Lawyers strike gold as Russia’s plane seizures spark lucrative litigation in Dublin

Gold bars were mentioned early on in one case by a senior counsel, but he wasn’t talking about the eye-watering fees that the cream of Ireland’s barristers specialising in commercial legal cases are commanding in the huge action over valuable aircraft stranded in Russia.

The litigation means boom times for some senior lawyers in Dublin’s Four Courts. The costs of the cases before Ms Justice Eileen Roberts in the Commercial Court, listed for hearing over six months, are inestimable at this stage but legal sources speculate they could run to hundreds of millions of euro.

Ireland’s top commercial lawyers, including the former attorney general Paul Gallagher, are among up to 180 lawyers involved in representing the biggest names in aircraft leasing – an industry that has a global hub in Ireland – and their insurers.

A small number of senior counsel are reputed to have commanded brief fees – agreed fees to take on the case – of up to €1 million. This does not cover the daily refresher fees of about €6,000.

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Brief fees for most counsel are believed to range from about €300,000, with junior counsel receiving about two-thirds of the fees of their senior colleagues.

Instruction fees for solicitors, sources estimate, are likely to be multiples of the €1 million brief fees. Some of the biggest solicitors’ firms in the country, including Matheson, McCann Fitzgerald and Mason Hayes & Curran, are involved.

The contrast between such fees and those payable in other areas of litigation, including criminal legal aid, where barristers might earn as little as €27 a day in the District Court, is pronounced.

Fury among lawyers working in criminal cases over the Department of Justice’s failure to fully unwind recession era cuts to criminal legal aid fees was evident at a packed general meeting of barristers last Monday. This led to the Bar Council, the representative body for barristers, sanctioning a withdrawal of criminal law services by barristers over three days next month.

The dispute running in the parallel world of the commercial court is a high-stakes one involving some of the world’s biggest aviation lessors and insurers. The litigation was sparked by a dispute over the refusal of insurers to pay out more than €2.5 billion in insurance claims over aircraft stranded in Russia.

Lessors are suing dozens of insurers around the world for billions of dollars, claiming more than 400 planes were unable to leave Russia and their leases had to be terminated due to western sanctions imposed in response to the Russian invasion of Ukraine in February 2022. Media reports have estimated that aircraft assets valued at up to $15 billion (€14 billion) remain in Russian territory.

The Irish courts were a natural home for many of the litigants because more than 60 per cent of the world’s leased aircraft are owned or managed here.

The world’s biggest aircraft lessor, Irish-based AerCap, run by chief executive Aengus Kelly, is pursuing its insurance claims through London’s High Court. Sources say the legal fees being paid to lawyers in the UK litigation are at least twice what their Irish counterparts are getting.

The world’s number two and three lessors, SMBC and Avolon, along with BOC Aviation, CDB Aviation, Nordic Aviation Capital and Carlyle Aviation Partners, are pursuing their claims in the Irish Commercial Court. The large number of defendant insurers include some of the world’s biggest firms, including Lloyds Insurance and Chubb.

Running such high-profile commercial litigation in the Irish courts is seen as a huge boost for Ireland for Law , the Government-supported initiative established with a mission to attract international commercial litigation to Irish courts.

The action involves six identical sets of proceedings over alleged refusals by various international insurers to indemnify the plaintiffs for the loss of planes. The lessors allege the EU sanctions imposed after Russia invaded Ukraine forced them to terminate lease agreements in Russia and they cannot retrieve their aircraft. The insurers deny the “all risks” or “war risks” policies are engaged or that payouts are due.

The case is being heard in a new courtroom venue set up on the first floor of the Phoenix House complex near the Four Courts in Smithfield, just across the road from the undeveloped site that will eventually become the long-promised state-of-the-art family courts complex. Some of the parties were unhappy with the proposed venue and sought to have the case heard in the Pillar Room in the Rotunda, where the inquest into the Stardust fire disaster was heard. The Courts Service disagreed and instead fitted out the Phoenix House facility for reasons including that venue would be available as another badly needed courtroom after the litigation.

[ High Court begins hearing mammoth case over indemnity for aircraft worth $2.5bn stranded in Russia ]

The Phoenix House courtroom has seating for about 50 lawyers and three journalists. Several screens around the room provide live coverage of the case through the TrialView system. Next to the courtroom is an overflow area with more seating and tables, mostly for legal teams, with hubs for media and members of the public. There are also more screens to follow the proceedings.

It is estimated up to 500 lawyers, for reasons including its potential implications for other cases, are viewing the litigation on a regular basis. The Irish commercial Bar is male dominated and male barristers in the courtroom outnumber their female colleagues by about three to one.

Insurance law is not for the faint-hearted and the case raises many complex issues concerning insurance cover. Twenty-three issues have been identified alone relating to the meaning of “possessed cover”.

Legal research can occasionally throw up some treasure, including gold bars. In his opening arguments for SMBC, senior counsel Michael Collins relied on a case concerning exactly who, in law, was in control of a quantity of gold bars seized by the Germans during the second World War but later taken into the possession of Allied forces and stored in the Bank of England.

A French national claimed to be the owner of the gold bars and took proceedings aimed at getting them back, or damages in lieu of their return, he said. The issue was whether they were in the control or possession of the tripartite allied commission which had entrusted them to the Bank of England. The UK Court of Appeal, having held the tripartite commission still had control of the gold although it was in the physical possession of the bank, dismissed the French litigant’s claim.

The Bank of England’s “inadvertent” sale of 13 of the gold bars to another party raised other issues not relevant to the aviation case, counsel said.

[ Identity of at-risk witness in Russia aircraft case protected by High Court ]

Another quirky case unearthed by Collins and his team concerned liability for a Venetian gondola damaged by a forklift while en route to Australia. An Australian man – “for reasons known only to himself” – had bought the gondola and made a claim when it was damaged during transit, Collins said. A legal case ensued, and a court decided an exclusion in the insurance policy applied because the gondola was within the control and custody of the transport company.

Submissions made by Collins provided some insight into the extent of the business of the plaintiff lessors. SMBC has a fleet of 400 aircraft, each valued at about €70 million, for which it continues to pay insurance premiums. The company’s insurers “owe us a duty of good faith”, he said.

“We are still paying them premiums; it is just quite extraordinary that they have not paid out on the policies as they should have done.”

It is “extraordinary”, he added, that the insurers have adopted such defences and advanced such “technical points”.

Another senior counsel, Eoin McCullough, is representing aircraft lessor clients including Avolon – co-founded by businessman Dómhnal Slattery – and BOC. He was also critical of the approach taken by insurers.

Some defences advanced appeared to suggest his client might have to spend millions of euro in irrecoverable costs in pursuing Russian insurers and reinsurers, with no guarantee of payment even if it wins, before having any cover paid out, he said.

“Is it really the proper interpretation of the policy that I have to take on all of that as the basis to be paid under contingent cover?” he asked.

The insurers have denied the claims.

Only time will tell whether they succeed on their “technical” points – time that will come with great legal cost.

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