Dublin-based BOC Aviation sues over leased aircraft lost in Russia

Asia’s largest aircraft lessor becomes latest firm to sue insurers over seized aircraft

Dublin aircraft leasing company BOC Aviation (Ireland) has become the latest plane lessor to take legal action over aircraft lost in Russia in the wake of the invasion of Ukraine.

The subsidiary of Singapore-based BOC, the largest aircraft leasing company in Asia, wrote down the value of its assets by $804 million (€774 million) in August relating to 17 aircraft it owns that have been stuck in Russia since the war began.

The company said then that it was unlikely to be able to to recover the jets “in the foreseeable future, if ever” and that it had filed insurance claims to recover losses and would vigorously pursue them.

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High Court records in Dublin show that BOC Aviation and BOC Aviation (Ireland), along with two associated companies, have taken legal proceedings against 16 insurance companies including Lloyd’s of London, Chubb European Group, AIG Europe and Swiss Re.

The proceedings were issued in the High Court on November 3rd.

A spokesman for BOC Aviation declined to comment further on the court filing, saying: “We have nothing to add to that information already in the public domain.”

The Irish Times has contacted the insurers seeking comment on the legal action.

A spokesperson for Lloyd’s of London said: “Lloyd’s is not at liberty to share information on any specific claim, policy or policyholder.”

Irish aircraft leasing companies were among the first businesses to face losses arising from Russia’s invasion of Ukraine, as Moscow re-registered foreign-owned aircraft in Russia and stopped them flying internationally to prevent recovery by their owners.

Lessors need to decide if they want their claims to be at the front of the queue or to be fast followers with less qualified counsel

—  Gifford West, MD, Alpine Tremont

Leasing companies have started chasing claims over multibillion euro losses since losing control of more than 400 leased planes worth almost $10 billion.

The Russian government blocked the aircraft from leaving the country in what was interpreted as retaliatory action after Western countries sanctioned Russia over the invasion of Ukraine.

Irish companies are among the worst affected, with Dublin-based AerCap and Avolon, the world’s two largest aircraft lessors, lodging claims against their insurers and following up with legal action in an attempt to cover their losses.

AerCap took a $3.5 billion legal action in the High Court in London over its insurance claim for more than 100 seized planes, the largest claim by any lessor arising from the Ukrainian conflict.

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The day before BOC Aviation lodged its court action, Avolon took legal action in Dublin against insurers over claims against losses of $261 million (€268 million) after Russia kept 10 of its aircraft.

One Dublin legal source familiar with the upcoming wave of related litigation questioned the capacity of the Commercial Court – the division of the High Court that fast-tracks business disputes – to manage the complex litigation involving multi-jurisdictional issues at speed.

“There will be seven or eight more cases that will file in quick succession,” said the source.

At least seven legal actions have been taken in Ireland, the UK and the US involving 35 or more insurers, with claims approaching $5 billion.

Alpine Tremont, an international adviser on distressed debt and litigation finance, said Dublin was the “logical venue” for many cases, but questioned whether the Irish court can “handle the volume”.

“Lessors need to decide if they want their claims to be at the front of the queue or to be fast followers with less qualified counsel. Which venue gives the best odds in terms of time to resolution and verdict?” said Gifford West, managing director of Alpine Tremont.

“There are at least 50 aircraft lessors exposed to Russia. The number is larger once you factor in engine leases. Before we are done, insurance claims will top $10 billion.”

Simon Carswell

Simon Carswell

Simon Carswell is The Irish Times’s Public Affairs Editor and former Washington correspondent