The Russian Aircraft Litigation – Contribution or subrogation?

Summary

In The Russian Aircraft Litigation - Operator Policy Claims the court dismissed contribution claims made by insurers of contingent war risks against the reinsurers of operator policies which covered the same losses. It was held that this was not a case of double insurance or co-ordinate obligations, whereby co-insurers would seek a contribution from one another, but the meeting by one insurer of primary obligations owed by another. Subrogation was the appropriate route to achieve an indemnity or reimbursement. The 1978 Contribution Act did not apply.

Background

In the 2025 Re Russian Aircraft Policy Claims decision, which we considered in our review of insurance law developments in 2025, a number of insurers of contingent War Risks cover contained within Lessor Policies (or LPs), including Chubb and Fidelis, were found liable to indemnify aircraft lessors for the loss of leased aircraft and/or engines that had been retained within Russia in the aftermath of the 2022 invasion of Ukraine.

In addition to the LP cover, the lessors had potential war risks cover in relation to the lost aircraft under operator policies (Operator Policies, or OPs) that the Russian lessees had been obliged to take out under the terms of the relevant leases. Those policies were (as required under Russian law) placed with Russian insurers but reinsured into the London market on the same terms and containing 'cut through' clauses.

Following the 2025 judgment, a number of insurers paid out significant sums under the contingent cover within the LPs, including Chubb and Fidelis. In essence, the contingent LP cover was found to respond where a claim under the principal policy had been made but not paid. In advance of an October 2026 trial in relation to claims under the OPs, Chubb and Fidelis sought to claim contributions from the defendant (re)insurers of the OPs (the War Risk Underwriters, or WRUs in the judgment), on the basis that the WRUs were primarily liable for the losses under the OPs. Chubb and Fidelis argued that their liability under the contingent cover under the LPs should have been reduced (or would not have arisen) if the WRUs had met their obligations under the OPs.

Key policy terms

The relevant terms of the contingent war risks cover under the LPs for the contribution claims were as follows:

• AerCap's LP (references to "the Principal Insurance" being to the OPs) provides that the contingent cover will respond:
  "(i) in the event that the Insured is not indemnified in whole or in part under the Principal Insurance; or
  (ii) in the event of the lack or insufficiency of required insurance due to error or accidental omission; or
  (iii) in the event of the exhaustion of the aggregate limit under the Principal Insurance."
• Merx's LP provided general cover for aircraft which were not in Merx's possession, subject to the exclusion of:
  • “… loss or damage which is recoverable as a claim from the Principal Policy.” (s.5.5 of the General Exclusions); and
  • “claims which are recoverable under any other policy in favour of the Insured except for any excess beyond the amount which would be payable under such other policy had this Insurance not been effected” (s.6.6)
  • Further, “Under Contingent coverage claims arising from the exhaustion… of the aggregate available under the operator's Hull War insurance are excluded.” The aggregate limit under the Merx LPs was US$300 million.

Contribution claims

Applications by the WRUs to strike out or for summary judgment on those contribution claims succeeded.

The contribution claims had been advanced on various bases, namely:

(i) for reimbursement following discharge by a secondary obligor (the LP insurers) of a primary obligor's (the WRUs’) liability;
(ii) double insurance; and/or
(iii) the Civil Liability and Contribution Act 1978 (the 1978 Act).

We summarise below the court’s reasoning in dealing with Chubb and Fidelis’ arguments and rejecting the contribution claims.

Indemnity/reimbursement

First, the court rejected arguments that the LP insurers were entitled to an indemnity/reimbursement because in meeting their own contingent liability obligations under the LPs they had been discharging the WRU’s primary obligations under the OPs.

The court distinguished the insurer's right of subrogation from his right to claim contribution from a co-indemnitor. Where the obligations are primary, rather than secondary or co-ordinate, then the paying insurer can pursue a subrogated claim in the name of the assured. Only where the payments are not res inter alios acta can an indemnity/ reimbursement or a contribution claim be pursued.

Insurance recoveries are res inter alios acta - they do not discharge the liability of a third party, including an insurer who is primarily liable for the loss, so that the insurer's remedy cannot be a direct cause of action but must, instead, be in subrogation. Citing Arnould, The Law of Marine Insurance and Average, 21st Ed: “the right of subrogation arises where another person is primarily liable to the assured, and the insurer's obligation to indemnify the assured under the contract of insurance is secondary … The right of contribution arises where the liability of the insurer and a third party to the assured are co-ordinate…”.

Here, the court found that the OPs and the LPs were each separate contracts of insurance, under which a contingent insurer had promised to perform its own independent obligation to indemnify on the terms of its own contract if the primary insurance did not respond. Subrogation is the appropriate (or only) route by which an indemnity or reimbursement can be achieved.

Double insurance

The court rejected submissions that this was a double insurance case, drawing a clear distinction between double insurance and contingent cover.

Double insurance entails co-ordinate liability between two or more insurers, where the insurers are each under a liability to the assured (as explored here in relation to the 2025 Watford v AJG decision), and an insured can choose which insurer to claim from. Here, the expressly contingent nature of the LPs cover meant that the assured did not have a free choice whether to sue one or other insurer, and Chubb's and Fidelis's contingent claims are therefore “the "antithesis" of co-ordinate liability.

In addition, for there to be a right to contribution in a double insurance context, there needs to be mutuality. There was no mutuality here as, obviously, the WRUs could not have claimed contribution from Chubb and Fidelis (or any other contingent LP insurer) given that their liability is only triggered in circumstances where the WRUs have not themselves paid.

Civil Liability and Contribution Act 1978

S. 1(1) of the 1978 Act provides that "any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage".

Rejecting the third basis for Chubb and Fidelis’ contribution claims, the court found that the 1978 Act had no application in the present case. It was common ground that a claim under an insurance policy governed by Russian law sounds in debt rather than damages, meaning that the WRUs are not "liable in respect of any damage" for the purposes of s.1(1) of the 1978 Act and have no liability to pay "compensation" (s. 6(1)). Where the payments by the LP insurers have not discharged the liability of the WRUs, the court considered a claim under the 1978 Act to be unavailable.

Commentary

This decision contains useful analysis of the distinction between the discharge by a third party (including a contingent insurer) of primary obligations, and true co-ordinate liability (including double insurance) so as to clarify when subrogation, as opposed to a contribution claim, will be the appropriate route for the paying party to take.

We note that only two of the twenty LP insurers who were found liable to indemnify the lessors in 2025 have brought contribution claims. Subject to the outcome of the October 2026 hearing, it seems likely that the remainder will seek recovery through subrogation. Although counsel for the WRUs suggested that this was effectively just an attempt to “skip the queue to potential reimbursement”, had the contribution claims succeeded other potential advantages for the WRUs may have included the fact that subrogation recoveries are ‘top down’, so lessors get paid out first in respect of losses in excess of the contingent policies. In addition, we note the reference at paragraph 38 of the judgment to Colinvaux 14th Ed, and its commentary highlighting that “Contribution is not brought in the name of the assured and is in principle not affected by defences that might have been pleaded against the assured had the action been brought by the assured for his own benefit”.