Zephyrus Capital Aviation Partners 1d Limited & Ors v Fidelis Underwriting Limited & Ors [2024] EWHC 734 (Comm)

“INSURANCE REQUIREMENTS Types of Insurance 1. The Insurances required to be maintained are as follows: … Terms of Hull and Spares Insurance 2. All required hull and spares insurance, so far as it relates to the Aircraft, will: (a) Additional Assureds: name Lessor, Owner, the Security Trustee (if any) and the Financing Parties (if any) and their respective successors and assigns as additional assureds for their respective rights and interests; (b) Settlement of Losses: name Lessor as (sole) Loss Payee in respect of any Total Loss of the Aircraft or Airframe and provide that any such Total Loss up to the Agreed Value will be settled with Lessor and will be payable in Dollars directly to Lessor as (sole) Loss Payee or as Lessor may direct, for the account of all interests provided that where proceeds do not relate to a Total Loss of the Aircraft or Airframe and Lessor has not notified the insurers to the contrary following an Event of Default, in which case, any loss below the Damage Notification Threshold will be settled with and paid to Lessee and any loss in excess of Damage Notification Threshold shall be paid to the repair facility in accordance with paragraph 6(b) below; (c) 50/50 Provision: if separate hull "all risks'' and "war risks" insurances arc arranged, include a 50/50 provision in accordance with market practice (AVS. l 03 is the current market language); and (d) No option to Replace: confirm that the insurers are not entitled to replace the Aircraft in the event of an insured Total Loss. (e) Engines: … Terms of Liability Insurance 3. … Terms of All Insurances 4. All Insurances will: (a) Industry Practice: be in accordance with prudent industry practice for comparable operators with the same or similar sized fleet as Lessee and operating similar aircraft in similar circumstances; (b) Dollars: provide cover denominated in dollars and any other currencies which Lessor may reasonably require in relation to liability insurance; (c) Worldwide: operate on a worldwide basis subject to such limitations and exclusions as are standard at the date hereof in the London aviation market or as Lessor may agree; (d) Acknowledgement: acknowledge the insurer is aware (and has seen a copy) of this Agreement and that the Aircraft is owned by Lessor; (e) Breach of Warranty: … (f) Subrogation: … (g) Premiums: … (h) Cancellation/Change: … (i) Reinsurance: any reinsurance will: (i) be for not less than 97% of the amounts covered by the original third party liability insurances and 95% of the amounts covered by the original hull insurances, (ii) be on the same terms as the original insurances and will include the provisions of this Schedule, (iii) provide that notwithstanding any bankruptcy, insolvency, liquidation, dissolution or similar proceedings of or affecting the reinsured that the reinsurers' liability will be to make such payments as would have fallen due under the relevant policy of reinsurance if the reinsured had (immediately before such bankruptcy. insolvency, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and (iv) contain a 'cut-through" clause in the following form (or otherwise satisfactory to Lessor): "The Reinsurers and the Reinsured hereby mutually agree that, in the event of any claim arising under the reinsurances in respect of a total loss or other claim, as provided by the Aircraft Lease Agreement dated [ ] and made between Lessor and Lessee, such claim is to be paid to the Person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the Reinsured, its successors in interest and assigns pay to the Person named as sole loss payee under the primary insurances effected by the Reinsured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the Reinsured ( subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith; subject to such provisions not contravening any Law of the State of Incorporation;" (j) Initiating Claims: contain a provision entitling Lessor or any insured party to initiate a claim under any policy in the event of the refusal or failure of Lessee to do so; and (k) Indemnities: ... Deductibles 5. … Application of Insurance Proceeds 6. …”

"The Reinsurers and the Reinsured hereby mutually agree that, in the event of any claim arising under the reinsurances in respect of a total loss or other claim, as provided by the Aircraft Lease Agreement dated [ ] and made between Lessor and Lessee, such claim is to be paid to the Person named as sole loss payee under the primary insurances, the Reinsurers will in lieu of payment to the Reinsured, its successors in interest and assigns pay to the Person named as sole loss payee under the primary insurances effected by the Reinsured that portion of any loss due for which the Reinsurers would otherwise be liable to pay the Reinsured ( subject to proof of loss), it being understood and agreed that any such payment by the Reinsurers will (to the extent of such payment) fully discharge and release the Reinsurers from any and all further liability in connection therewith; subject to such provisions not contravening any Law of the State of Incorporation;"

“TO WHOM IT MAY CONCERN THIS IS TO CERTIFY that insurance has been placed in the name of the Insured (as defined below) with the Reinsured (as defined below) and that we, McGill and Partners Ltd, in our capacity as reinsurance broker to the Reinsured have placed reinsurance in the London and international insurance markets in the name of the Reinsured, in respect of the Insured's aviation operations for their fleet of aircraft including all new aircraft from the moment that they become the insurance responsibility of the Insured, against the following risks and up to the limits stated:-”

“GEOGRAPHICAL LIMITS: Worldwide but in respect of hull war (including spares) war and allied risks subject to LSW617G (amended writing back Georgia, North Caucasian Federal District and Mauritania). REINSURED AMOUNT: 95% in respect of hull (including spares) all risks and aviation legal liability; 95% in respect of hull (including spares) war and allied risks; 100% in respect of excess third party war and allied risks legal liability; 90% in respect of hull deductible COVERAGE: 1) HULL (including spares) ALL RISKS covering loss or damage whilst flying and / or on the ground for an agreed value each aircraft. This coverage is subject to the following deductibles: … 2) HULL (including spares) WAR AND ALLIED RISKS covering loss or damage in accordance with LSW 555D for an agreed value as set out above. Cover includes confiscation and other perils detailed in Section 1(e) of LSW 555D by the government of registration. Coverage under Section 1(a) of LSW 555D in respect of spares is restricted to air and sea transits in accordance with the applicable transit clause(s). Subject to an overall annual aggregate policy limit of not less than USD 500,000,000. The coverage in respect of spares (as detailed above) is subject to a limit of USD 40,000,000 any one occurrence. The coverage detailed above includes a 50/50 clause in accordance with AVS 103 and the following cut-through clause: “The Reinsurers hereby agree (at the request and with the agreement of the Reinsured) that in the event of any valid claim arising hereunder the Reinsurers shall in lieu of payment to the Reinsured its successors in interest and assigns pay to the person(s) named as loss payee(s) under the original insurance effected by the Insured that portion of any loss for which the Reinsurers would otherwise be liable to pay the Reinsured (subject to proof of loss) it being understood and agreed that any such payment shall fully discharge and release Reinsurers from any and all further liability in connection with such claim. The Reinsurers reserve the right to set off against any claim payable hereunder in accordance with this clause any outstanding premiums due on the reinsurance in respect of the Equipment. Payment shall be made under this reinsurance notwithstanding (i) any bankruptcy, insolvency, liquidation or dissolution of the Reinsured, and/or (ii) that the Reinsured has made no payment under the original insurance policies. It is a condition that the provisions of this clause shall not operate in contravention of the laws, statutes or decrees of the country of domicile of the Reinsured”. 3) AVIATION LEGAL LIABILITY … 4) HULL DEDUCTIBLE … AVN 67B: It is hereby certified that the following insurance provisions apply under the original policy: The attachment of the Equipment is hereby certified in accordance with the provisions of AVN67B Airline Finance / Lease Contract Endorsement and AVN67B (Hull War) Airline Finance Lease Contract Endorsement (Hull War) providing coverage to the following Contract Party(ies) in relation to the following Contract(s): … SEVERAL LIABILITY NOTICE –.. .”

“31. I am instructed by the Second Defendant [Cathedral Capital (1998) Limited, a Lloyd’s war risk reinsurer], and it is my understanding as a solicitor practising in the aviation insurance market, that the incorporation of provisions selecting as the governing law and exclusive jurisdiction for dispute determination the law and the Courts of the Insured’s state of domicile is a common feature of aviation insurance and aviation reinsurance arrangements.FN The First Claimant [VX Freighter Investment (Ireland) Limited], as a lessor, would be expected to have known or expected that the policies would contain such choice of law and jurisdiction clauses with the result that the insurance obtained by Atran and the reinsurance obtained by the Russian Insurer would be governed by Russian law and subject to the exclusive jurisdiction of the Courts of the Russian Federation.” [footnote] “The application of local law and the incorporation of jurisdiction agreements in favour of the courts of the states where lessees are resident, are, in my experience, common features of aviation insurance policies put in place by lessees the world over (it is not just Russian aircraft lessees that are required to place the required insurance locally). It is equally commonplace, in my experience, for aircraft lessors to obtain their own separate insurance cover in respect of all risks and war risks to aircraft owned and/or leased by them under what are called “contingent policies” (and/or “contingent and possessed policies”) which would not be subject to the governing law and jurisdiction of the state where the lessee is based – as I expect the First Claimant has done in respect of the Aircraft.” “34. My firm has consulted on the Second Defendant’s behalf Mr Sergey Seliverstov, a partner in a firm of lawyers qualified in Russian law and litigation practice and based in Moscow, Sokolov, Maslov and Partners. As a result, I understand that from a Russian Law perspective: (1) The provision of insurance services in Russia requires a license. The position in July 2021, when the insurance and reinsurance relevant to these proceedings was placed, was that such licenses could only be granted to Russian corporate entities. As a result, Russian airlines, including Atran, had to place aviation insurance with local (Russian) insurers. In any event, Atran placed the Insurance Contract commencing 1 July 2021 with a local (Russian) insurer, NIC. (2) My own experience is that insurance policies taken out by a Russian airline and underwritten by Russian insurers invariably incorporate Russian choice of law and exclusive jurisdiction clauses nominating the courts of the Russian Federation as the agreed forum for the resolution of disputes. …”

“13. From my market experience, I am aware that in Russia there is a local regulatory requirement and/or local market preference, for the local (Russian) airline to arrange for its insurance cover to be issued by a local (Russian) insurer. The local insurer then reinsures the vast majority of the risk on a back-to-back basis in the recognised London and/or other international aviation insurance markets. I believe the requirement to arrange insurance and reinsurance in this way is typically a requirement under the airline’s lease agreement. 14. In addition, my understanding from writing these Russian risks is that, in recent years, 10% (or thereabouts) of the underlying risk has to be, or in practice is, reinsured with the Russian National Reinsurance Company. The remainder of the reinsurance is placed in the London and/or other international aviation insurance markets, as I have described above. … 24. I was aware, at the time of transacting the 2021 Siberia Airlines/S7 Airlines hull war reinsurance contract, that it contained a Russian law and exclusive jurisdiction clause in the reinsurance slip. I expected the same for the Nordstar reinsurance contract (as was indeed the case). 25. In my experience of writing a wide range of aviation war reinsurances over many years, the reinsurance slip prepared and produced by the broker at presentation would invariably include a law and jurisdiction clause which matched the local territory of the underlying insured airline and the local insurer. The Siberia Airlines/S7 Airlines and Nordstar reinsurance contracts were no exception – the law and jurisdiction clauses in these contracts were completely in line with what I expected and had experienced as the general rule in the market. 26. This was, to me, an entirely expected and logical outcome. My understanding was that the airline and the local insurer would want to provide for local law and jurisdiction (in this case, Russian law and jurisdiction) in the underlying insurance contract. If the reinsurance contract did not contain the same law and jurisdiction, there might be the possibility of running into difficulties on account of the insurance and reinsurance not being fully back-to-back – a possibility which the local insurer (and airline) would likely be keen to avoid. Given all of this, it would have jumped out at me at the time had these AXA XL-led reinsurances not been presented with a Russian governing law and exclusive jurisdiction clause. 27. I add that in so far as Russian risks are concerned, I do not recall an occasion when a broker put forward slip reinsurance wording that required a governing law and jurisdiction provision other than Russia. The brokers, who I understand also advised the claimant lessors on their own insurance and reinsurance requirements and needs, will have had their reasons for this. 28. I am aware that the judicial and court system in Russia may not be regarded as being as predictable and as free from imperfections as, for example, most Western legal systems. Nevertheless, at the time these reinsurance contracts were written in 2021, Russia continued to be a big growth area for aviation insurance business, as it was a significant growth area for financiers and lessors of western-built aircraft. There was a lot of appetite in the market for the business and, in my view, it was important for AXA XL to continue to be involved in that since if we did not agree to provide reinsurance cover then it would be difficult to do so later as we would need to poach the business back off a different reinsurer. The Siberia Airlines/S7 Airlines and Nordstar accounts met AXA XL’s ‘adequacy’ requirements (discussed above) and we had internal sign off on these Russian risks from AXA XL’s sanctions team. So, there was no issue in principle with writing the business. In the light of that, the simple fact was that if we (AXA XL) wanted to write this reinsurance business – which we did, for the reasons I have explained – we had to accept the Russian law and exclusive jurisdiction clause as part of the overall package of the risk. 29. I think it is important to be aware that there were, at around this time, other jurisdictions which were considered by AXA XL to be higher risk territories than Russia (but still within AXA XL’s overall risk/financial parameters), for which AXA XL continued to write airline hull war reinsurances. These jurisdictions included, for example, Nigeria, Tanzania, Ethiopia, Iraq and Libya. 30. I would not myself have complete trust in the legal systems of these countries (i.e., Nigeria, Tanzania, Ethiopia, Iraq and Libya) – and I would regard them as considerably more problematic in that regard than Russia. In particular, I would have concerns about bribery and corruption should there be a coverage dispute in the courts of these countries. Nevertheless, we continued and continue within AXA XL to write hull war risks reinsurance in respect of airlines based in these countries (after carrying out appropriate due diligence on the overall country risks). AXA XL does not necessarily lead all of these risks, but I can confirm that AXA XL does participate on each. These reinsurance contracts are, as expected (as I have explained above), subject to the law and exclusive jurisdiction of the courts of the domicile of the original insured airline (i.e., Nigeria, Tanzania, Ethiopia, Iraq and Libya, respectively).”

“22. … I had … personally transacted … earlier year renewals of seven of these accounts for Lancashire. 23. … I was well aware at the time of placement, and indeed I fully expected, that each of these reinsurance contracts contained a Russian law and exclusive jurisdiction clause. Such a clause was entirely in line with what, in my underwriting experience, is commonplace in airline hull war risk reinsurances – namely, that the law and jurisdiction of the reinsurance contract matches the country of domicile of the underlying insured airline(s) (and the local insurer(s)). 24. The broker (Willis or McGill in each case) was responsible for producing the draft reinsurance slips that were sent to Lancashire at the time of presentation. These included the Russian law and exclusive jurisdiction clause in each case. My understanding at the time, given the inclusion of this clause in the draft reinsurance slips at presentation, was that the underlying hull war insurance policies (issued by the Russian insurer(s) to the Russian airline in question) would also have contained Russian law and exclusive jurisdiction clauses. That is what I would expect, since the intention and design of the reinsurance contracts was to mirror the underlying insurance policies on a ‘back to back’ basis. 25. In practical terms – given the business requirement for the reinsurances to be back-to-back with the underlying insurances – if Lancashire wanted to write this Russian reinsurance business (which we did), we had to accept the Russian law and exclusive jurisdiction clause included by the brokers (on behalf of the Russian insurer(s)) at the time of placement. It is fair to say that we (Lancashire) went into these reinsurance contracts with our ‘eyes open’ about the law and jurisdiction that would apply to them (i.e., Russian), as did the brokers who I understand – in many cases – also advised the claimant lessors on their own insurance and reinsurance requirements and needs. 26. The Russian law and exclusive jurisdiction clause did not result in any specific premium allocation or rating in the reinsurance contracts by Lancashire. But at a wider level, the fact that these reinsurances related to Russian business (Russian domiciled airlines/insurers) was a factor in Lancashire’ s overall underwriting considerations when quoting for the business. In relation to this: (1) As I have explained above, Lancashire writes a global book of airline hull war risks which includes many and varied jurisdictions, some of which, clearly, are more politically and/or economically complicated and challenging than others. … (3) There are only a limited number of territories worldwide that automatically fall outside of the Lancashire group’s risk tolerances, such that business directly involving these territories must automatically be declined. These territories are Iran, Syria, North Korea, and Crimea/Sevastopol. Otherwise, as long as the economic/political risk of any particular territory is aligned with the Lancashire group’s legal and compliance guidelines, it is for the Lancashire underwriters to make a judgement on whether a particular risk is acceptable, what is charged for the risk, and what level of cover is provided. … 27. I am conscious that Lancashire has written airline hull war reinsurance contracts in relation to airlines from a number of jurisdictions where we do not necessarily have full confidence that the local legal system is as well-functioning or predictable as, say, the English court system. Examples would include Iraq, Pakistan and Nigeria. 28. Prior to Russia’s most recent invasion of Ukraine in February 2022 after which sanctions precluded the continuance of reinsuring aviation risks there, the aviation risk score for Russia, from a Lancashire hull war perils perspective, remained in line with the Lancashire group’s legal and compliance tolerances for underwriting this class of business. At the time of the reinsurance contracts in question, I did not believe that the risk of reinsuring Russian insurers of Russian airlines was elevated beyond a point where the risk was unacceptable to Lancashire (including with the Russian law and exclusive jurisdiction clause in the reinsurance contracts). 29. Indeed, around the time when Lancashire was writing the reinsurance contracts in question: (1) Russia was far from having the highest (that is to say, the worst) aviation risk score in the reports we had from our third-party security experts. For example, Iraq, Pakistan and Nigeria (which I mentioned above in paragraph 27) all had higher (worse) aviation risk scores than Russia (albeit still within the Lancashire group’s legal and compliance tolerances for writing business). (2) Nevertheless, Lancashire continued to write hull war risks reinsurance in respect of airlines based in these countries (Iraq, Pakistan and Nigeria) and I understand that financiers and leasing companies continue to finance and/or lease aircraft in those jurisdictions. These reinsurance contracts were, like the reinsurances of Russian insurers that I have been describing in this statement, subject to local law and the exclusive jurisdiction of the local courts (of Iraq, Pakistan and Nigeria, respectively). …”

