Britain preparing for £8BILLION legal battle over 500 planes ‘stolen’ by Putin

'Russia will hold out' in Ukraine says Russian TV panellist

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The 336-year-old Lloyd’s of London have reportedly hired law firm Clyde & Co to advise on whether it can “deny” the Kremlin’s attempts to move aircraft to their own register. This move by the Kremlin to move around 500 commercial aircraft is worth up to $10bn (£8bn), by putting the planes out of reach of the leasing companies that own them.

Experts have stated this unilateral move is illegal, and amounts to the Russian state “stealing” aircraft owned by leasing companies based in tax-friendly jurisdictions such as Ireland and the Bahamas.

Lloyd’s boss John Neal said last month the institution was facing some of its biggest losses since 1688, when the world-famous market was founded in a coffee shop.

He added that despite “multi billion-dollar losses,” the situation remained “manageable”.

Aircraft lessors and insurers were sent into a panic ever since Russia retaliated against Western sanctions by seizing all foreign-leased planes in the country.

Moscow did so after the Treasury announced last month Russian companies in the aviation or space industry would be blocked from accessing British-based insurance or reinsurance services directly or indirectly.

Paul Jebely, global head of asset finance at law firm Withers, said: “Simply put, no insurance means no flights. Most aviation risk is insured and reinsured in the Lloyd’s market, and most Russian aviation risk is reinsured there.

“Depriving Russian airlines of access, with apparent immediate effect, is nearly catastrophic for the airlines — as intended.”

The Telegraph reports the world’s biggest aircraft leasing company, AerCap, has also entered the fray, hiring magic circle law firm Clifford Chance to advise on negotiations on claims totalling $3.5bn.

The Dublin-based company plans to claim against the insurance policies held by airline operators such as Aeroflot.

Should they fail to pay out, they will then seek to recoup its losses against its own insurance cover.

The outlet adds that brokers and underwriters are yet to ascertain which parties hold the “risk”, which means they would need to pay out to leasing companies, according to insurance industry sources.

Paul Jebely, global head of asset finance at law firm Withers, said: “[This will] lead to a generation of insurance litigation and arbitration as various hands are forced.

“Resolving insurance coverage disputes requires a sound commercial approach to the parties’ positions, and that frankly is lacking at the moment, on both sides.”

David Warnock-Smith, aviation management professor at Buckinghamshire New University, told City A.M.: “Leasing contracts and agreements do not normally cover sanctions specifically either.

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“Insurance does often cover for losses related to war situations though full coverage in this case is also doubtful.”

Lloyd’s insiders said questions remain as to which insurance firms will foot the bill for the “stolen” planes amid fears syndicates could have ended up insuring each other in a cyclical fashion.

A spokesman for Lloyd’s said: “As the situation is still evolving, it is too early for us to comment on the potential exposure and too early for us to determine the extent specific classes will be affected.

“However, we are approaching this problem in a systematic and thorough way while engaging key stakeholders in the process.”

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