Can property be “lost” for the purposes of an insurance policy, even if you know where it is? This has been the dilemma facing aircraft lessors in the wake of Russia’s invasion of Ukraine, with twelve billion dollars’ worth of
leased aircraft stranded in Russia.

In June 2025, the UK High Court issued a highly anticipated decision on six multibillion dollar insurance claims by various aircraft lessors, after Western sanctions and retaliatory Russian measures left their aircraft in Russia, out of reach. This case addressed a number of issues, including how courts determine when property is “lost” for insurance purposes. The test laid down by the Court could shape how loss is assessed in a range of commercial contexts, internationally and in New Zealand – including “losses” arising from exports bans, sanctions, theft or conversion.

Background to Aercap Ireland Ltd v AIG Europe SA & Ors [2025] EWHC 1430 (Comm)

Timeline of key events 

Following the Russian invasion of Ukraine on 24 February 2022, the United States (US), European Union (EU), and United Kingdom (UK) moved quickly to impose sanctions. These sanctions included bans on aircraft leasing, maintenance services, and the export of aviation-related goods and technology to Russia. The EU’s amendments to Regulation No. 883/2014 and the UK’s Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2022 effectively forced Western aircraft lessors to terminate their leases with Russian airlines.

In March 2022, Russia retaliated against western sanctions, issuing Presidential Decree No. 100 and Government Resolutions Nos. 311 and 312, which banned the export of aircraft and engines. The Federal Customs Service enforced these measures, supported by the Federal Security Service and National Guard Troops. Russian authorities re-registered foreign-leased aircraft domestically, nationalising hundreds of foreign-leased aircraft.

It soon became apparent that the war would not end quickly. Russian airlines retained formerly leased aircraft without consent, and the Russian government extended export bans through to 2025. Western lessors pursued insurance claims on the basis that the sanctions and retaliatory action had eliminated any realistic prospect
of maintaining the continued airworthiness of these aircraft. While limited settlements were reached with Russian insurers under state-backed schemes, most claims were rejected by insurers, who argued that the aircraft were not physically destroyed and that lessors had not demonstrated that they had been permanently deprived of their aircraft. The resulting litigation brought before the Courts the question of when property is “lost”.

When is property “lost”? Insights from a century of case law

In his decision, Butcher J considered a century of case law and examples to hone in the test for determine when property is “lost” for insurance purposes.

The first case referred to by Butcher J was the oft-cited case of Moore v Evans [1917] 1 KB 458 (CA), [1918] AC 185 (HL). This case concerned the consignment of jewellery on a “sale or return” basis, with the owner retaining title to the goods. The jewellery was consigned to customers in Brussels and Frankfurt in June and July
1914, however as war tensions escalated, the owner requested the return of the jewellery by registered post. The Brussels customer responded that postal services were disrupted and the jewellery had been placed in a bank for safekeeping. The Frankfurt customer did not reply. The owner then made a claim under its policy
on the basis that the jewellery was lost. When proceedings were issued nearly seven months later, in February 1915, the inability of the plaintiff to recover possession or control of the goods was likely to continue
for an indefinite time. 

Considering the question of loss, the Court in Moore v Evans considered a number of hypothetical scenarios. For example, if jewels are buried under rubble due to bombardment, or inaccessible due to military control, the owner may be deprived of access, but the jewels are not necessarily “lost” for the purposes of an insurance
policy. There was no evidence of damage, misfortune, or dishonest appropriation. The goods remained safe and undamaged. “Loss” in non-marine insurance requires more than inconvenience or delay. There must be a practical and probable inability to recover the property.

Butcher J discussed a number of other cases with interesting fact patterns:

• Holmes v Payne [1930] 2 KB 301: Concerned misplaced and later discovered jewellery – the Court commented, in obiter, that subsequent discovery or recovery does not, of itself, disprove loss.
• Webster v General Accident Fire and Life Assurance Corporation Ltd [1953] 1 QB 520: Here, the claimant had been induced to part with a car through fraudulent misrepresentation. The car was then sold, but the owner knew where it was. The Court considered the car was lost when, after taking all reasonable steps to recover the chattel, recovery was uncertain.
• Dawson’s Field Award: This was an arbitration which considered a reinsurance claim in respect of the hijacking of four aircraft by members of the Popular Front for the Liberation of Palestine. One was then destroyed in Cairo, and three at Dawson’s Field. The question arose as to whether the planes were “lost” when hijacked or only when later blown up. The Court held that this was a “wait and see” situation, and the aircraft were not total losses until they were blown up.
• Kuwait Airways v Kuwait Insurance [1996] 1 Lloyd’s Rep 664: The Court considered the overrunning and capture of a private fleet by Iraqi forces. The key question was one of aggregation – i.e. whether there was an aggregate loss of all aircraft when Iraqi forces overran the airport, or whether the taking of each airplane was a separate loss. The Court found that the aircraft were lost when the airport was overrun, determined by the Iraqis’ intent to “make [the aircraft] permanently their own as an exercise of war-time plunder”.
• Scott v Copenhagen Reinsurance Co (UK) Ltd [2003] EWCA Civ 688: The Court considered whether a single aircraft stranded in a Kuwait airport following the 1990 Iraqi invasion was lost. It was held that the aircraft was not lost as a result of the invasion, there being no hostile intent towards by it from the invading forces. Rather, it was lost by destruction in February 1991.

Following his survey of the case law, Butcher J identified a number of key principles:

• The insured must prove that a deprivation has occurred but also that the deprivation will, more probably than not, be of sufficient permanence to constitute a “loss”.
• Permanence should be assessed against the standard of “more probably than not”.
• Subsequent discovery will not disprove the loss.
• An item will be lost if recovery is uncertain, even after all reasonable steps to recover the item have been taken by the assured.
• When the circumstances at the time of deprivation of possession are still evolving, it may be appropriate to adopt a “wait and see” approach until the situation stabilises and becomes clearer, before determining whether the test has been met.

In the context of a claim involving aircraft, Butcher J commented that permanence is to be assessed against the commercial life of the asset. Butcher J acknowledged that while a theoretical possibility of the aircraft’s return may exist, this would not preclude a finding of permanent deprivation, provided the insured can demonstrate that recovery is unlikely within the aircraft’s operational lifespan.

Furthermore, in determining when a loss occurred, Butcher J acknowledged that a court may consider material in hindsight, in two ways. First, there may be an evidential “wait and see” period, following which the court may assess whether a loss had occurred at the outset, taking into account events occurring during the wait and see
period. Alternatively, subsequent events may be used as a sense check, either reinforcing or challenging any preliminary conclusion about whether a loss was sustained on day one.

On the facts of this case, Butcher J concluded that the aircraft were “lost” on 10 March 2022, when GR 311 was issued. That resolution expressly prohibited the export and therefore the return of aircraft, and no aircraft were returned thereafter, except in a handful of cases involving approved settlements. Under an authoritarian
government, it was not realistic to expect that airlines would disregard or defy the terms of GR 311 and accordingly, the Court was satisfied that from that date, the lessors had been permanently deprived of their
aircraft.

Our view

The High Court’s decision helpfully pulls together case law arising from disparate scenarios  from misplaced jewellery to hijacked planes — and identifies principles for determining when property has been “lost”. However, the discussion in this case also highlights the complexity of assessing when property is “lost” for insurance purposes, which must be determined on the facts of each case and therefore gives rise to uncertainty for insureds and insurers, exacerbated by the “wait and see” approach approved by the Court.

 

This article was co-authored by Leticia Alvarez, a Solicitor in our Ligitation team.