“22. Throughout my time in the aviation market, where a policy is placed in the local market (i.e. where the operator places the risk with a local insurer), the law and jurisdiction clauses in the insurance and reinsurance contracts have always matched the domicile of operator. That applies globally and specifically in relation to Russian operators. It has always been that way since I have been in the market. That is the commercial preference of the insureds and is the market standard, so the practice continues. 23. In my experience, the lessors dictate what insurance is required. Lessors advise the lessees in their lease contracts the insurance provisions required. The Agreed Value and Limits of Liability are prescribed. Lessors will also require confirmation of the list of co-insurers supporting the placement and their ratings. The lessors are very prescriptive about security and won’t give their assets into the control of the operator without a very extensive due diligence process and the coverage requirements being agreed. For example, I have had instances where the lessors have required the operator to change some of the reinsurance companies on the proposed panel because they have had some objection to them. 24. In my experience, the lessors are very disciplined in knowing not just who the reinsurance is placed with but also what the detailed terms are. For example, they dictate points even down to small coverage triggers such as a 30 day payment clause on timing of claims for confiscation. 25. I do not recall any client, additional insured or loss payee ever asking for a change to a law and jurisdiction clause in aviation insurance or reinsurance where the law and jurisdiction clause reflected the domicile of the operator. As a potential reinsurer, I once suggested a law and jurisdiction change from Israel to England and Wales, as a result of which I was replaced as leader on the slip. As I said, it is accepted market practice that the law and jurisdiction follows the domicile of the operator.”

“Dispute resolution clauses are generally regarded as separate undertakings, distinct from the main contract to which they relate. Any provision which purports to incorporate the terms and conditions of another contract will in general not bring in dispute resolution[] clauses, because they are not terms and conditions as such, but separate agreements. This principle is not confined to reinsurance, but applies also to other cases of incorporation, in particular from charterparty to bill of lading and from head construction contract to sub-contract. The authorities thus decide that the words “as original” or their equivalent are ineffective to incorporate from a direct policy into a reinsurance agreement any arbitration clause, exclusive jurisdiction clause or choice of law clause.” (footnotes omitted) As regards EJCs, Arnould cites inter alia Prifti v Musini Sociedad Anonima De Seguros Y Reaseguros [2003] EWHC 2796 (Comm), where a reinsured alleged that its reinsurance contained the same EJC as the original insurance, by reason of a ‘full reinsurance’ clause in the reinsurance slip stating “Being a reinsurance of and warranted subject to the same terms and conditions (excluding limits and rates) as and to follow the settlements of the Reassured”

“It shall be prohibited to provide insurance and reinsurance, directly or indirectly, in relation to goods and technology listed in Annex XI to any person, entity or body in Russia or for use in Russia.”

“2) (a) We hereby notify you that one or more Events of Default have occurred and are continuing under the Lease, including, without limitation, pursuant to: (i) Article 25.2(c), as a result of your failure to maintain or cause to be maintained the insurance or reinsurance required by Article 18 of the Lease; (ii) Article 25.2(t), as a result of it becoming unlawful for you to perform your material obligations under the Lease; and (iii) Article 25.2(u), as a result of the operation, use or employment of the Aircraft in violation of the requirements of Article 10.2 of the Lease. (b) In view of recent geopolitical events and Trade Laws, Lessor has determined that there has been a material adverse effect in the financial condition, prospects or operations of the Lessee or on the ability of the Lessee to perform all of its obligations under, or otherwise comply with the terms of the Lease, and, as a result, an Event of Default under Article 25.2(j) of the Lease has occurred and is continuing. …” iii) Events of Default consisting of a failure to maintain insurance and/or reinsurance in accordance with the requirements of the Lease. Reliance on such Events of Default followed or anticipated the formal issuing of Notices of Cancellation of the reinsurance (see above). For example, one of the Events of Default alleged in the notice served in the Carlisle/I-Fly claim was expressed to be under “Section 17(c)(ii), as a result of your failure to maintain the insurance required under Section 12 of the Lease”

“By this Notice, the Lessor hereby formally notifies you that an Event of Default has occurred under Clause 20.1(b) of the Lease Agreement as the insurances required to be maintained in respect of the Lease Agreement have been cancelled pursuant to the recent imposition of sanctions by the European Union.” ii) A “Notice of Event of Default and Demand for Return of Aircraft” dated 16 March 2022: “By this Notice, the Lessor hereby formally notifies you that (1) an Event of Default has occurred under Clause 20(c) of the Lease Agreement, (2) a Lessee Illegality Event has occurred resulting in an Event of Default under Clause 20(u) of the Lease Agreement and (3) a Lessor Illegality Event has occurred. Consequently, you are in breach of your obligations under the Lease Agreement.”

“[24] … Whether a party can show strong reasons, sufficient to displace the other party's prima facie entitlement to enforce the contractual bargain, will depend on all the facts and circumstances of the particular case. In the course of his judgment in The Eleftheria [1970] P 94, 99–100, Brandon J helpfully listed some of the matters which might properly be regarded by the court when exercising its discretion, and his judgment has been repeatedly cited and applied. Brandon J did not intend his list to be comprehensive, but mentioned a number of matters, including the law governing the contract, which may in some cases be material. (I am mindful that the principles governing the grant of injunctions and stays are not the same: see Aérospatiale at p 896. Considerations of comity arise in the one case but not in the other. These differences need not, however, be explored in this case).”

“The principles established by the authorities can, I think, be summarised as follows: (1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign court, and the defendants apply for a stay, the English court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (3) The burden of proving such strong cause is on the plaintiffs. (4) In exercising its discretion the court should take into account all the circumstances of the particular case. (5) In particular, but without prejudice to (4), the following matters, where they arise, may properly be regarded:- (a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign courts. (b) Whether the law of the foreign court applies and, if so, whether it differs from English law in any material respects. (c) With what country either party is connected, and how closely. (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages. (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would: (i) be deprived of security for their claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial.” ([1970] P 94, 99–100, paragraph breaks interpolated) Brandon J went on to say that: “… as to the prima facie case for a stay arising from the Greek jurisdiction clause, I think that it is essential that the court should give full weight to the prima facie desirability of holding the plaintiffs to their agreement. In this connection I think that the court must be careful not just to pay lip service to the principle involved, and then fail to give effect to it because of a mere balance of convenience.”

“It follows, in my judgment, that what one might call the standard considerations that arise in arguments about forum non conveniens should be given little weight in the face of an exclusive jurisdiction clause where the parties have chosen the courts of a neutral territory in the context of an agreement with world-wide application. Otherwise the exclusive jurisdiction clause would be deprived of its intended effect. Indeed, the more “neutral” the chosen forum was the less the importance the parties must have placed on the convenience of the forum for any particular dispute. If the standard considerations that arise in arguments about forum non conveniens were to be given full weight, they would almost always trump the parties’ deliberate selection of a neutral forum. …”

“where the factors relied on would have been eminently foreseeable at the time that they entered into the contract…Surely they [i.e. DHC] must point to some factor which they could not have foreseen on which they can rely for displacing the bargain which they made i.e. that they would not object to the jurisdiction of the English Court. Adopting that approach it seems to me that the inconvenience for witnesses, the location of documents, the timing of a trial, and all such like matters, are aspects which they are simply precluded from raising.”

“As Waller J. subsequently made clear [in British Aerospace], he considered that the inclusion in the contract of a non-exclusive jurisdiction clause made it appropriate to approach the issue of forum conveniens as if the plaintiff had founded jurisdiction here as of right. To that extent his comments relate directly to the position in the present case. In principle I would respectfully agree with that approach. Although I think that the court is entitled to have regard to all the circumstances of the case, particular weight should in my view attach to the fact that the defendant has freely agreed as part of his bargain to submit to the jurisdiction. In principle he should be held to that bargain unless there are overwhelming reasons to the contrary. I would not go so far as to say that the court will never grant a stay unless circumstances have arisen which could not have been foreseen at the time the contract was made, but the cases in which it will do so are likely to be rare…”

“… of fundamental importance, it is in my judgment a principle of the Court’s residual discretion to stay even proceedings commenced in the consensual forum of an exclusive jurisdiction clause that the strong cause which needs to be shown if that discretion is to be exercised must go beyond matters of mere convenience and must enter into the interests of justice itself. After all, when the parties agree to an exclusive forum for their disputes, they are or must be treated as being mindful both that they have chosen for themselves where such considerations of convenience take them and also that their choice may override pure matters of convenience… As Mr Justice Waller put it… in British Aerospace v Dee Howard… it is necessary to point to some factor which could not have been foreseen in order to displace the bargain which has been agreed. He was there talking about matters of convenience. It is or may be different, however, where the quality of the consideration is different and goes to a matter of justice, although even in such a case it might be said that the factor in question should be regarded as having been foreseen and encompassed in the bargain struck.”

“Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would: (i) be deprived of security for their claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; …”

“Such overwhelming or very strong reasons do not include factors of convenience that were foreseeable at the time that the contract was entered into (save in exceptional circumstances involving the interests of justice); and it is not appropriate to embark upon a standard Spiliada balancing exercise. The defendant has to point to some factor which it could not have foreseen at the time the contract was concluded.” (§ 7(iii), my emphasis) Antec was not a case about fairness of trial. However, it is notable that Gloster J did not appear to treat unforeseeability as a requirement as regards “exceptional circumstances involving the interests of justice”

“Two matters call for comment at this point. First, the Strasbourg court is not addressing any procedural unfairness contrary to Convention standards; rather, it contemplates that a flagrant denial of the standards of a fair trial might give rise to the responsibility of the extraditing Contracting State. In Othman v United Kingdom (2012) 55 EHRR 1 the Strasbourg B court considered it noteworthy that, in the 22 years since the Soering judgment, the court had never found that an expulsion would be in violation of article 6, a matter which served to underline its view that "flagrant denial of justice" is a stringent test of unfairness. "A flagrant denial of justice goes beyond mere irregularities or lack of safeguards in the trial procedures such as might result in a breach of article 6 if occurring within the Contracting State itself. What is required is a breach of the principles of fair trial guaranteed by article 6 which is so fundamental as to amount to a nullification, or destruction of the very essence, of the right guaranteed by that article." (Para 260.) (See also Ahorugeze v Sweden (2011) 55 EHRR 2 at paras 115, 116.)” "A flagrant denial of justice goes beyond mere irregularities or lack of safeguards in the trial procedures such as might result in a breach of article 6 if occurring within the Contracting State itself. What is required is a breach of the principles of fair trial guaranteed by article 6 which is so fundamental as to amount to a nullification, or destruction of the very essence, of the right guaranteed by that article." (Para 260.) (See also Ahorugeze v Sweden (2011) 55 EHRR 2 at paras 115, 116.)”

“I recognize that there is a spectrum of cases from the case where the parties have negotiated the jurisdiction clause at one end to the case of a one-off standard term contract at the other and that the Court is perhaps less likely to find the necessary strong cause established in the former case than in the latter.”

“237. An English court will approach with considerable circumspection any contention that a potential claimant cannot obtain justice or a fair hearing in a foreign court and will require “positive and cogent” evidence to persuade it to the contrary: The Abidin Daver [1984] AC 398, 411C. Assertions to that effect are relatively easily made by generalised statements and may be difficult comprehensively to refute. I further accept that research on Russian law may suffer from what Professor Stephan describes as an “echo chamber effect” where one commentator states an impression which is swapped with the impression of another commentator, each citing the other as authority supporting their own thesis without any systematic study of data. It is, however, right to have some regard to any consensus of academic opinion, based on research and personal familiarity, particularly when backed by specific instances (such as the Yukos and Guzinsky affairs) or determinations of the ECHR or other courts. 238. In the absence of cogent evidence to the contrary the Court will start with the working assumption, for which comity calls, that courts in other judicial systems will seek to do justice in accordance with applicable laws, and will be free from improper interference or restriction. As this case indicates, where there is evidence to the contrary it may be hotly in dispute and difficult to evaluate. Such evidence is likely, insofar as it derives from reports and articles, to consist of “broad and conclusory allegations, founded on multiple levels of hearsay” and, if so, to be unacceptable as an indictment of a legal system or part of it. Evidence relied on by Professor Burger, whom Professor Bowring cites, was so characterised by Judge Koeltl in the Base Metal case and regarded by him as “insufficient to condemn the entire Russian judiciary as an inadequate alternative forum”

“[97] The authorities establish that the English court should show particular restraint before reaching the conclusion that a claimant would not receive substantial justice in a foreign country in view of the requirements of comity. The authorities indicate that the claimant must make good its argument based on ‘positive and cogent evidence’… Whilst there are rare cases where a claimant has been able to satisfy this standard [Cherney v Deripaska] such cases are the exception. [98] It is fair to say that the Claimants’ arguments before me were very largely based on similar arguments which had been advanced successfully in the Cherney v Deripaska case. However, the Cherney v Deripaska case was an ‘extreme one’ as Flaux J concluded in Erste Group Bank AG v JSC ‘Red October’ [2013] EWHC 2926 (Comm), at paragraph 201… [99] Mr Lord Q.C. relied in particular on the fact that the two experts agreed that … the Russian judicial system is not without its problems including that there has been alignment of Russian courts to state interests or external influence in some high-profile cases. However, the real issue is whether and, if so, to what extent these factors would be likely to operate in the present case so as to jeopardise the prospect of a fair trial…”

“238. … the Court is not blind to the fact that unfairness or partiality may arise from that which occurs behind the scenes rather than centre stage. 239. In the present case what is of concern is that it appears to be common ground between the experts that, in certain cases, the arbitrazh courts cannot necessarily be expected to perform their task fairly and impartially. Professor Stephan characterizes that as only applicable in a case whose outcome will affect the direct and material strategic interest of the Russian state. 240. The problem with that is fourfold. Firstly, respect for the rule of law and the separation of powers requires that the freedom of the courts from interference by the executive (or anyone else) in their decision making should be without exception. 241. Secondly, once it is apparent that such freedom is not without exception, it is difficult to describe what is the limit which the Russian State would in practice observe or to be satisfied that that limit will not change.”

“22. Secondly, the Claimants’ claim is premised on the Claimants establishing in these proceedings that they have a valid claim pursuant to the Insurance Contract/s on the terms of either the All Risks or War Risks cover ... To resolve that issue will require consideration of the interpretation and application of the terms of cover as a matter of Russian law. The question whether there has been an insured loss indemnifiable under the terms of the Insurance Contract/s cannot be determined without evidence of what has happened to the Aircraft since March 2022 and will require consideration of Russian law. 23. Bearing in mind the facts and matters relied upon by the Claimants at paragraphs 40 to 50 of the Particulars of Claim as giving rise to a relevant loss of the Aircraft covered by the Insurance Contract/s, the Court will need to determine the terms, status and effect of the various statements and measures announced by Russian state entities during March 2022, including those relied upon at paragraphs 45 of the Particulars of Claim. The Claimants propose at paragraph 45(g) of the Particulars of Claim to address unspecified expert evidence to the issue of the “precise date on which it first became impossible to remove the Aircraft from Russia: [sic] I assume that the Claimants have in mind to call expert evidence of Russian law or other expert evidence of the practical position ‘on the ground’ in Russia at the material time. Both because the War Risks reinsurance is governed by Russian law and because the facts and matters relied upon include Russian legislation, these are matters which necessarily will require consideration of Russian law.”

