English High Court clarifies scope of political risks in insurance ‘mega trial’

The English High Court (Commercial Court) handed down judgment in the multi-billion-dollar Russian Aircraft Lessor Policy Claims on 11 June 2025 ([1] [2025] EWHC 1430 (Comm).), following a ‘mega trial’ before Mr Justice Butcher involving six separate claims which were managed and heard together. The trial took place over five months and involved 24 witnesses, 14 experts and more than 50 counsel in addition to 13 solicitor teams across the City of London. Claims have also been pursued in other jurisdictions. 

As Butcher J put it, this was an “unusually demanding piece of litigation” concerning insurance claims brought in the wake of the Russian invasion of Ukraine in February 2022. In response to the invasion, Western sanctions were imposed which banned the leasing of aircraft and engines to airlines operating in Russia. As a result, in this litigation alone the owners (lessors) of nearly 150 aircraft and some 16 standalone engines leased to various Russian carriers had demanded the return of their assets from their Russian lessees. The aircraft were not returned however, and the lessors subsequently claimed against All Risks (AR) and War Risks (WR) insurers for the total loss of them. 

Proximate cause of loss

Whilst the judgment addresses a number of points of general importance to both insurers and their insureds, one of the central issues was whether the lessors' claims fell within the WR exclusion clause contained in the AR insurance. In this context, the AR Camp and WR Camp (as the Judge described them) disagreed as to whether the cause of the non-return and therefore any loss of the aircraft was a commercial decision of the airlines leasing the aircraft, in which case it was said that the AR insurers would be liable, or an act or order of the Russian government, in which case the WR insurers would be liable.

The relevant WR exclusion clause embraced both political risks as well as classic war risks, and the AR insurers argued that the aircraft were lost either by reason of “the act of one or more persons … for political purposes” (Political Peril), or as a result of “restraint, detention … by or under the order of any Government (whether civil, military or de facto…)” (Government Perils). 

In the event, Butcher J concluded that the aircraft had been subject to a “restraint” and/or “detention”, i.e. Government Perils, and that they were lost on 10 March 2022 when Russian legislation banned the export of aircraft and aircraft equipment from Russia. Consequently, the loss was covered under the WR insurance and excluded under the AR insurance, resulting in there being no valid claim against the AR insurers. 

Decision on Political Peril

Given the Judge's conclusion, his comments on the Political Peril were strictly speaking obiter, but are of general interest. In the relevant insurance contracts, the Political Peril was described in these or similar terms:

“Any act of one or more persons, whether or not agents of a sovereign power, for political or terrorist purposes and whether the loss or damage resulting therefrom is accidental or intentional”

The key question here was what is meant by an “act … for political … purposes.” 

In summary, the AR Insurers argued that the ordinary meaning of these words would encompass any act carried out to implement or further a government policy, namely the acts of persons in Russia who had taken steps to keep the aircraft in Russia in order to render ineffective the Western sanctions targeting Russian civil aviation. 

The WR Insurers, on the other hand, argued that the phrase only covered acts of individuals directed at changing either a government or a government policy and so could not apply in circumstances where the Russian government (or its agents) were simply acting in furtherance of its own policy of retaining foreign-leased aircraft in Russia. 

Noting that the scope of the relevant wording was “not straightforward to determine”, Butcher J rejected the WR insurers' case that the wording covered only actions against a government seeking to change it or its policies, and equally did not agree with the AR insurers that it would cover actions by the government itself, as here. 

In doing so Butcher J considered that: 

• The words are broad and do not exclude political acts in support of the government's stance.
• The reference to “political or terrorist purposes” brings with it certain implicit or inherent restrictions, one of which is that the provision is not concerned with the acts of the government itself.
• The juxtaposition with “terrorist purposes” indicates that the clause is concerned with acts which are in some sense adverse to the government of the place where they happen. This may include cases where support for a government or government policy is pursued e.g. by violent means.
• The parties to the insurance contract had not intended that the Political Peril should render the Government Perils redundant, which would be the case if government acts in pursuit of its own policies could amount to a Political Peril.
• The Political Peril does not embrace acts which are simply those of agents of the government, particularly in a situation where only one government is relevant. If it did, it would potentially apply to all or most government acts capable of causing loss or damage, accidentally or intentionally.
• The reference to “whether or not agents of a sovereign stage” makes clear that acts committed at the behest or instigation of a foreign state may be covered, e.g. state-sponsored terrorism of the Lockerbie type. 

In light of the above and in circumstances where, as here, two or more states were involved, Butcher J found that the Political Peril does not cover “the avowed acts of the government, or agents of the government, of the place where the act is done which causes the loss or damage”. In the present case, that meant that it did not cover the “avowed acts of the Russian Government or its agents or acts of others supporting the known policy of their government and not in any sense adverse to that government”. 

Comment 

Given the conclusion that the loss was caused by a Government Peril (about which we will write on another occasion), Butcher J's views on the Political Peril made no difference to his findings and are, as we say above, strictly speaking obiter. Nevertheless they represent the most comprehensive analysis of the Political Peril there has been under English law, and may in future also impact the interpretation of comparable wordings, for example the Institute Clauses (“any terrorist or any person acting from a political motive”).

Butcher J himself recognised that the boundaries of the distinction required to be drawn on his interpretation are “not easy to define” and so may well give rise to future debate. That is perhaps particularly the case when the requirement that the relevant act must be adverse to the government of the place where they occur is not clearly expressed in the wording itself.

Wikborg Rein acted for the successful AR insurers.