Product liability

Product liability insurance provides an indemnity to a business in respect of legal liability to the end-users of the products which it either manufactures or sells. Although the definition of a product in most product liability policies is broad, disputes do sometimes occur concerning whether or not the damage in question has been caused by a ‘product’ at all. Further, the cover for property damage is in respect of the insured’s

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Lost in the war—Judgment in the Russian aircraft claims (Aercap v AIG)

Financial Services analysis: Following a mega trial spanning over 12 weeks, the court held that the aircraft lessors (including AerCap and DAE) were entitled to recover under their contingent War Risks (WR) cover, but were not entitled to recover under their All Risks (AR) cover, for aircraft and engines stranded in Russia following the 2022 invasion of Ukraine. Aercap made its primary claim under its AR cover while DAE advanced its primary claim under its WR cover. The lessors lost the aircraft on 10 March 2022, when the Russian government issued Government Resolution (‘GR’) 311–a decree prohibiting the return of aircraft to the lessors in response to Western sanctions against Russia. As a consequence, while AerCap originally claimed losses of over US$3.4bn under its AR cover (reduced after settlements to US$2.051bn), it failed against its AR cover and its recovery was confined to a US$1.2bn WR aggregate limit. By contrast, DAE succeeded in its primary claim under its WR cover. The case provides significant guidance on various issues. Key issues of interest include: the test for ‘loss’ by deprivation of assets; the scope of the Political Peril (‘act…for political…purposes’) and Government Peril (“by or under the order of any government”); the ‘grip of the peril’ doctrine; the causation analysis where there are concurrent or independent causes of loss; the distinction between Contingent and Possessed covers in lessor policies; and the scope of economic sanctions against Russia. Written by Aradhya Sethiya, pupil barrister at 7 King’s Bench Walk.

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