“(a) Whether the leasing of aircraft has been lawfully terminated (including by reference to the imposition of Western Sanctions as a ground for termination); (b) Whether the lessees were/are obliged to redeliver/return the aircraft to the Claimants (including by reference to the counter-measures imposed by Russia); (c) Whether the aircraft have been lost and if so the cause(s) of loss, in particular whether the losses were caused by a peril falling within either the All Risks Cover or the War Risks Cover.”

“261.2. … If there are no provisions in the insurance / reinsurance contracts covering the risk of “non-return” (“deprivation of possession”) the Claimants will need to prove that the case of “non-return” (“deprivation of possession”) may somehow be qualified as a total physical loss of the aircraft or engine. In particular, the Claimants will need to explain to the Arbitrazh Court why they claim the total loss of an aircraft/engine in the situation when this property is not damaged and most of it is being operated. In other words, an Arbitrazh Court will need to consider whether it is possible that under the same insurance / reinsurance contract and in respect of the same property, the Claimants (lessors) suffered losses linked to the total loss of the property, and the Russian lessees while the Russian lessees (parties to the insurance contracts) did not. 261.3. The Arbitrazh Court may need to resolve the issue of whether a Russian airline could have insured the business risk of the Claimants related not to the physical destruction of the aircraft/engine but to the failure of their counterparty Russian airlines to fulfil their contractual obligations. In particular, the Arbitrazh Court will need to analyse the provisions of Article 933 of the RCC. These should, in my opinion, be interpreted as follows: a party to a business risk insurance contract should be a person whose business risks are to be insured; besides such risks may be insured only in favour of such person. In other words, the Claimants could under Russian law have validly insured their business risks only themselves. 261.4. The Arbitrazh Court will need to address another important issue: whether the alleged insured event has been caused by the wilful acts of the insured Russian airlines themselves (parties to the insurance contract). The Court will need to analyse the provisions of Article 963 of the Russian Civil Code stating that an insurer shall be released from payment of insurance compensation if the insured event has occurred as a result of the intent of the insured (party to the insurance contract) or beneficiary. 261.5. If the Claimants pursue their claims against the reinsurers, the Russian Court will have to ascertain whether such claims are valid in light of Article 967 of the RCC, effectively providing that reinsurance is "insurance for the insurer" …: this Article does not provide for the possibility for the insured (beneficiary) to apply directly to the reinsurer and bypassing an insurer because the insurer shall remain responsible for payment indemnity under the principal insurance. 263. A Russian Judge will then have to resolve whether the factual circumstances of the case have been proven or not: has a “deprivation of possession” taken place in fact? … the Arbitrazh Court will need to conclude what criteria allow to say that the “deprivation of possession” is final and that the Claimants will never again get their property back? 264. I believe that an Arbitrazh Court would first of all check whether there are criteria for “deprivation of possession” (for example, for how long such “deprivation” should have been present) in the contractual documentation (lease agreements, insurance / reinsurance contracts)? If there are no such criteria, an Arbitrazh Court should establish what actions have been taken by the Claimants to recover their property and what opportunities are still available to them: 264.1. Have the Claimants filed claims against the Russian airlines in court or commercial arbitration on the basis of the lease agreements and have they sought the recognition of the rendered awards in Russia and their enforcement? 264.2. Have the Claimants utilised the mechanisms of the 2001 Convention to which the Russian Federation is a party (if applicable)? 264.3. Have the Claimants applied to the Russian law enforcement authorities to initiate criminal proceedings on the grounds that there was no return of property owned by the Claimants by the lessees? … 266. … The complexity of these issues lies in the fact that they are indeed linked to factors that emerged after 24 February 2022 (such as, for example, the consequences of the introduction of the Western sanctions and Russian counter-sanctions). Resolving these issues will also entail a complex analysis of lease agreements subjected to foreign law.”

“5. The Russian State views the judiciary as a means of achieving state objectives, including its national security and economic objectives. The judiciary understands that it is expected to deliver rulings that advance state objectives, regardless of the technical legal merits, and can be punished if they do not do so. This tendency only increased in the course of the 2010s, as President Putin’s regime became more authoritarian in nature. 6. Prior to the war in Ukraine, it was conceivable that foreign companies could obtain a fair trial in Russia, where the substance of the dispute did not directly implicate important state interests. 7. Since February 2022, the setbacks Russia has faced in its war against Ukraine have created deep and growing concern in the state about the security of both Russia and the Putin regime. The latter views itself as locked in an existential battle with the West, which is supporting Ukraine with military and other aid and is imposing severe economic sanctions on Russia. Winning the war in Ukraine is Russia’s overriding priority. The designation of Western countries that support Ukraine as Unfriendly States reflects this. 8. Since these claims pertain to matters relating to major Russian State interests in a period of extreme hostility between Russia and the West, in my view, it is very likely that the judicial determination of these claims in Russia would be subject to state interference.”

“The judiciary lacks independence from the executive branch, and judges’ career advancement is effectively tied to compliance with Kremlin preferences. The Presidential Personnel Commission and court chairpersons control the appointment of the country’s judges, who tend to be promoted from inside the judicial system rather than gaining independent experience as lawyers. The 2020 constitutional amendments empowered the president to remove judges from the Constitutional Court and the Supreme Court, with the support of the Federation Council, further damaging the judiciary’s already negligible autonomy.”

“There are no stable rules, there’s no impartiality in … the arbitration of problematic disputes …”

“28. In cases that involve powerful interests or large stakes, judicial decisions are typically shaped by the state’s preferences or by vested interests. We may call the first source of influence “political direction” and the second “corruption”. 29. Both political direction and corruption play a major role in the way Russian political institutions, including the judicial system, operates today. … Where political direction and corruption are not engaged, for example in low-level cases, such as petty crime or minor commercial disputes, the court system arguably provides a satisfactory remedy for ordinary citizens. 30. The role of the state in Russia’s judicial system today must be understood in the context of the state’s wider role and direction of travel. Having lived and worked in Russia and followed the development of the country and its institutions, it is my view – and, I am confident, the consensus opinion of independent analysts and observers of Russia – that over the past two decades the state has comprehensively weakened and subordinated all independent institutions with the potential to restrain state power or to act in ways unwelcome to the state. These include civil society, political opposition, the media and elections.”

“are the Russian courts impartial”? In important matters they are not, and cannot be, in present circumstances. The question is rather: “how does the state assess its interests, and what decision will it direct the Russian court to make?”

“The Special Rapporteur is concerned about the many reported attempts by State authorities and private actors alike to exercise control over the judicial system — interference often referred to as “telephone justice”

“What is certain, though, is that unless the Russian judiciary becomes more independent, concerns will not be assuaged. The current procedures and criteria to appoint, dismiss and sanction judges still provide insufficient guarantees for objective and fair proceedings and judges remain exposed to pressure from powerful political and economic interests ”. 111. Based on the above research and my professional experience, I believe that there is a substantial risk of Russian courts being improperly influenced by executive authorities and being affected by “self-censorship”

“17. I do not disagree that, in cases which are of sufficient interest to the Russian State, it is capable of affecting the outcome of judicial decisions. However, this phenomenon is in my view less likely in the Arbitrazh Courts, before which this dispute would be litigated. In my opinion, that primarily reflects the fact that the types of disputes coming before those courts – i.e., commercial disputes – rarely contain features which would motivate the Government to seek to influence the outcome, as well as the fact of relatively greater transparency at the Arbitrazh Courts (as compared with the courts of general jurisdiction). This dispute seems to me to be one of the many cases that is likely to be determined by the Arbitrazh Courts without a significant risk of political interference.”

“23. I repeat that it is not my contention that Russian judges today – even Arbitrazh-Court judges – are never subject to political pressure or that they are always independent in performing their judicial duties. Yet, I do not believe it methodologically correct to contend that the Russian Arbitrazh judges are – by virtue of the manner of their appointment – structurally susceptible to political interference. Such a broad-brush approach chooses to ignore the millions of cases annually decided by Russian Arbitrazh Courts in which there are no rumours or suspicions of political interference behind the coulisses.”

“30. The level of transparency achieved by Law No.262 makes it imperative, in my opinion, to discard what is, now, an obsolete perception: relying only on generalities and suspicions in assessing allegations of judicial impropriety in a Russian Arbitrazh Court. 31. … Of course, transparency does not guarantee that a judge will not be subject to political or other influences (most particularly in disputes where legal texts require a judge to make a determination, e.g., to gauge the seriousness of alleged contractual violations as possible grounds for the lawful repudiation of a contract). Yet, the now-transparent Arbitrazh-Court system means that the possibility to corrupt a judge is more restricted; that it fosters a judicial culture where corruption is viewed as unacceptable. 32. I am not suggesting that attempts to influence a Russian Arbitrazh-Court judge are now relegated to the history books, that corruption has been eradicated from the Russian judiciary, or that the government is unable to affect the outcome of proceedings in an Arbitrazh Court in one of the rare cases where it was motivated to do so. However, as noted above, any such interference is significantly less likely because of the transparency reforms and the procedural guarantees to which I have referred above.”

“52. I can see how one might reach a view that the outcome of those cases is unfair. However, whether or not these decisions unfairly penalize the current owners is not an easy question to answer. Such a determination is more within the realms of ethics, economics, or political science, and, I agree: it is quite controversial. 53. In my opinion, the court decisions in JSC Kuchuksulfat, JSC Bashkir Soda Company, and JSC Solikamsk Magnesium Plant – even though they raise questions among lawyers and economists, and provide room for discussions among political-science scholars – were formally rendered without violating the letter of the law. I cannot see any convincing evidence that the Russian State interfered in those disputes, thereby determining their outcome in favour of the RF Prosecutor General’s Office.”

“139. In my opinion, nothing in the Reports of [Person X] or Dr. Gould-Davies establishes that there is any significant risk that: (A) any of the Russian litigants would attempt to interfere with judicial independence in the present dispute without getting a ‘green light’ from the Kremlin; and/or that (B) the Kremlin would authorize it even if any of the Russian litigants dared to ask for it. In my view, there would be no such risk. Such interference would be at odds with official narratives and publicly proclaimed goals and policies of the Russian State and, also, with the policies of the Russian Government which is seeking to resolve the matter of the leased Western aircraft via settlement negotiations. 140. In my opinion, there is no significant risk that the Russian State – or that the RNRC as a de facto state agency – would attempt to exert influence on Russian Arbitrazh Courts in their determination of the present dispute. The sums at issue are not large enough to prompt the State to risk losing face by showing that it instrumentalises its judicial system to evade contractual liability.FN It would run afoul of the official ideology and, also, with what seem to be the Russian Government’s strategic, long-run plans for economic development (see paras.87-90 of my Report). As mentioned above, that ideology and those plans are reflected in the Government’s settlement of claims and negotiations to settle further claims concerning retained aircraft, inclusive of insurance payments. I see no reasons why the State would adopt another strategy in the present dispute. 141. In summary, my opinion is that there is no direct State interest in the outcome of the present dispute, certainly not of sufficient weight to outweigh its interest in letting the courts deal fairly and impartially with the claims and to motivate it to seek to interfere (or to permit interference) with the outcome of the claims.” [FN] “I note that there is a multitude of publications – both in Russia and abroad – dealing with the retained aircraft. Thus, there is little chance that – were the Russian State to undertake ‘dirty tricks’ at the Arbitrazh Court – it would go unnoticed by the public. For the same reasons, there is little chance that illegal actions would be played out behind the scenes; that any unfair play of the Russian litigants at the court in the present dispute – and their attempts of unlawful influence Arbitrazh judges – would not be observed by the Kremlin.”

“51. The view that judicial practice in Russia today is less politicised and more impartial than ten or twenty years ago is not one that I have heard offered in the expert community. Professor Hendley does not share it. Speaking of the contemporary situation, she stated in an April 2023 interview that “We are back to this old Soviet trick of finding an eternally elastic law that can just catch anybody”

“[…] the state regularly lost cases in the commercial courts, particularly in tax-related matters. To stamp out this assertion of judicial independence, Putin took the drastic step of abolishing the Higher Commercial Court, the most pro-reform judicial institution in Russia, and placing the lower commercial courts under the supervision of least progressive court, the Supreme Court”. [William E. Pomeranz, Law and the Russian State: Russia’s Legal Evolution from Peter the Great to Vladimir Putin (Bloomsbury Academic, 2019), p. 159.] 52. Dr. Pomeranz argues this was also a “not-too-subtle message that the Constitutional Court could suffer a similar fate if it asserted its independence”

“Russian Judges with the experience in the Court’s Staff attach greater importance to discipline and knowledge of laws among the qualities important for a Judge; the protection of human rights is mentioned as the most important goals of a Judge. For Judges who came from the Prosecutor’s Office, the skills of “not being afraid to take responsibility” and “fairness” come first.”

“126. … In those cases in which I have participated personally, I have not been aware of such phenomena as “self­censorship”; I have no grounds for assuming that judges were guided not by the law but by their own ideas of what the state might expect from them ... 127. My own personal experience has been different. I have virtually never had any problems in accessing fair justice when there were legitimate grounds for doing so. If judgments of the Russian Courts were rendered (in my opinion) with violations of procedural and/or substantive laws, I have always had the opportunity to appeal to a higher Court and outline those violations in corresponding complaints. And quite often the violations and/or errors committed by the lower Courts were successfully corrected by the higher Courts. During my near 30-year practice as a lawyer in Russia, I have not encountered any cases of pressure or other undue influence on Judges exerted by the representatives of the state authorities. 128. In my practice, I myself have personally participated as a lawyer in numerous judicial cases in which the decisions and actions of the Russian state authorities were challenged. In these cases, I represented the interests of Russian or foreign private persons. It should be noted that in those cases where violations of the requirements of the Russian law were actually committed by the state authorities, the courts have satisfied the claims of my clients (claimants) and recognised the actions / decisions of the state authorities as invalid or unlawful regardless of whether the claimant was a Russian or a foreign person / company.”

“104. As noted above, major state and state-linked interests dominate official decision-making of all kinds, including those of the judicial system. In the case of aircraft lessees and Russian insurers, the financial sums at stake create a compelling interest to use their ties to the state to seek verdicts that favour them. 105. Several airline companies, such as JSC Rossiya Airlines, and insurance companies have clear links to the state. The possibility that Russian courts would rule against, or against the interests of, sanctioned state-linked companies in favour of companies from the states that sanction them appears to me remote. 106. As also noted earlier, it was possible in the past to imagine that courts might issue judgments that favour non-Russian companies in disputes with Russian ones because the Russian State had a specific interest in treating foreign companies leniently. As also noted, the comprehensive sanctioning of Russia since February 2022 makes it less likely than ever that such constraints would still apply in respect of companies from “unfriendly states”, especially where a verdict favouring such companies would result in a pure financial loss to the Russian State or state-linked interests, without any mitigating economic, influence, or reputational benefits. … 109. It is virtually impossible for me to imagine that a Russian court would rule against Russian interests in cases that have arisen as a consequence of actions decreed or encouraged by the Russian State, including President Putin, and that have been driven by its economic and security imperatives – and that, moreover, pit Russian interests against those of companies from “unfriendly states” that are waging what Russia views as an “economic war” against it.”

“The retrocession program will enable Russian National Reinsurance Company to increase its capacity in risk reinsurance from 2.5 to 10 billion rubles, which, in turn, will provide us an opportunity to increase our market share. At the same time, the amount of the Company’s own retention will remain high (2.5 billion rubles) and, therefore, reduce the cost of reinsurance coverage. Thus, acquiring coverage for its portfolio our Company will not only insure itself against catastrophic losses and accumulation risks but also retain funds in Russia’s economy (Russian cedents will get an opportunity to reinsure their risks in Russia).”

“120. The Russian National Reinsurance Company JSC (“RNRC”) was founded in 2016 by the Central Bank which remains its 100-percent owner. The RNRC was established pursuant to Federal Law No.363-FZ (03.07.2016) amending Federal Law No.4015-1 (27.11.1992, as amended) “On the Organization of the Insurance Industry in Russia”

“(a) War, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, martial law, military or usurped power or attempts at usurpation of power.”

