.e., where each insurer is independently liable to the same insured for the same loss, with the insured free to choose which to claim against. The Court found that the Lessor Policies were contingent, not co-ordinate: they only responded because the Operator Policies had failed to pay, the lessors had no free choice of insurer, and there was no mutuality because the Operator Policy reinsurers could never have claimed contribution from the Lessor Policy insurers.
The Court further held that the Civil Liability and Contribution Act 1978 did not apply because the Operator Policy reinsurers’ alleged liability was based in debt under Russian law and they were therefore not “liable in respect of any damage” as required by the Act. The Court held that the claims would fail in any event because the payments had not discharged the Operator Policy reinsurers’ liability, a necessary precondition for a claim under the Act. The Court also noted that it was inclined to agree with the “bold” submission that the Act would not apply between insurers but declined to decide this given unresolved conflict in Supreme Court decisions on this point.
Comments
The judgment provides clarity on when subrogation, rather than a contribution or indemnity claim, is the appropriate recovery route for a paying insurer against a party it alleges is primarily liable. The practical consequences of that distinction were significant in this case.