“… information aimed at discrediting the use of the Armed Forces of the Russian Federation to protect the interests of the Russian Federation and its citizens, to maintain international peace and security, including calls to prevent the use of the Armed Forces of the Russian Federation for the mentioned purposes, as well as information aimed at discrediting the performance by state bodies of the Russian Federation of their powers outside the territory of the Russian Federation for the mentioned purposes”

“In this comment, N.N. Zhukov stated that he was an opponent of fighting and believed that the Russian military were waging war on the territory of Ukraine, and were not conducting a special military operation”; and (b) in its judgment, the court avoided using the term war, referring instead to Russia’s actions in Ukraine as “a special military operation in the Donetsk People’s Republic and the Lugansk People’s Republic in connection with the appeal of the heads of these republics for assistance” (reflecting the official Russian State narrative). iv) In the Resolution of the Kyiv District Court of Simferopol of the Republic of Crimea of 21.04.2023 in case No. 5-269/2023, the court set out the following reasoning in support of a decision to impose administrative liability where the defendant had: “expressed his disagreement with the actions of the Armed Forces of the Russian Federation to conduct a special military operation on the territory of Ukraine and considers these actions equivalent to war, i.e. performed public actions aimed at discrediting the use of the Armed Forces of the Russian Federation in order to protect the interests of the Russian Federation and nationals, maintaining international peace and security as part of the demilitarization and denazification of Ukraine.”

“154.1. The new offences are defined in terms (e.g., “public actions aimed at discrediting the use of Russian Armed Forces” and “public dissemination of deliberately false information”) which do not seem, to me, to encompass a description of the activities of lawyers in bringing claims involving consideration of the meaning of the insured perils in para.(a) of LSW 555D under Russian law. 154.2. Speeches in court rooms are not considered to be a form of public dissemination of information [citing § 7 of the Ruling of the RF Supreme Court Plenum No.3 (24.02.2005) “On case law about issues concerning the defense of honor and dignity of citizens, as well as of the business goodwill of citizens and legal persons”]. Moreover, it is quite clear that lawyers advancing or defending the case of their clients and mentioning the war risks upon which a party may rely – as having led to the alleged loss of aircraft – do not purport to discredit the Russian Army or disseminate false information about it. 154.3. The concept of war risks is described both in Art.964, Russian Civil Code, and in LSW 555D (the latter referring to “war, invasion, acts of foreign enemies, hostilities” (see para.341 of [Person X]’s Report)) in terms much wider than only “war”

“Information contained in court decisions and judgements, resolutions of preliminary investigation bodies and other procedural or other official documents, for appeal and contestation of which another judicial procedure established by the laws may not be considered as not corresponding to reality”

"As follows from the case files and established by the court instances, on 21 March 2022, during the period of time from 16h. 15 min. to 16h. 47 min. Bonzler M.V., realising the nature of her actions, deliberately, publicly, in relation to an unlimited circle of persons, during an open court session on the fact of bringing *** to administrative responsibility under article 20.3.3 (1) of the Code of Administrative Offences of the Russian Federation in room 212 of the Central District Court of the city of Kaliningrad, located at the address: ***, carried out public actions aimed at discrediting the use of the Armed Forces of the Russian Federation in the Donetsk People's Republic and the Lugansk People's Republic in order to protect the interests of the Russian Federation."

"On 22 May the defender received a phone call from Valentina Romanets, an inspector of the Administrative Law Enforcement Group (ALEG). She said: the police had received material that Bonzler had said the word "war" at two sittings. Therefore, Romanets asked the lawyer to come to the OMVD in the Central district of Kaliningrad. Bonzler explained to "

“Such a reason for a public event is especially relevant in connection with the military operation in the south-eastern regions of Ukraine”, “As for the protocol, a lot has changed since 06 March 2022. It is not clear what our government is doing; it attacked 16 regions of Ukraine. For what? Russia has already been banned from using Art. 51 of the UN Charter. It’s unclear what they are trying to achieve,” and “Because of these actions, everyone will soon come to an end.”

“The allegations that M.V. Bonzler, being a lawyer, expressed the opinion of her client (FULL NAME 4) in accordance with her powers and did not discredit the Armed Forces of the Russian Federation, were critically assessed by the courts, the objectivity of which is beyond doubt.”

“In order to protect the interests of the Russian Federation and its nationals, to maintain international peace and security, units of the Armed Forces of the Russian Federation may be promptly used outside the Russian Federation in accordance with generally recognised principles and rules of international law, international treaties of the Russian Federation and this Federal Law to solve the following tasks: (1) repelling an armed attack on units of the Armed Forces of the Russian Federation, other troops or bodies stationed outside the Russian Federation; (2) repelling or preventing an armed attack on another State that has applied to the Russian Federation with a corresponding request; (3) protecting nationals of the Russian Federation outside the Russian Federation from an armed attack on them. In accordance with Executive Orders of the President of the Russian Federation No. 71 and No. 72 dated 21 February 2022, the Lugansk and Donetsk People's Republics were recognised as sovereign and independent states and the Ministry of Defence of the Russian Federation is entrusted with providing peacekeeping functions on the territory of these states. By Resolution No. 35-SF on the use of the Armed Forces of the Russian Federation outside the Russian Federation dated 22 February 2022, the Federation Council of the Federal Assembly of the Russian Federation gave consent to the President of the Russian Federation to use the Armed Forces of the Russian Federation outside the Russian Federation based on generally recognised principles and rules of international law. The total number of units of the Armed Forces of the Russian Federation, their areas of operation, their tasks, and the duration of their stay outside the Russian Federation are determined by the President of the Russian Federation in accordance with the Constitution of the Russian Federation. On 24 February 2022, based on Resolution of the Federation Council No. 35-SF dated 22 February 2022, the President of the Russian Federation decided to conduct a special military operation on the Donetsk People's Republic and the Lugansk People's Republic in connection with the appeal of the heads of these republics for assistance.”

"… while conducting consulting work in a place accessible to an indefinite circle of persons, with open access to the office (lawyer's office) in the presence of two citizens, which indicates the publicity of actions aimed at discrediting the use of the Armed Forces of the Russian Federation to protect the interests of the Russian Federation and its citizens, to maintain international peace and security, as well as those aimed at discrediting the performance by state bodies of the Russian Federation of their powers outside the territory of the Russian Federation."

“1. Unless the law or the insurance contract provides for otherwise, the insurer shall be exempt from payment of the insurance indemnity and insurance amount when the insured event occurred due to: the impact of a nuclear blast, radiation or radioactive contamination; military actions, as well as manoeuvres or other military activities; a civil war, any popular unrest or strikes.” a civil war, any popular unrest or strikes.”

“The court did not accept the Defendant's objection with reference to Article 964 (1) of the CC RF, as no evidence of military operations, manoeuvres or other military activities in the territory of Belgorod region, Politotdelsky settlement at the time of occurrence of the insured event was submitted by the Defendant in the case file.”

“From the literal interpretation of para.1.1. of the sublease contract, it follows that from the zone of commercial exploitation of the leased wagons shall be excluded not any territories where military actions, manoeuvres, and/or military undertakings are occurring but only the territories on which such actions have been declared in an official way.”

“In my opinion, it is impossible to imagine that in these conditions a Russian court would rule against a preference expressed by the state. In any legal case in which the state considers itself to have an important interest, the key question is not: “are the Russian courts impartial”? In important matters they are not, and cannot be, in present circumstances. The question is rather: “ how does the state assess its interests, and what decision will it direct the Russian court to make? ”

“… Russia is ruled by a full-blown authoritarian system that subordinates all institutions to state interests. This includes the judicial system. All decisions, including judicial ones, of any importance are extremely likely to be directed by state interests. This is even more emphatically true of issues that are of strategic importance to the state. The fact that the state is now waging a war that the President sees as existentially significant for Russia, and in which Russia faces setbacks and even potential defeat, only reinforces this imperative. In present circumstances, judicial decision-making can be presumed to be fully subordinated to state interests.”

“…it is denied (if intended to be alleged) there was, at all material times after 24 February 2022, no reasonable prospect of the conflict ending in a reasonable period at time. In at least the first few weeks of the conflict, there was a great deal of uncertainty about how long the conflict was likely to last and how it was likely to develop. As at late February and early March 2022, at most a “wait and see” situation had arisen”

“(1) The exercise of civil rights solely with the intention of causing harm to another person, bypassing the law with an unlawful purpose, or any other intentionally bad faith exercise of civil rights (abuse of rights) is prohibited. The use of civil rights to restrict competition and the abuse of a dominant market position are prohibited. (2) In the event of failure to comply with the requirements set out in paragraph 1 of this Article, the Court, Arbitrazh Court or Arbitral Tribunal shall, taking into account the nature and consequences of the abuse, refuse to protect in whole or in part the right belonging to the person concerned and shall also take other measures prescribed by law. […] (5) The good faith of participants of civil relations and the reasonableness of their actions are assumed.”

“Under Article 10(1) of the Civil Code, exercise of civil rights solely with the intention of causing harm to another person, unlawful circumvention of the law and other intentional bad faith exercise of civil rights (abuse of rights) is prohibited. In the event of failure to comply with the requirements set out in paragraph 1 of the Article, the court, arbitrazh court or arbitral tribunal shall, taking into account the nature and consequences of the abuse committed, refuse to protect in whole or in part the rights belonging to the person concerned and also apply the other measures prescribed by law (Article 10(2) of the Civil Code). In view of the restrictive measures imposed on the Russian Federation and the claimant’s status (the claimant’s location is in the United States), the court considers that the claimant’s actions aimed at obtaining material compensation when similar compensation could not be obtained by Russian residents in the US due to the unfriendly actions of the United States and international organizations constitutes an abuse of rights, which is an independent ground for dismissal of the claim.”

“The Entrepreneur bases his arguments about the abuse of the Company’s right in dealing with this claim on the fact that that pursuant to Decree No. 79 dated 28.02.2022 of the President of the Russian Federation “On the Application of Special Economic Measures in Connection with the Unfriendly Actions of the United States of America and the Foreign States and International Organisations That Have Joined Them”, Great Britain (the state the company is incorporated in) is classed as an unfriendly state that is subject to restrictive measures. At the same time, the intention to knowingly dishonestly exercise the rights, the purpose of which is to harm another person, should be found to have taken place at the time of the actions the abuse of the right is seen from. It is clear from the case files that the violation was identified on 21.03.2019, and this claim was filed by the Company with the Arbitrazh Court of Kirov Region on 09.09.2021, i.e., well before the introduction of restrictive measures by Decree No. 79 dated 28.02.2022 of the President of the Russian Federation. The cassation applicant’s reference to the abuse of right also manifesting itself in the Company’s actions aimed at accumulating and using trademarks solely for the purpose of recovering compensation from other participants in economic activity cannot be found to have merit due to lack of any documentation of these facts. Thus, the finding of the Court of Appeal that there are no grounds for finding the Company's actions to constitute abuse of right is correct.”

“On the meaning of RF Presidential Decree of 28.02.2022 N 79, as well as the RF Government Decree of 05.03.2022 N 430-r, paragraph 1, 2, Art. 10 of the Civil Code, given the introduction of restrictive measures against Russia and the status of the creditor (the location of the beneficiary creditor is the United States), the presence REVIONICS, INC in the register of debtor claims must be regarded as an abuse of right, which is grounds for excluding his claims from the register of creditors. At the same time, the purpose of excluding the claims of REVIONICS, INC from the register of creditors of Aptechka Trading Network JSC is to prevent distribution of the Debtor's assets to unfriendly countries putting sanctions pressure on the Russian Federation. Therefore, the bankruptcy receiver believes that the claims of REVIONICS, INC should be excluded from the register of the debtor's creditors on the basis of the above-mentioned circumstances.”

“It must be remembered that the purpose of checking the legitimacy of claims is to prevent unjustified claims from being included in the register, since such inclusion would violate the rights and legitimate interests of creditors with justified claims, as well as those of the debtor and its founders (participants). According to the register of debtor's creditors claims, REVIONICS, INC is included into the 3rd priority unsecured claims (13,166,658.00 rubles), as well as penalties (1,284,456.06 rubles). However, within the meaning of Presidential Decree of 28.02.2022 No. 79, as well as the Russian Government's Order of 05.03.2022 No. 430-r, paragraphs 1 and 2 of Article 10 of the Civil Code, given the introduction of restrictive measures against the Russian Federation and the creditor's status (the location of the beneficiaries of the creditor is the United States), the presence of REVIONICS, INC in the creditor claims register should be considered an abuse of right, which is grounds for excluding his claims from the register of creditors. Thus, Presidential Decree №79 of 28.02.2022 introduced a ban on currency transactions, associated with the provision of foreign currency by residents in favor of non-residents under loan agreements. … The Bankruptcy Law does not establish a specific list of grounds for excluding a creditor's claims from the register of the debtor's creditors. The arbitrazh court, considering the application of the receiver or other person involved in the case to exclude the creditor's claims from the register of creditors, does not review the judgment by which the claims of such creditor were included in the register, but considers the legality of the creditor in the register after the grounds in connection with which the receiver requests the exclusion of claims. Considering the restrictions in force in the Russian Federation with regard to transactions (operations) with non-residents from unfriendly states, the receiver is deprived of the opportunity to make settlements with creditors, which will lead to a violation of the rights and legitimate interests of other creditors, the court therefore concludes that the application of the debtor's receiver for exclusion of the claim of creditor Revionics, Inc. in the total amount of RUB 14,448,114.06 from the creditor claims register should be granted.”

“However, the applicant bank is a non-resident legal entity and its place of registration (jurisdiction) is Latvia. According to Order №430-r of the Government of the Russian Federation dated March 5, 2022, all countries of the European Union are included in the list of unfriendly states. Latvia is a member state of the European Union; accordingly, restrictions are imposed on all Latvian economic entities. The court, having analyzed the circumstances of the case under Article 71 of the Arbitrazh Procedural Code of the Russian Federation based on its internal conviction and a comprehensive, full, objective and direct examination of the available evidence, used Article 10 of the Civil Code and refused to satisfy the Bank’s application. The grounds on which the courts had arrived at those conclusions were set out in the court decisions. The appeal court had no grounds for challenging them.”

“As follows from the case materials, Smart Technological Systems LLC is a shareholder of the debtor's majority shareholder AC Travicom JSC. At the same time, Smart Technological Systems LLC was a subsidiary of a foreign legal entity from the countries unfriendly to Russia according to the Order of the Government of the Russian Federation No 430-r dated 05.03.2022. … Thus, the court of the first instance correctly concluded that the repayment of the register of creditors of Almaz-Avia Training Centre LLC by STS LLC will not lead to the termination of bankruptcy proceedings, but to the transition to bankruptcy proceedings in order to sell the property of Almaz-Avia Training Centre LLC and to disrupt the deadlines for the execution of state defence contracts. … If external management is terminated and the debtor is declared insolvent (bankrupt), the only liquid asset – real estate - will leave the possession of Almaz-Avia Training Centre LLC in favour of foreign persons (taking into account that the founder of Smart Technological Systems LLC is a foreign person). … The court of appeal concluded that the actions of Smart Technological Systems LLC showed clear signs of abuse of right, since the actions were not aimed at restoring the debtor's solvency, but at obtaining a liquid asset of the debtor for purposes contrary to the interests of the debtor, creditors and society (in violation of Article 20.3(4) of the Bankruptcy Law and Article 10 of the Civil Code of the Russian Federation). With regard to the appellant's objections concerning the alleged failure to prove the fact of bad faith behaviour of STS LLC …, the court of appeal notes that the court of the first instance, in making the appealed order, coming to the conclusion about the applicant's bad faith, proceeded from the fact that the actual actions of STS LLC and AC TRAVICOM JSC are currently aimed not at restoring the debtor's solvency, but at foreclosing on its only asset and effectively terminating the activities of TC Almaz-Avia LLC, which has not been refuted by the appellant”

“In terms of ordinary good faith behaviour, it would not have been difficult for CITIBANK N.A. and CB Citibank JSC, given their affiliation and control over a single decision-making centre, to transfer the performance of obligations to Sovcombank PJSC from CITIBANK N. A. to CB Citibank JSC, a Russian legal entity not subject to foreign sanctions regulation. Moreover, the general principles of applying foreign law in the Russian Federation are established by Article 4 of the Constitution of the Russian Federation, Articles 1189, 1191, 1192, and 1193 of the Russian Civil Code and do not provide for the obligation of Russian legal entities to implement the prohibitions (export restrictions) imposed by international organisations or foreign states against the Russian Federation. This legal position has been developed by arbitrazh courts in cases to compel Russian entities under foreign control to continue to fulfil in kind their obligations to Russian persons despite foreign sanctions restrictions. For example, in the case of Russian Railways PJSC v. Der Siemens Aktiengesellschaft and Siemens Mobility LLC (Ruling of the Ninth Arbitrazh Court of Appeal dated 15 June 2023 …), despite the fact that Russian Railways PJSC had contractual relations only with the foreign company, its Russian controlled company Siemens Mobility LLC was also forced to fulfil its obligations in kind. Applying a similar approach to this case means that CB Citibank JSC, following accepted standards of good faith, could and should have fulfilled its obligations to the Claimant. To do otherwise would mean that foreign legal entities and their Russian controlled entities could evade their obligations by taking advantage of the sanctions regime of unfriendly states in Russia.” and: “Thus, in the present case there is a full legal structure for the recovery of losses: Sovcombank PJSC suffered losses as a result of the blocking of funds owed to it; this loss arose as a result of the Defendants' bad faith actions, expressed in following the regime of sanctions of unfriendly states against the Russian Federation; there is an obvious causal link between the Defendants' bad faith actions and the Claimant's losses. It should be taken into account that the Defendants have not committed an ordinary civil law tort, but a tort complicated by following the regime of sanctions of foreign states against the Russian Federation. In other words, the Defendants' behaviour contradicts such basic principles of public policy as the prohibition of abuse of right (Article 10 of the CC RF) and the inadmissibility of unilateral refusal to fulfil an obligation (Article 310 of the CC RF).”

“Article 1193 of the Russian Civil Code invoked by Euroclear Bank SA/NV does not specify that the contents of foreign law provisions shall be established; the application of the public policy clause is conditioned on the implications of application of foreign law provisions, while the implications may be determined without the establishment of contents of the Belgian law. According to Article 1193 of the Russian Civil Code, the foreign law provision to be applied in accordance with the provisions of this section may, in exceptional cases, be not applied, when the implications of its application would expressly contradict the fundamentals of legal order (public policy) of the Russian Federation.” and: “The inadmissibility of the execution of unilateral sanctions restrictions was pointed out by the Constitutional Court of the Russian Federation in the Decision of 13.02.2018 No 8-P, according to which the right, the realisation of which is conditioned by following the regime of sanctions against the Russian Federation, its economic entities, which are established by any state outside the proper international legal procedure and in contradiction with multilateral international treaties to which the Russian Federation is a party, is not subject to court protection. The mere location of a litigant from an unfriendly state does not in itself indicate an abuse of a right by that person, nor does it deprive such a person of the right to court protection. At the same time, if there are specific grounds for a person from an unfriendly state to commit acts in violation of the legislation of the Russian Federation, the affiliation of such a person to an unfriendly state will be an additional circumstance indicative of abuse of right. Since the law of the Russian Federation is applicable to the present legal relations, the unlawful actions (inaction) of Euroclear Bank SA/NV to block on the basis of sanctions the funds owed by the Bank are not subject to court protection and testify to the bad faith of Euroclear Bank SA/NV.”

“At the same time, these Decrees of the President of the Russian Federation do not adopt a measure in the form of refusal of settlements with residents of foreign states as well as they do not establish a special procedure for inclusion or exclusion of claims of foreign persons associated with unfriendly states from the register of creditors ’claims in bankruptcy cases. The courts took into account that the creditor himself did not apply to the court with an application for the exclusion of his own claims from the register of creditors ’claims, it submitted statement of defence related to the merits of the dispute. Contrary to the arguments of the applicant, the mere fact that the Company Suintex Limited is a resident of a foreign state related to a group of states unfriendly to the Russian Federation is not an unconditional ground for denial of protection of such person’s right to judicial protection.”

“The issuance of the aforementioned legal acts and the fact of the location of Khepri Finance Designated Activity Company, registered on the territory of a state connected to the group of states that are unfriendly to the Russian Federation does not constitute unconditional grounds for excluding the claims of the debtor from the register of creditors’ claims. The Decrees of the President of the Russian Federation, No. 79 dated 28.02.2022 and No. 95 dated 05.03.2022 establish the procedure for the performance by residents of the Russian Federation of foreign currency operations, the acquisition of shares, the discharge by the Russian Federation, constituent entities of the Russian Federation and municipalities of their obligations on credits and loans to foreign companies connected to the group of states that are unfriendly to the Russian Federation. At the same time, no measures in the form of the refusal of settlements with residents of foreign states have been enacted and in addition no special procedure has been introduced for including or excluding the claims of foreign persons related to unfriendly states from the register of creditors’ claims in bankruptcy cases. At present the rules of effective legislation do not stipulate such grounds for the termination of an obligation as the affiliation of a creditor to an unfriendly country.”

“The court of appeal rejects the assertion of the defendant that Decree No. 79 …, as this decree does not release the defendant from the obligations that it assumed. Furthermore, the claimant filed this claim for the protection of its rights on 17.10.2019, in other words, prior to the adoption of this Decree. In addition, the defendant did not indicate the specific measures stipulated by Decree No. 79 of the President of the Russian Federation dated 28.02.2022 which are applicable in this case, while the declared fact of the abuse by the claimant of its right based on the meaning of Article 10 of the RCC is not confirmed by any supporting documents”

“Siemens Gamesa has publicly announced its acceptance of the non-friendly states unilateral sanctions against the Russian Federation and Russian persons (“ protocol of examination of evidence ” – internet page of Siemens Gamesa of Spain). Due to the failure to complete the project for the construction of the Kolska Wind Farm, the applicant will not ensure the fulfilment of its public legal obligation under 54 959 the RESP, nor will it ensure the fulfilment of its obligations under the special investment contract to the Government of the Murmansk Oblast. Thus, the defendant’s actions of willfully terminating its obligations under the supply contract and claiming the transfer of the disputed property, caused by the defendant and its controlling persons ’ compliance with the restrictive measures of states engaging in unfriendly acts against the Russian Federation, Russian individuals and legal entities, were committed with the intention of causing damage to the applicant and the Russian Federation energy system, violating the energy sovereignty of the Russian Federation …”

“Under paragraph 10 of the Resolution No. 55 while assessing the argument of the applicant in accordance with paragraph 2 of Article 90 of the Russian Arbitrazh Procedure Code arbitrazh courts should take into account: the reasonableness and validity of the applicant’s claim for the application of interim measures; the likelihood of causing significant damage to the applicant in the event of failure to take interim measures; ensuring a balance of interests of interested parties; preventing violations of public interests, interests of third parties when taking interim measures. Proceeding from the legal position contained in the second paragraph of paragraph 13 of the resolution of the Plenum of the Supreme Arbitrazh Court of the Russian Federation dated 09.12.2002 No. 11 “On Some Issues Related to the Entry into Force of the Arbitrazh Procedure Code of the Russian Federation’’, arbitrazh courts should not take interim measures in case the applicant has not substantiated the reasons for applying for interim measures in respect of the claim with reference to specific circumstances confirming the necessity of adoption of interim measures and has not provided evidence confirming his arguments.”

“The Arbitrazh Court of Moscow considers a case filed by SPE BIOTECHPROGRESS JSC against the respondent MT RUSSIA LLC seeking recovery of RUB 36,633,410 under the Supply Agreement, including RUB 32,878,452.50 in debt and RUB 3,754,958.20 in penalty interest. The plaintiff filed an application for interim measures in the form of seizure of the respondent's funds. The applicant states that the respondent is controlled by legal entities being residents of unfriendly countries; as of 07 June 2022 the shareholders of MT Russia LLC are Tecnimont S.P.A. (Italy), owning 99% of the authorized capital, and TPI - Tecnimont Planung und Industrieanlagenbau GmbH (Germany); several arbitrazh proceedings are pending against the respondent and the respondent is unable to pay its debts. Having considered the application, the court found that it should be satisfied partially, since failure to grant the interim measures being sought might complicate or render enforcement of the court order in the case impossible, should it come into force.”

“In support of its application, the plaintiff points out that H&M (Hennes & Mauritz) is a Swedish company, Europe's largest clothing retailer, headquartered in Stockholm and New York. H&M and its subsidiaries operate in 71 countries with 4,968 shops as of November 2018. … At the same time, Sweden, as a European Union Member State, is included in the list of foreign countries and territories that take hostile actions in respect of the Russian Federation, Russian legal entities and individuals … The respondent published the following press release on its official website on 02 March 2022: "H&M Group is deeply concerned about the tragic developments in Ukraine and stand with all the people who are suffering. H&M Group has decided to temporarily pause all sales in Russia. The stores in Ukraine have already been temporarily closed due to the safety of customers and colleagues. The situation is continuously monitored and evaluated. Representatives of the company are in dialogue with all relevant stakeholders. H&M Group cares for all colleagues and joins all those around the world who are calling for peace. Clothes and other necessities are donated by the company. H&M Foundation has also made donations to Save the Children and to UNHCR." On 03 March 2022, the respondent sent a letter of similar content to the plaintiff: "We would like to inform you of the following: H&M Group (hereinafter, H&M Group), represented by its sole shareholder H&M Hennes & Mauritz GBC A.B., Private Limited Company, within the scope of its sole and exclusive competence to determine the core business of the company, due to the uncertain situation, extremely unfavourable market conditions and a significant interruption in the supply chain of products and goods, has decided to temporarily suspend all retail shops and online sales in the Russian Federation and Belarus. In view of the above, the shop located in the leased premises in your shopping centre will temporarily suspend its business activities from 03 March 2022." Although the respondent is a Russian legal entity, it is fully controlled by a legal entity which is a resident of an unfriendly country (Executive Order of the Russian President No. 95 dated 05 March 2022 On Temporary Procedure for Meeting Loan Obligations to Certain Foreign Creditors). Therefore, the plaintiff believes and documents that the respondent has no intention of both complying with the obligations under preliminary lease agreement for premises No. RU0753 dated 24 August 2019 entered into between the parties and enforcing the court order in the future, considering the specifics of economic sanctions imposed and observed by the European Union in respect of the Russian Federation, which sanctions were also supported by Sweden, among others. Thus, the likelihood of difficulties in enforcing the judgment in the case, and failure by the respondent to duly perform contractual obligations resulting in substantial damage to the plaintiff are more than obvious and prove that the plaintiff's application is well founded in the form claimed by it. The interim measures being sought are aimed at preventing actions which may result in impossibility or difficulty for the enforcement of the court order in the case, correspond to the subject matter of the claim filed, are commensurate with the application filed and do not violate the balance of interests of the parties. Taking of the said measures will not make it impossible or substantially difficult to carry out lawful activities of the respondent, and these are consistent with requirements contained in Article 91 of the Russian Arbitrazh (Commercial) Procedure Code.”

“In this case, the plaintiff states that failure to grant the interim measures being sought might complicate or render enforcement of the court order impossible. The court finds that, as stated by the plaintiff, the information about the suspension of technical support services posted on the official website https://www.dell.com/restrictions/support/ru-ru/index.html is valid throughout the Russian Federation. In addition, the Respondent's founders are foreign companies … registered in the country (the Netherlands) that took hostile actions in respect of the Russian Federation and Russian legal entities. Given these circumstances, the court finds that there is a real threat of difficulty of enforcing the court order or threat of unenforceability of the court order in the future. The court considers that the interim measures being sought are directly related to the subject matter of the dispute, proportionate to the claims, necessary and sufficient to secure the enforcement of the court order. Given these considerations, the court considers it necessary to satisfy the application for interim relief.”

“The amount of Ruskhimalyans LLC's claims against the Defendants is more than 100 billion rubles at the current euro exchange rate. The companies are subsidiaries of foreign legal entities from countries unfriendly to Russia according to the Russian Federation Government Order N 430-r dated 05.03.2022 "On Statement of the List of Foreign States and Territories Committing Unfriendly Actions against the Russian Federation, Russian Legal Entities and Individuals". The mentioned circumstances may indicate that the Defendants intend to withdraw their own assets from the territory of the Russian Federation, which will lead to difficulties in the performance of the Decision of the court. The seizure of the disputed property and Shares in the corporate structure of Linde GMBH and Linde plc prevents the withdrawal of assets from the subsidiaries, which the Claimant could awarding in the event the claim is successful.”

“The claimant did not produce any objective evidence confirming that it had taken any real actions aimed at reducing the volume and sale of any of its property (in particular, evidencing the likelihood of concealing property, siphoning-off assets, alienating property to third parties, selling real estate or business, entering into transactions, transferring funds, etc.), as well as the absence on the part of the defendant of property on which execution could be levied at the enforcement proceedings stage. … The measures sought concern the defendant’s property interests and may lead to an imbalance of the interests of the parties to the dispute, as well as a violation of the rights of the defendant, if the measures sought are adopted. The mere fact that VOLKSWAGEN AKTIENGESELLSCHAFT has suspended its operations in Russia does not attest to the fact that failing to adopt measures to secure the claim may render enforcement of a court decision difficult or impossible,”

“The Volkswagen Group’s intention to sell its assets is not linked to the claim brought and cannot be regarded as an attempt to evade the execution of a court decision rendered in favour of the claimant. There is currently no reason to believe that the defendants will evade execution of a court decision (if rendered in favour of the claimant) and that their financial situation will not allow them to comply with such decision. At the same time, the interim measures adopted against the defendants have a negative effect on their business reputation, since these measures support the view of the defendants as organizations that are unable to pay off their debts and that are trying to evade this. However, the court has no information that would characterise the defendants in this way. Paragraph 5 of Article 10 of the Russian Civil Code establishes that the good faith of participants in civil legal relations and the reasonableness of their actions are assumed.”

“When assessing the arguments of the administrator regarding the membership of a foreign legal entity from an unfriendly country in Limited Liability Company TED Gas Systems, the arbitrazh court relies on the following. As it follows from the extract from the Unified State Register of Legal Entities regarding TED GAS SYSTEMS LLC …, DUNGS BETEILIGUNGS-GMBH (Germany) is a member of the respondent. On 28 February 2022, Executive Order of the President of the Russian Federation No. 79 dated 28 February 2022 on Imposing Special Economic Measures in Connection with the Hostile Actions of the United States in League with Other Foreign States and International Organisations was issued. In accordance with Executive Order No. 95 dated 5 March 2022 on Temporary Procedure for Meeting Loan Obligations to Certain Foreign Creditors of the President of the Russian Federation, the list of foreign countries and territories that take hostile actions in respect of the Russian Federation, Russian individuals and legal entities, which list includes European Union Member States, was approved by Executive Order of the Government of the Russian Federation No. 430-r dated 5 March 2022. Currently, all the remedies provided for by the insolvency (bankruptcy) institution shall pursue the objective not only to protect the rights and legal interests of the entity, its creditors, and employees, but also to protect the national interests of Russia and ensure its financial stability. According to paragraph 1 of Article 10 of the Russian Civil Code, exercise of civil rights solely with the intention to harm another person, to act in circumvention of the law with an unlawful purpose or to otherwise knowingly exercise civil rights in bad faith (abuse of the right). As it is established in the case, the respondent is controlled by a legal entity being a resident of an unfriendly country, and, therefore, the actual beneficiary under the challenged transactions is a foreign legal entity. In case of non-observance of the requirements provided for by paragraph 1 of the Article, the arbitrazh court or mediation court, taking into consideration the nature and the consequences of the abuse of the right, shall refuse to protect the person's right in full or in part and shall apply other measures provided for by the law (paragraph 2 of Article 10 of the Russian Civil Code).”

“which transactions entail, inter alia, the creation of the right of ownership of the immovable property, and which transactions (operations) entail, directly and (or) indirectly, the establishment, change or termination of rights of ownership, use and (or) disposal of interests in authorized capitals of limited liability companies (except for credit institutions and non-credit financial organizations) or other rights that make it possible to state the terms of control of such limited liability companies and (or) conditions on which they conduct business activities”

“At the same time, the court correctly rejected the company's request to recognise and enforce the decision in case №204930, referring to Article 244(1) of the APC RF, according to which the arbitrazh court rejects recognition and enforcement of a foreign court decision and a foreign arbitrazh decision if the enforcement of the foreign court decision would be contrary to the public policy of the Russian Federation. In rejecting the company's application, the court correctly mentioned that the enforcement of the decision in case №204930 would be contrary to the public policy of the Russian Federation, which presupposes good faith and equality of parties entering into private relations. At the same time, the company that applied for recognition and enforcement of the decision in case №204930 is under the jurisdiction of Switzerland, which is included in the List of foreign states and territories that commit unfriendly actions against the Russian Federation, Russian legal entities and individuals, approved by the Order of the Government of the Russian Federation №430-r of 05.03.2022 (hereinafter - the List), adopted in pursuance of the Decree of the President of the Russian Federation №95 of 05.03.2022 "On Temporary Procedure for the Performance of Obligations to Certain Foreign Creditors". The statement of the List is a consequence of the countries mentioned in the List (and companies under their jurisdiction) committing unfriendly actions towards the Russian Federation that cause damage to sovereignty and security, including economic security, and the Russian Federation's response in order to prevent damage to the sovereignty and security of the state, protect the interests of large social groups, and respect the constitutional rights and freedoms of individuals. Thus, according to public information, since March 2022, the company has suspended its activities in the Russian Federation despite the fact that there are no obstacles for it to carry out its activities in the Russian Federation, while the company is objectively deprived of the possibility to carry out business activities (including for the performance of the contract concluded with the company) in the territories of the List of states due to the imposition of economic sanctions. These circumstances show the inequality of the parties to the contract, due to the objective impossibility of enforcement of which the decision in case №204930 was made. In reaching the conclusion that there were no grounds to satisfy the company's application for recognition and enforcement of the decision in case №204930, the court correctly pointed out that its enforcement would be contrary to the public policy of the Russian Federation as mentioned in Decrees of the President of the Russian Federation №81 of 01.03.2022 "On Additional Temporary Economic Measures to Ensure Financial Stability of the Russian Federation", №95 of 05.03.2022 "On Temporary Procedure for the Performance of Obligations to Certain Foreign Creditors", №252 of 03.05.2022 "On the Application of Retaliatory Special Economic Measures in Connection with the Unfriendly Actions of Certain Foreign States by International Organisations", and №254 of 04.05.2022 "On the Temporary Procedure for the Performance of Financial Obligations in the Scope of Corporate Relations to Certain Foreign Creditors", Order of the Government of the Russian Federation №430-r of 05.03.2022, regarding the performance of obligations to foreign creditors under the jurisdiction of countries unfriendly to the Russian Federation.”

“27. The authorities show that the English court may well decline to grant an injunction or a stay, as the case may be, where the interests of parties other than the parties bound by the exclusive jurisdiction clause are involved or grounds of claim not the subject of the clause are part of the relevant dispute so that there is a risk of parallel proceedings and inconsistent decisions. These decisions are instructive. In Evans Marshall and Co Ltd v Bertola SA and Another [1973] 1 WLR 349 there was a tripartite dispute but only two of the parties were bound by a clause conferring exclusive jurisdiction on the court in Barcelona. Kerr J at first instance was impressed by the undesirability of there being two actions, one in London and the other in Barcelona (pp 363–364). The Court of Appeal took a similar view (pp 377, 385). Sachs LJ thought separate trials particularly inappropriate where a conspiracy claim was in issue (p 377). In Aratra Potato Co Ltd v Egyptian Navigation Co (The El Amria) [1981] 2 Lloyd's Rep 119 the primary dispute was between cargo interests and the owner of the vessel, both parties being bound by a clause in the bill of lading conferring exclusive jurisdiction on the courts of Egypt. But the cargo interests had also issued proceedings against the Mersey Docks and Harbour Co, which was not bound by the clause. The Court of Appeal upheld the judge's decision refusing a stay. In the course of his leading judgment in the Court of Appeal Brandon LJ said, at p 128: “I agree entirely with the learned Judge's view on that matter, but would go rather further than he did in the passage from his judgment quoted above. By that I mean that I do not regard it merely as convenient that the two actions, in which many of the same issues fall to be determined, should be tried together; rather that I regard it as a potential disaster from a legal point of view if they were not, because of the risk inherent in separate trials, one in Egypt and the other in England, that the same issues might be determined differently in the two countries. …”

“88. As for an alleged risk of irreconcilable judgments, this cannot amount to a strong reason. Even if I am wrong that there is no real risk, the risk was one accepted by the parties when they agreed to exclusive jurisdiction. 89. In a similar vein, any inconvenience in dealing with the Petroleo claim in Venezuela or in having separate or concurrent proceedings cannot amount to strong reasons for disregarding the parties’ contractual bargain when such matters were foreseeable at the time of the Services Contract. I am in any event far from convinced that there would be any such inconvenience …”

“93. Turning now to the irreconcilable judgments factor, in my judgment this does not lead to a different outcome when it is weighed in the balance with those I have so far considered. This situation only arises because the first defendant chose to submit to the jurisdiction of this court. … 94. In those circumstances, I accept the second defendant’s submission that merely because these proceedings have been commenced against the first defendant does not provide a good reason for requiring the second defendant to submit to the jurisdiction of this court, when the much more natural forum for the resolution of these disputes is the Ukrainian court. …”

“Taking the question of loss as an example, the facts themselves are unlikely to be contentious – it is common ground in the LP Claims (and likely to be so in the Russian OP Claims) that the aircraft have not been returned to the lessors and continue to be operated by the Russian Operators – but the key issue is whether, as a matter of applicable law, those facts amount to a loss of the aircraft. Similar points arise in relation to peril and causation, which are quintessentially mixed questions of fact and law.”

“RULE 5 - English courts will not enforce or recognise a right … or legal relationship arising under the law of a foreign country, if the enforcement or recognition of such right … or legal relationship would be inconsistent with the fundamental public policy of English law.”

“The courts are not free to refuse to enforce a foreign right at the pleasure of the judges, to suit the individual notion of expediency or fairness. They do not close their doors unless help would violate some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal.” (Loucks v Standard Oil Co of New York (1918) 120 NE 198, 202) Lord Nicholls stated that the exception was to be “exercised exceptionally and with the greatest circumspection” (§ 18). See, to similar effect, Belhaj v Straw [2017] UKSC 3 § 37: “However recognition will, exceptionally, be refused, when recognition would conflict with a fundamental principle of domestic public policy. The classic authorities in respect of legislation affecting property or contracts are Oppenheimer v Cattermole [1976] AC 249 (non-recognition of Nazi laws discriminating against Jews) and Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 (non-recognition of an Iraqi law confiscating the Kuwait Airways fleet, which was in Iraq, and giving it to Iraqi Airways in undeniable breach of Security Council Resolutions). Similarly, recognition may be denied to foreign judgments where this would be contrary to public policy: Dicey, Morris & Collins, rule 51; see also Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 … and Yukos Capital Sarl v OJSC Rosneft Oil Co (No 2) [2014] QB 458.”

“121 The first rule is that the courts of this country will recognise, and will not question, the effect of a foreign state’s legislation or other laws in relation to any acts which take place or take effect within the territory of that state. 122 The second rule is that the courts of this country will recognise, and will not question, the effect of an act of a foreign state’s executive in relation to any acts which take place or take effect within the territory of that state. 123 The third rule has more than one component, but each component involves issues which are inappropriate for the courts of the United Kingdom to resolve because they involve a challenge to the lawfulness of the act of a foreign state which is of such a nature that a municipal judge cannot or ought not rule on it. Thus, the courts of this country will not interpret or question dealings between sovereign states; “Obvious examples are making war and peace, making treaties with foreign sovereigns, and annexations and cessions of territory” - per Lord Pearson in Nissan v Attorney General [1970] AC 179, 237. Nissan was a case concerned with Crown act of state, which is, of course, a different doctrine and is considered in Rahmatullah v Ministry of Defence [2017] UKSC 1, but the remark is none the less equally apposite to the foreign act of state doctrine. Similarly, the courts of this country will not, as a matter of judicial policy, determine the legality of acts of a foreign government in the conduct of foreign affairs. It is also part of this third rule that international treaties and conventions, which have not become incorporated into domestic law by the legislature, cannot be the source of domestic rights or duties and will not be interpreted by our courts. This third rule is justified on the ground that domestic courts should not normally determine issues which are only really appropriate for diplomatic or similar channels (see Shergill v Khaira [2015] AC 359, paras 40 and 42).”

“that courts in this jurisdiction will not adjudicate or sit in judgment on the lawfulness or validity under its own law of an executive act of a foreign state, performed within the territory of that state. The rule also has a sound basis in principle. It is founded on the respect due to the sovereignty and independence of foreign states and is intended to promote comity in inter-state relations. … The rule does not turn on a conventional application of choice of law rules in private international law nor does it depend on the lawfulness of the conduct under the law of the state in question. On the contrary, it is an exclusionary rule, limiting the power of courts to decide certain issues as to the legality or validity of the conduct of foreign states within their proper jurisdiction. It operates not by reference to law but by reference to the sovereign character of the conduct which forms the subject matter of the proceedings. In the words of Lord Cottenham LC, it applies “whether it be according to law or not according to law”. …” (§ 135) subject to the exceptions listed at § 136 including: “foreign acts of state which are in breach of clearly established rules of international law, or are contrary to English principles of public policy, as well as where there is a grave infringement of human rights (Oppenheimer v Cattermole [1976] AC 249, 277-278, per Lord Cross of Chelsea; Kuwait Airways (Nos 4 and 5) [2002] 2 AC 883 and Yukos Capital (No 2), paras 69-72).”

“… in seeking which direction to take in such matters where decisions must be taken on grounds of public policy, the judges should try to work in harmony with the executive.” (§ 146) Lord Steyn stated that “the public policy condemning Iraq's flagrant breaches of public international law is yet another illustration of such a truly international public policy in action” (§ 115). However, Lord Hope emphasised the need for caution in this regard: “138 It is clear that very narrow limits must be placed on any exception to the act of state rule. As Lord Cross recognised in Oppenheimer v Cattermole [1976] AC 249, 277-278, a judge should be slow to refuse to give effect to the legislation of a foreign state in any sphere in which, according to accepted principles of international law, the foreign state has jurisdiction. Among these accepted principles is that which is founded on the comity of nations. This principle normally requires our courts to recognise the jurisdiction of the foreign state over all assets situated within its own territories: see Lord Salmon, at p 282. A judge should be slow to depart from these principles. He may have an inadequate understanding of the circumstances in which the legislation was passed. His refusal to recognise it may be embarrassing to the executive, whose function is so far as possible to maintain friendly relations with foreign states. 139 But it does not follow, as Mr Donaldson for IAC has asserted, that the public policy exception can be applied only where there is a grave infringement of human rights. This was the conclusion that was reached on the facts which were before the House in the Oppenheimer case. But Lord Cross based that conclusion on a wider point of principle. This too is founded upon the public policy of this country. It is that our courts should give effect to clearly established principles of international law. He cited with approval Upjohn J's dictum to this effect in In re Claim by Helbert Wagg & Co Ltd [1956] Ch 32.3, 334. As Upjohn J put it, the true limits of the principle are to be found in considerations of public policy as understood in the courts. I think that Mr Donaldson sought to achieve a rigidity which is absent from these observations when he said that, whatever norm one finds that has been abused, it cannot be applied in our law if it is a manifestation of international law and does not fall within the recognised exception relating to human rights. 140 As I see it, the essence of the public policy exception is that it is not so constrained. The golden rule is that care must be taken not to expand its application beyond the true limits of the principle. These limits demand that, where there is any room for doubt, judicial restraint must be exercised. But restraint is what is needed, not abstention. And there is no need for restraint on grounds of public policy where it is plain beyond dispute that a clearly established norm of international law has been violated.”

“152. … the imposition or threat of trade restrictions in order to exert pressure upon other states, and thereby achieve political objectives, has been part of the armoury of the state since classical times. … Trade sanctions, embargoes and protectionism more widely remain normal and important aspects of statecraft in the modern world. There is, for example, a section of the UK Government’s website devoted to the trade sanctions, embargoes and other trade restrictions imposed by this country on other countries (73 countries are currently listed). As it explains, the UK uses sanctions to fulfil a range of purposes, including supporting foreign policy and national security objectives, as well as maintaining international peace and security, and preventing terrorism. Other countries do likewise. In particular, the trade restrictions alleged to have been adopted or threatened by the Russian Federation are another example of the use of such measures by a sovereign state in the pursuit of its interests. 153. There is no trace, as far as the court has been made aware, of the pressure imposed by such measures ever having been treated in English law as constituting duress. That is so, notwithstanding their long history, and the amplitude of case law concerned with state practice, including restrictions on trade, in other contexts. That appears to us to be unsurprising. Measures of this kind, whether imposed by the UK or by other countries, cannot sensibly be regarded as being, as a category, inherently illegitimate or contrary to public policy. Indeed, they are often imposed for reasons which are widely regarded as morally admirable, such as to encourage other countries to alter objectionable practices (for example, sanctions are currently imposed by the UK for the purpose of encouraging the Russian Federation to cease actions which destabilise Ukraine, including actions which undermine or threaten its territorial integrity, sovereignty or independence). That remains the position even if the measures have the effect of exerting pressure on a targeted state to enter into an agreement which it would not otherwise have concluded. That is not infrequently the purpose of such measures. 154 Nor can warnings or threats of the possibility of restrictions on the importation of Ukrainian goods into the territories of the Russian Federation or the Eurasian Customs Union, or of the cancellation of joint projects in a number of industries, be characterised as duress of goods. There is not, for example, a pleaded case of threats to destroy or damage property, or to seize or detain goods contrary to Russian domestic law or at all. Refusing to accept Ukrainian goods into Russian sovereign territory, or persuading other members of the Eurasian Customs Union to do likewise, is a different matter. … 162 There appears to us in any event to be no principled basis for treating international law as a guide to the illegitimacy of conduct under the English law of duress. … 163 In the first place, such a rule would be contrary to the approach adopted by the House of Lords in Dimskal Shipping [1992] 2 AC 152. … Similarly, in the present case, it is English law, not international law, which provides the yardstick of legitimacy, whether the alleged breach of international law is arguable or manifest. The point is that non-domestic law, whether national as in Dimskal Shipping, or international as in the present case, does not provide the relevant standard. That is not to deny that international law may be relevant in some cases to an assessment of public policy, although not determinative of the issue; but we have already explained that trade restrictions of the kind in question in the present case cannot be regarded as contrary to English public policy: para 153 above.”

“My Lords, it is, in my view, most consistent with the achievement of the purpose of the Act of 1971 that the time at which to ascertain whether a choice of forum clause will have an effect that is proscribed by article III, paragraph 8 should be when the condition subsequent is fulfilled and the carrier seeks to bring the clause into operation and to rely upon it. If the dispute is about duties and obligations of the carrier or ship that are referred to in that rule and it is established as a fact (either by evidence or as in the instant case by the common agreement of the parties) that the foreign court chosen as the exclusive forum would apply a domestic substantive law which would result in limiting the carrier's liability to a sum lower than that to which he would be entitled if article IV, paragraph 5 of the Hague-Visby Rules applied, then an English court is in my view commanded by the Act of 1971 to treat the choice of forum clause as of no effect.”

“The principle of respect for the territorial integrity of states is well founded as one of the linchpins of the international system…”); and (ii) the prohibition on the use of force between States, reflected in Art. 2(4) of the Charter of the United Nations 1945. Following the February 2022 invasion, the United Kingdom in co-ordination with the US and the EU imposed sanctions against Russia. Regulation 4 of the Russia (Sanctions) (EU Exit) Regulations 2019 (“UK Russia Sanctions”) identifies the purpose of the UK’s sanctions as: “(a) encouraging Russia to cease actions destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine; (b) promoting the payment of compensation by Russia for damage, loss or injury suffered by Ukraine on or after 24th February 2022 as a result of Russia’s invasion of Ukraine”

“The UK’s sanctions against 120 businesses and oligarchs are part of a concerted strike against the Putin regime carefully co-ordinated with our international allies including the US, the EU, and other G7 partners.” and on 9 March 2022, introducing new sanctions, said: “These new measures will further tighten the growing economic pressure on Russia and ensures the UK is in line with sanctions imposed by our allies.”

“a collateral contract can be said to arise because the reinsurer is assuming an obligation to the insured in exchange for consideration, namely its premium which on some occasions may be paid directly by the insured or by the insurer’s broker, and will in any event ultimately be funded by it in the sense that the insurer will use the premium it receives from the insured to pay the reinsurance premiums.”

“[31] … a claimant abroad will be restrained by injunction from suing inconsistently with a forum clause contained in the contract which forms the basis of the claim… In essence, he is not entitled to found a claim on rights arising out of a contract without also being bound by the forum provisions of that contract… [33] As is clear from the relevant authorities it is necessary to characterise the substance of the claim being asserted by the foreign claimant. The question is whether the claimant is, in substance, asserting a contractual liability… [34] Guidance on the proper approach to characterising the foreign claim was set out by the Court of Appeal in The Prestige [2015] 2 Lloyd’s Rep. 33 at [10]-[16] per Moore-Bick LJ. In particular: (1) The key question is the substance or content of the right asserted abroad, not the derivation or formal source of the right: see at [14]; and (2) when determining the substance or content of the foreign right, it is necessary to look at the questions or issues raised, rather than the form of the claim, see at [11].” (1) The key question is the substance or content of the right asserted abroad, not the derivation or formal source of the right: see at [14]; and (2) when determining the substance or content of the foreign right, it is necessary to look at the questions or issues raised, rather than the form of the claim, see at [11].”

“The government (civil, military or de facto) and other public authorities 30. The President of the Russian Federation is the head of state of the Russian Federation. The President’s formal constitutional responsibilities include ... 31. The President is de facto and/or de jure the ultimate head of government who asserts and exercises the central authority of the state. The formal constitutional limits to the President’s powers and responsibilities do not limit the scope of the power and authority exercised by the President as de facto head of government. Subject to limited political and/or informal constraints, reflecting the need to cultivate and/or maintain support from Russian elites and Russian society as a whole, President Putin exercises power without constitutional or legal or meaningful practical restraint. 32. The President utilises the following (amongst other) organisations and individuals to govern the Russian Federation, regardless of any formal legal or constitutional constraints or other formal organs of government (such as the Prime Minster or the legislature): 32.1 The Presidential Administration, which, amongst other things, coordinates policy and the drafting of legislation and Presidential decrees, communicates the President’s will by giving informal and/or verbal orders, and ensures that his exercise of power is implemented by and/or through and/or despite the formal organs and ministries of the Russian government (formally constituted as such). In practice, no significant governmental law-making or policy-making takes place in Russia without the knowledge, approval and/or control of the Presidential Administration; 32.2 The Security Council, which is a body established under the Russian Constitution and by Presidential Decree dated 6 May 2011 (as amended by Decree dated 16 January 2020) as a collegiate consultative body chaired by the President. In practice the Security Council is dominated by the President personally, operates as an instrument for the consolidation of the President’s rule, and that implements the President’s decisions on matters of national security and strategic interest; 32.3 The ministries and agencies responsible for intelligence, security and national security, which report directly to the President (and including, specifically, the Ministry of Defence, the Ministry of the Interior and the Federal Security Service (“FSB”)); 32.4 The regulatory and tax authorities, which may be and as necessary are deployed as instruments of persuasion, coercion, oppression and/or punishment; 32.5 Other federal government ministries, agencies and services; 32.6 The judicial system and judges; 32.7 Significant commercial enterprises wholly or partly owned by the state; 32.8 The many individuals with positions or backgrounds in the various federal security and intelligence agencies, including many who, since leaving their agency positions, have been promoted into positions of economic and commercial significance (the so-called “siloviki”); and/or 32.9 Significant business leaders (many of whom are also siloviki) and others with whom the President has personal relationships and/or over whom the President exercises influence. 33. At all material times, the formal government (in the form of the Prime Minister and the Council of Ministers), the Parliament (in the form of the Duma and the Federation Council, in which there are no representatives of any independent political parties) and significant commercial enterprises and business leaders and siloviki operated, and continue to operate, under and in subjection to the President. 34. At all material times, the interests of the state (as determined by the President) take precedence over all private rights and interests, such that whenever an issue of vital policy and/or national security and/or otherwise of significant interest to the President arises, the President can and does utilise all or some of the foregoing (amongst other) organisations and individuals as the instruments of power through which he sets policy, gives orders and/or secures the implementation of those orders. 35. In the context of civil aviation, the following constitute governmental and/or public authorities relevant to the activities of registered air carriers and/or Russian operators of aircraft (whether for passenger carriage or freight cargo carriage): 35.1 The Ministry of Transport of the Russian Federation (“MinTrans”). MinTrans is and was at all material times the ministry of the federal government responsible for developing and implementing government policies in the transport sector, including the civil aviation sector. The head of MinTrans is and was at all material times the Minister of Transport, Mr Vitaly Savelyev (who, prior to his appointment in November 2020, was the CEO of Aeroflot). 35.2 The Federal Air Transport Agency (“FATA”, also known as Rosaviatsiya). … FATA operates under the supervision of MinTrans. First Deputy Prime Minister Andrey Belousov is responsible for coordination of the activity of FATA. … 37. At all material times, the Russian Federation has operated and has been operated, including by President Putin and/or by those acting on his behalf, in what President Putin has termed ‘manual steering’ mode (ruchnoe upravleniye) – that is, in a manner whereby President Putin and/or those acting on his behalf personally control all significant economic, business and social activity in the pursuit of what President Putin determines are Russia’s interests and objectives. Further, all the resources of the Russian Federation, including those belonging (ostensibly) to significant commercial enterprises, are, and are regarded by President Putin as being, at his disposal and under his control in what he regards as Russia’s strategic interests. The President sets policy and issues orders, directives, instructions and guidance in all areas of Russian civil, military, political and economic life which are regarded by him as strategic and/or as significant to Russian political, geopolitical and national security interests. … 39. On many occasions, President Putin’s policies, intentions, objectives, wishes and preferences are sufficiently well-known or made known to the Presidential Administration, others close to him and/or government ministries or agencies for them to be implemented and acted upon without the need for detailed or specific orders, directives, instructions or guidance. Among other things, this can happen at the regular meetings between the President and government ministers, at which the ministers are required to report on their activities and the President gives orders, insofar as necessary, as to how they ought to proceed, and expects that they will comply with any such orders. On such occasions, the President’s policies and intentions are implemented and acted upon by the Presidential Administration, others close to the President and/or government ministries or agencies themselves giving express or implied orders, howsoever couched, to individuals or commercial enterprises as, and to the extent, necessary to ensure that the President’s policy, orders, directives, instructions, wishes, objectives and/or guidance are carried into effect. … 41. The formal position laid down in Russian law, and any apparent freedom of action which Russian law appears to allow, is an incomplete and inaccurate picture of the real context within which commercial enterprises in Russia must operate and did at all material times operate. The ostensible legal position is therefore insufficient and/or inaccurate as a means of identifying the discretion (if any) which commercial enterprises have in deciding what actions to take and not to take, although decrees, orders and/or legislation were and are often issued or made in order to enable individuals and commercial enterprises to comply with the President’s, the government’s and/or other public authorities’ orders or requirements without violating other laws. 42. In addition to making formal decrees or passing laws, some or all of the following methods were at all material times, and are, often used by the President (whether through unidentifiable individuals acting on his behalf or through formal office-holders, ministries or agencies) and/or by the government and/or by other public authorities or agencies as means of (i) giving governmental orders (express, implied or tacit) to private individuals and corporate entities, and (ii) influencing and/or controlling decision- making so as to ensure action consistent with the governmental orders which have been given: 42.1 Public and private statements, whether of present fact or future fact or expectation or desire. 42.2 Requests that a commercial enterprise act in a certain way, and/or suggestions as to what a commercial enterprise might do, and/or opportunities specifically created for certain types of commercial enterprise of which, ostensibly, they may choose to avail themselves. These may take the form of consultative or advisory meetings, discussions and other communications between private businesses and government officials, at or by which messages are conveyed as to the manner in which those private businesses are expected to act. 42.3 The use of regulatory and governmental institutions (including the judicial system) as instruments of encouragement, coercion, oppression and/or punishment of any who fail to comply (or exhibit reluctance to comply) with orders, howsoever given. 42.4 The use of the security services as instruments of influence, persuasion, coercion, oppression and/or punishment. 42.5 Attack or threats of attack on the physical well-being and/or property of those (and/or the families of those) who fail or refuse to comply with express, implied or tacit orders (howsoever given), especially in ways regarded as detrimental to the President’s policies or Russia’s national security interests as determined by the President. Pressure may be applied to individuals including in the form of (or by threats of) the loss of business interests, the seizure of assets, personal bankruptcy, arrest and/or designation as a foreign agent or person under foreign influence (with an attendant restriction upon civil rights). … 43. As a result of the use of these methods over many years since the start of 2001 and at all material times, combined with the fact that their use is widely known within commercial enterprises operating in Russia, the methods alleged at paragraphs 42.1 and 42.2 above were, and at all material times were reasonably understood and treated by Russian individuals and corporate enterprises (whatever the precise form in which they presented themselves or howsoever they were couched) as amounting to, (i) governmental and/or presidential and/or public authority orders and/or (ii) requests and/or expectations to act according to the government’s political objectives and therefore for political purposes, which must not be refused or declined or ignored but, on the contrary, must be complied with such that what they require, demand, request or suggest (or howsoever else their subject-matter may be put) must be brought about, obeyed and/or complied with. The air transport industry in Russia and the role of the lessees 46. At all material times, the air transport industry in Russia has been, and has been regarded by the President and/or the government as, a sector of the economy of strategic importance, and/or the civil aviation fleet (and its operations) is and is regarded as critical national infrastructure, and/or their preservation is and is regarded as a matter of national security. This is because Russia is highly dependent on its air transport infrastructure, by reason of the large distances between its regions, the relative isolation of many of its cities and communities, the vulnerability of non-central regions (especially in the east and south of the country) to political and/or socio-economic instability, and the outdated nature of its alternative internal transport networks. The aviation industry is also an essential component of the Russian economy and supports a large number of jobs in Russia. … 54. The aircraft of which the Claimant [AerCap] (and those it represents) has demanded redelivery account for approximately 10% of the civil aviation fleet being operated within the air transport sector of the Russian Federation. The aircraft of which all Western lessors have demanded redelivery will account for a materially higher percentage of Russia’s civil aviation fleet, namely up to about 40% of Russia’s entire civil aviation fleet on the basis that all EU-based lessors are likely to have demanded redelivery of all aircraft leased to Russian air operators. Further, Russia does not have the capacity to replace foreign leased aircraft with domestically manufactured aircraft. Thus Russia is and was dependent upon foreign leased aircraft for a functioning civil aviation sector, and the Russian government appreciated this at all material times. The proportion of the fleet which is foreign-leased is such that the mass repossession of such aircraft by foreign lessors would have (i) crippled Russia’s domestic and international aviation transport networks, (ii) caused severe problems for the Russian economy, and/or (iii) caused serious instability in Russia’s non-central regions as a result of the reduction in their economic, social and political links to the rest of the country. 55. In the premises, the consequences of the EU and/or UK sanctions and/or the actions taken by lessors following those sanctions represented a significant threat to the continued operation of the Russian air transport sector and, therefore, to the economic and/or national security interests of the Russian Federation. The retention in Russia by the lessees of the leased aircraft was, and was perceived by the Russian government as being, critical to the strategic and national security interests of the Russian Federation. This was the case at all material times from the first introduction of sanctions targeting Russian aviation on 25 February 2022, at the latest. 56. Further or alternatively, the confiscation and/or seizure and/or restraint and/or detention and/or appropriation of the Aircraft & Engines by the Russian government and/or other public or local authorities of the Russian Federation and/or by the lessees under the Russian government’s orders were a means of inflicting financial harm on western businesses domiciled within the EU, the UK and/or the US. Orders and actions of the Russian government in response to Western sanctions 56A. On 26 February 2022, the Minister of Transport, Mr Vitaly Savelyev, held an emergency meeting with the head of FATA, Mr Alexander Neradko, and Russian airline representatives (…). During this meeting, the airline representatives were told, inter alia, not to return their aircraft to foreign lessors and to await further clarifications and/or directions from the Russian government. Those statements would have been understood by the representatives of those airlines as a reflection of the Russian government’s position and as a tacit order or prohibition communicated by Mr Savelyev on behalf of the Russian government that foreign-leased aircraft should not be returned to their lessors, either at all or pending further order or direction from the government, and that they should instead continue to be retained and/or operated by the airlines. The meeting was reported in a Kommersant article dated 28 February 2022 and is thereby likely to have come to the attention of airlines which were not represented at the meeting. … 57. On 28 February 2022, the Deputy Minister of Transport, Mr Igor Chalik, met with senior executives of Aeroflot, S7 Airways, Ural and Utair (…) to discuss the means by which foreign-made aircraft would remain in Russia. The implication of Mr Chalik’s involvement and the subject matter of discussion was that the will of the President and/or of the government was for the aircraft to remain in Russia regardless of the lessees’ obligations under the leases. This would have been apparent to the lessee representatives at the meeting. This implication was itself a tacit order to the lessees represented at the meeting that the aircraft must not be returned, pending a government decision as to the formal means by which the retention of the aircraft in Russia would be fully secured by the government. The meeting and the discussion at the meeting were reported by Russian media by about 2 March 2022. The will and tacit orders of the President and/or government thereby became known more widely, including to Russian lessees of foreign-leased aircraft not represented at the meeting. 58. In the period between about 2 March and 8 March 2022, the government and/or MinTrans and/or FATA took action and/or gave orders and instructions in relation to the preservation in Russia of foreign leased aircraft. These amounted to orders that the Aircraft & Engines be confiscated, seized, restrained, detained and/or appropriated by not being allowed to leave the country, and included orders designed to ensure (i) that international flights were suspended, (ii) that steps were taken to register aircraft in the Russian Federation (even though Russian law did not yet permit such registration) and (iii) that airports were physically maintained so as to avoid damage to aircraft. The First Defendant will rely on the actions and/or orders and instructions of the government and/or MinTrans and/or FATA (as summarised below) for their full force, meaning and effect. … 58F. Also on 4 March 2022, a meeting with operational staff was held at MinTrans in connection with the situation in the civil aviation industry created by the requirement for lessees to return aircraft to the lessors outside the Russian Federation. 58F.1 It was reported that during the meeting the Minister of Transport, Mr Vitaly Savelyev, had “firmly and emotionally voiced the requirements for airports to maintain aircraft in good working condition.” 58F.2 The requirements were reported to have been subsequently set out in a letter from Mr Aleksandr Yuryevich Serov, Executive Director of Rostovaeroinvest, a regional company in the airport operations sector, to his colleagues in the following terms, in translation: “… Today the Minister announced his requirements for airports. He did it in quite a tough and passionate way. And it related to damage to aircraft on the ground. The runways must be cleaned like a mirror, not a single stone should get into the engine and damage the blades, there should be not a single stone cut or thorn on the runway, no birds and no damage to aircraft on the ground during maintenance. Therefore, we must be extremely careful going forward. We are not allowed to make mistakes. Planes have now become diamonds.” 58F.3 The letter sent by Mr Serov in relation to the government’s instructions demonstrates that the preservation of the civil aviation fleet available to Russian operators was being regarded by the government as an issue of national importance. … 60B. On 5 March 2022, during a public appearance at an aviation training centre, President Putin indicated that it was the Russian government’s policy that foreign-leased aircraft would not be returned to the foreign lessors: 60B.1 He stated, among other things, as follows (in an official Kremlin translation; emphasis added): “Leasing companies and spare parts – I am not going to go into detail right now, but your former CEO, now Minister of Transport, has some ideas, and he reports them to me regularly, calls me almost every morning. On the whole, I support these considerations. Let’s give him the opportunity to negotiate with his partners. I hope they will agree on things that overlap with their own interests. But I am certain that we will fly.” 60B.2 This statement was made in response to a question by an Aeroflot pilot expressing concern about the future of the Aeroflot fleet, where “the company will not be able to replace Boeing and Airbus overnight” and asking “how will the aviation industry be operating in the near future when leasing companies want to take our aircraft?”. … 61.5 Further or alternatively, it is to be inferred from the other facts and matters set out above and below that the President, those acting on his behalf (whose identity is not known) and/or the government ordered MinTrans, the Federal Customs Service, the Ministry of Defence, the FSB and/or other authorities to ensure that the required approvals and permissions were not given, such that the aircraft were not allowed to leave the Russian Federation. … 68. On 31 March 2022, President Putin held a meeting about the development of air transport and aircraft manufacturing with, amongst others, the Prime Minister (Mikhail Mishustin), the Chief of Staff of the Presidential Administration (Anton Vaino), the First Deputy Prime Minister (Andrei Belousov), the Deputy Prime Minister (Yuri Borisov), the Minister of Transport (Vitaly Savelyev), other presidential aides and ministers, the Head of FATA (Alexander Neradko) and the heads of various air industry companies, including Aeroflot and the Volga-Dnepr Group (of which AirBridgeCargo is a subsidiary). The First Defendant will rely on President Putin’s statements about the aviation industry at the meeting for their full force and effect. Excerpts from a transcript of the meeting were posted on the President of Russia’s website and on the English version of the website at http://en.kremlin.ru/events/president/news/68097. President Putin’s statements are likely, therefore, to have come to the attention of airlines which were not present at the meeting including the Lessees. 69. The President’s statements at the meeting on 31 March 2022 were only consistent with the air operators retaining the leased aircraft. In the circumstances and in the context of Russian society, his remarks and conclusions were, and were reasonably understood by the air operators as being, (i) only consistent with the leased aircraft being retained and not redelivered, and therefore (ii) an implicit order to retain and not to redeliver leased aircraft and engines. Further or alternatively, in retaining and not redelivering leased aircraft and engines, the air operators were and are acting for political purposes in aid of and in accordance with the policies, objectives and requirements of the Russian government. 70. Also on 31 March 2022, Mr Yuri Borisov, the Deputy Prime Minister of the Russian Federation, stated during a briefing about the development of a Russian domestic aircraft industry that the Russian aviation industry is “systemically important”, that the foreign aircraft would stay in Russia, and that they would be operated prior to the launch of production of Russian jets in the required quantities. … 80C. On 9 February 2023, President Putin and Mr Savelyev met with representatives of the aviation industry in Russia on the occasion of the 100th anniversary of Russian domestic civil aviation. A recording of the event and excerpts from a transcript of the meeting were posted on the President of Russia’s website and on the English version of the website, at http://en.kremlin.ru/events/president/news/70484. 80C.1 According to the official translation, Mr Savelyev thanked President Putin for the decision he made to retain aircraft in Russia, to which President Putin interjected that it was Mr Savelyev who retained the aircraft and President Putin merely agreed. Minister of Transport Vitaly Savelyev: Mr President, First of all, on behalf of all civil aviation employees and on my own behalf, allow me to thank you for the difficult decision that you made amid the sanctions, that is, to retain aircraft in Russia. Vladimir Putin: It was you who retained them, and I merely agreed. Vitaly Savelyev: I agree with this correction, but nothing would have come of it without you. Thanks to all this, we saved the civil aviation sector and continued to work stably. 80C.2 The video shows that, in addition to the words included in the official transcript, Mr Savelyev also said, immediately before President Putin’s interjection, “Such a strong decision…”

“19. Alternatively, if (contrary to the Insureds’ position) the Insureds’ claims are excluded from Section One of the Policy by reason of the application of the exclusion in respect of war and allied perils, then the Insureds will in that eventuality say that the cause of their loss was the acts of one or more persons done for political purposes and/or confiscation and/or seizure and/or restraint and/or detention and/or appropriation (for the reasons set out in the Defence of the First Defendant dated 5 September 2022 (including as amended hereafter)), such that they are entitled to an indemnity in respect of those claims under Section Three of the Policy. …”

“24. Without prejudice to the burden of proof which is on the Claimant and without prejudice also to the full ambit of LIC’s case as set out below, LIC will say (amongst other things): 24.1 Absent a willingness and/or ability on the part of the Insureds to repossess the Aircraft & Engines or otherwise to compel the Lessees to comply with the Lessor Notices terminating the leasing of the Aircraft & Engines whilst the Aircraft & Engines remained in Russia, the Lessees decided: (i) not to comply with such notices, which had been issued only as a result of the imposition of EU and UK sanctions in response to Russia’s invasion of Ukraine, but instead (ii) to retain possession of the Aircraft & Engines and to continue to use and operate them for their own commercial purposes and/or consistently with their own economic interests, as they had done prior to the imposition of EU and UK sanctions and to the issuing by the Insureds of the Lessor Notices. 24.2 The Lessees sought the support of the Russian government for their decisions aforesaid and the Russian government and/or public authorities have supported the Lessees to retain possession of the Aircraft & Engines and to continue to use and operate them for their own commercial purposes and/or consistently with their own economic interests, including by: (i) making public statements supporting the Lessees to retain possession of the Aircraft & Engines and to continue to use and operate them; (ii) providing for Lessees to make lease payments in roubles pursuant to Decree 95 of 5 March 2022, as supplemented by Presidential Decree 179 of 1 April 2022; (iii) introducing (with effect from 12 May 2022), by way of an amendment to Resolution No. 311 of the Russian Federation (“Resolution 311”), an export ban on aircraft being exported for the purpose of their return to lessors located in foreign states which the Russian government had classified as unfriendly to the Russian Federation; and (iv) making provision for the registration of the Aircraft & Engines in the State Register of Civil Aircraft of the Russian Federation and in the Register of Aircraft Rights and Transactions without requiring mandatory provision of documents of title or confirmation of de-registration from the register of the state of previous registration. 24.3 If there had been a genuine will on the part of the Lessees to return the Aircraft & Engines to the Insureds, there were ways for them to do so, including (but not limited to) by (i) returning the Aircraft & Engines to the Insureds at locations outside Russia prior to the introduction of the export ban pursuant to Resolution 311 and/or, once the export ban was in effect, by (ii) applying for permission (if and insofar as it was required) to transfer the Aircraft & Engines outside Russia. 24.4 In the premises, it is denied that the loss claimed by the Insureds has been proximately caused by the operation of any war or allied peril, whether as alleged or at all. … 29. As to each of the alleged acts of the Lessees (to which LIC makes no admissions): 29.1 The retention of possession of and/or the failure to return and/or the continued use and operation of an Aircraft or Engine by a Lessee do not constitute an “act” within the meaning of the Political or Terrorist Purposes Peril. 29.2 In retaining possession of and/or failing to return and/or continuing to use and operate an Aircraft or Engine, the Lessees were not acting for “political or terrorist purposes” within the meaning of the Political or Terrorist Purposes Peril. 29.3 Further or alternatively, in retaining possession of and/or failing to return and/or continuing to use and operate the Aircraft & Engines, the Lessees were not seeking to “inflict[] financial harm on western businesses domiciled within the EU, the UK and/or the US” (per paragraph 56 of the D1 Defence). 29.4 To the contrary, in retaining possession of and/or failing to return and/or continuing to use and operate the Aircraft & Engines, the Lessees were: (a) Acting for their own commercial purposes and/or consistently with their own economic interests, as the Claimant contends at paragraph 16 of the D1 Reply, and/or the commercial and/or economic interests of their owners; and/or (b) Acting otherwise in their own (perceived) best interests and/or the (perceived) best interests of their owners, directors, officers and employees, including (if and to the extent they did so) by giving effect to any policies, intentions, objectives, wishes, preferences, instructions, guidance, expectations, desires, requests, requirements, demands, suggestions, will, or facilitations (per paragraphs 39, 42.1, 42.2, 43 and 44 of the D1 Defence) of the Russian government and/or public authorities, whether in order to curry favour with such entities and/or to avoid any (perceived) risk of encouragement, influence, persuasion, coercion, oppression, punishment, attack or threats of attack (per paragraphs 42.3 to 42.5 of the D1 Defence) or other negative consequences of failing to do so (per paragraphs 42.6 and 42.9 of the D1 Defence). … … 45. LIC admits that the following constitute the de jure Russian government or a Russian public authority: the President of the Russian Federation, the Presidential Administration, the Prime Minister, the Council of Ministers, the Duma, the Federation Council, the Security Council, the intelligence and security agencies including the FSB, MinTrans, the Ministry of Defence, FATA, FSST, SATMC and the Federal Customs Service. 46. As pleaded above, an act of the Russian government or public authority is not within the Political or Terrorist Purposes Peril on its true construction and/or was not the proximate cause of the Insureds’ loss in this case. If an act of the Russian government or public authority is to be relied upon to establish the application of exclusion clause 6(b) or cover under Section Three of the Policy, such an act must constitute an order within the meaning of the Confiscation Peril.47. Save as admitted in paragraph 45 above, the relevance of paragraphs 30 to 45 [of the D1 Defence] is denied. 47. Without prejudice to the generality of that denial: 47.1 The portrayal or description of the unfettered power of the Russian President and the operation of the Russian State in paragraphs 30 to 45 is an oversimplified and inaccurate caricature of the Russian political system. 47.2 The powers of the Russian President were at all material times constrained by formal constitutional or legal limitations, by meaningful political and/or informal and/or practical constraints and de facto limitations arising from, inter alia, Russian law and/or practice, the nature of the Russian Federation including ineffective regulation and bureaucracy, endemic corruption, the weakness of the rule of law, the geographic expanse of the Russian Federation, the influence and power of Russian elites and the need for the Russian government to maintain some degree of popular support. 47.3 For the reasons given below, it is denied that any of the alleged informal expressions of policies, intentions, objectives and so forth (per paragraphs 39, 42.1, 42.2, 43 and 44 of the D1 Defence) were tacit orders of the Russian government (including the Russian President), whether as alleged or at all. … 51. As to paragraphs 32 and 33, it is denied that the Russian President is able to utilise the listed organisations and individuals to “govern” the Russian Federation in the unlimited way alleged by the First Defendant, “regardless of any formal legal or constitutional constraints or other formal organs of government”, and it is denied that commercial enterprises (whether significant or otherwise) and/or business leaders operate “under and in subjection to the President”

“(c) 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. … (e) Confiscation, nationalisation, seizure, restraint, detention, appropriation, requisition for title or use by or under the order of any government (whether civil, military or de facto) or public or local authority."”

“18. On 24 February 2022, Russia invaded other territories of Ukraine, giving rise to a full-scale armed conflict between Ukrainian and Russian armed forces. At all material times since that date, the conflict in Ukraine continues. There was at all material times thereafter (and is) no apparent prospect of it ending within a reasonable period of time. … 32. … by 23:59 on 8 March 2022 at the latest, key Russian state actors (identified in paragraph 35 below) had determined that foreign-leased aircraft would not be returned to the foreign lessors. In late February and early March 2022 (and by 23:59 on 8 March 2022 at the latest), as set out in paragraphs 36 – 47 below, a series of measures had been formulated and were being implemented to ensure that, despite the aforesaid demands and notices, the aircraft, including the Aircraft, would not be permitted to be returned to their foreign lessors, including the Claimants. 33. These measures and their implementation were acts committed for political purposes (within the meaning of paragraph (c) of the War Risks Perils) and/or amounted to confiscation, seizure, restraint, detention and/or appropriation and were ones taken by or under the order of the Russian government (including President Putin) (within the meaning of paragraph (e) of the War Risks Perils). A case to this effect has been pleaded by AIG Europe S.A. ("AIG") in its Defence to Claim No. CL-2022-00294 (the "AerCap action"). AIG also has a 10% line on each of the AR and WR Policies. The Claimants will say in the present case that paragraphs 30 – 83 of AIG's Defence to the AerCap action are materially correct. 34. The gist of the measures was that, instead of being returned, the aircraft would continue to be operated by Russian airlines, and/or retained so that some or all of a given aircraft could be used as spare parts for another aircraft. The retention and continued operation of the aircraft was to be enabled by state measures that, among other things, facilitated the re-registration of the aircraft in Russia and that permitted aircraft to be operated and maintained in accordance with Russian standards. 35. The individuals and entities involved in the conception, development and/or implementation of the said measures included (i) President Putin; (ii) Prime Minister Mikhail Mishustin; (iii) First Deputy Prime Minister Andrei Belousov; (iv) former Deputy Prime Minister Yuri Borisov; (v) Vitaly Savelyev, the Minister of Transport and former Director General of Aeroflot; (vi) Deputy Minister of Transport Igor Chalik; (vii) other ministers and officials at the Ministry of Transport and the Federal Service for Supervision of Transport ("FSST"), which operates under the supervision of the Ministry of Transport; (viii) officials at the Federal Agency for Air Transport ("FATA"), an agency subordinate to the Ministry of Transport, including its head and former First Deputy Minister of Transport, Alexander Neradko, and the State Air Traffic Management Corporation ("SATMC"), which FATA controls; (ix) the Russian Federal Security Service (the "FSB"); and (x) the Federal Assembly of Russia. The measures taken 36. On 26 February 2022 there was an emergency meeting at the Ministry of Transport attended by (among others) Vitaly Savelyev, Alexander Neradko and representatives of Russian airlines (which the Claimants are not presently able to identify), at which the Sanctions and the foreign lessors' actual or anticipated demands for the return of their aircraft were discussed. The representatives of the airlines were told (among other things) that Aeroflot (and/or its subsidiaries, Rossiya and Pobeda) would not return foreign aircraft to their lessors, and that the other airlines should likewise not return their aircraft but wait for clarity from the Russian government authorities. 37. In a further meeting at the Ministry of Transport on 28 February 2022, attended by Igor Chalik and by representatives of certain Russian airlines (including Aeroflot, Pobeda and Rossiya, S7 Group, Ural Airlines, and UTair), options were discussed with the objective of keeping foreign-leased aircraft in Russia and continuing to fly them. 38. On 2 March 2022 FATA issued a telegram asking Russian airlines to (i) submit (by no later than 12:00 on 2 March 2022) details of every lessor for its aircraft engaged in commercial air transportation, including the lessor's nationality, (ii) to inform FATA (by no later than 12:00 on 2 March 2022) of any requests from lessors in relation to the termination of leasing agreements and the conditions for the return of the aircraft, and (iii) immediately to inform FATA if any requests were received from lessors relating to the termination of leasing agreements or the conditions for the return of the aircraft. 39. On 3 March 2022 in a meeting between FATA and certain airlines (the identities of which the Claimants are not presently able to particularise) it was made clear that the state would not assist lessors in the repossession of their aircraft, notwithstanding Russia's obligations as a party to the 2001 Convention on International Interests in Mobile Equipment (the "Cape Town Convention", or "CTC"). … 41. On 4 March 2022 in one or more telegrams FATA advised airlines that should the airlines receive notices asserting that their leases were terminated, they should enter into negotiations with their lessors, and in the event that they failed to reach a "mutually beneficial agreement", the airlines were invited to re-register the aircraft in Russia. Since (i) the premise of the said advice was that the Russian airlines should not agree to return their aircraft, and (ii) the foreign lessors, including the Lessors, could not agree – and have not agreed – that the aircraft might be retained by the airlines, the suggestion that airlines might "negotiate" with the foreign lessors was not an invitation to carry out genuine negotiations. The Russian airlines were, therefore, in effect being asked to re-register their foreign-leased aircraft on the Russian register, in order to continue to operate those aircraft in Russia. … 43. On 5 March 2022, during a public appearance at an aviation training centre, President Putin indicated that it was the Russian government's policy that foreign-leased aircraft would not be returned to the foreign lessors. He stated among other things, as follows (in an official Kremlin translation … [there followed a plea of the subsequent legal and regulatory measures taken in Russia] … 54. Despite the valid demands and notices contained in the Lessors' Notices, the Aircraft have not been returned to the Claimants. Instead: (i) some or all of the Aircraft have been re-registered on the Russian state registry, contrary to the terms of the Leases and in contravention of Art 18 of the Chicago Convention; (ii) the Aircraft continue to be operated by the Lessees and/or have been used, or are at risk of being used, for spare parts to service other aircraft; and (iii) the Aircraft have not been and will not be maintained in accordance with the applicable standards. 55. The Aircraft are lost to the Claimants. 55.1 By no later than 23:59 on 8 March 2022 the Claimants were irretrievably deprived of the Aircraft. 55.2 Further or alternatively, it was by no later than 23:59 on 8 March 2022 and (if relevant) continues to be unlikely, or alternatively at least uncertain, that the Aircraft would be and (if relevant) will be recovered within a reasonable time or alternatively at all. 55.3 Yet further or in the alternative, the Aircraft were in any event in the grip of a peril (or perils) by 23:59 on 8 March 2022, and subsequently thereto the operation of such peril(s) has proximately caused (i) the Claimants to be irretrievably deprived of the Aircraft and/or (ii) for it to become and continue to be unlikely, or alternatively at least uncertain, that the Aircraft will be recovered within a reasonable time or alternatively at all. 56. The loss was caused by one or more of the War Risk Perils, namely (i) an act of one or more persons for political purposes, and/or (ii) a confiscation, nationalisation, seizure, restraint, detention, appropriation or requisition for title or use by or under the order of the Russian government. 57. Specifically, the matters summarised in paragraph 54 above are a consequence of some or all of the following, whether individually or in combination, as particularised in section D.5 above: (i) positive statements that foreign-leased aircraft would continue to be flown in Russia; (ii) positive directions not to fly aircraft to so-called "unfriendly" countries; (iii) the re- registration of foreign-leased aircraft in Russia; (iv) an export ban; (v) other more indirect forms of political pressure to the same or similar effect; and (vi) measures intended to ensure that the foreign-leased aircraft, including the Aircraft, would continue to operate in Russia and so-called "friendly" countries, and be maintained in Russia, despite the imposition of the Sanctions, the Lessors' ongoing efforts to repossess the Aircraft and any suspension of their airworthiness certificates.”

“…it is denied (if intended to be alleged) there was, at all material times after 24 February 2022, no reasonable prospect of the conflict ending in a reasonable period at time. In at least the first few weeks of the conflict, there was a great deal of uncertainty about how long the conflict was likely to last and how it was likely to develop. As at late February and early March 2022, at most a “wait and see” situation had arisen”