Lawyers strike gold: Russia’s plane seizures spark lucrative legal battle in Dublin – The Irish Times

Gold bars were mentioned by a senior lawyer early on in one of the cases, but he did not mention the exorbitant fees being charged by the elite of Irish commercial lawyers in the major case involving the valuable aircraft stranded in Russia.

The legal battle is a busy time for some of the leading lawyers in Dublin’s four courts. The costs of the proceedings before Judge Eileen Roberts in the Commercial Court, which are due to last six months, are currently incalculable but legal sources speculate that they could run into the hundreds of millions of euros.

Ireland’s leading commercial lawyers, including former Attorney General Paul Gallagher, are among up to 180 lawyers representing the biggest names in aircraft leasing – an industry with a global centre in Ireland – and their insurers.

A small number of senior lawyers are said to have demanded fees – agreed fees for taking on a case – of up to one million euros. This does not include daily refresher fees of around 6,000 euros.

The fees for most lawyers are estimated to be around 300,000 euros, with junior lawyers receiving around two-thirds of the fees of their experienced colleagues.

Sources estimate that the fees for the lawyers’ mandates are likely to be several times over 1 million euros. Some of the largest law firms in the country are involved, including Matheson, McCann Fitzgerald and Mason Hayes & Curran.

The contrast between these fees and those paid in other areas of litigation, including legal aid in criminal cases, where district court lawyers may earn as little as €27 per day, is enormous.

At a packed general meeting of lawyers last Monday, the anger of criminal lawyers at the Department of Justice’s failure to fully reverse recession-hit cuts to criminal legal aid fees was palpable. This led to the Bar Council, the barristers’ representative body, approving a three-day suspension of criminal lawyers’ services for the next month.

The legal battle, which is being fought in the parallel world of the commercial court, is a high-stakes process involving some of the world’s largest aircraft lessors and insurers. The legal battle was sparked by a dispute over insurers’ refusal to pay out more than €2.5 billion in insurance claims for aircraft stranded in Russia.

Lessors are suing dozens of insurers around the world for billions of dollars, claiming that more than 400 aircraft were unable to leave Russia and had to have their leases terminated due to Western sanctions in response to Russia’s invasion of Ukraine in February 2022. According to media reports, aircraft worth up to $15 billion (€14 billion) are still on Russian territory.

For many of the litigants, the Irish courts were an obvious location, as over 60 percent of all leased aircraft worldwide are owned or managed here.

The world’s largest aircraft lessor, AerCap, based in Ireland and whose CEO is Aengus Kelly, is pursuing its insurance claims in London’s High Court. According to sources, legal fees for the British litigation are at least twice as high as those of their Irish counterparts.

The world’s second and third largest lessors SMBC and Avolon, as well as BOC Aviation, CDB Aviation, Nordic Aviation Capital and Carlyle Aviation Partners are pursuing their claims in the Irish Commercial Court. The numerous insurance companies defendants include some of the largest firms in the world, including Lloyds Insurance and Chubb.

The conduct of such high-profile commercial disputes in Irish courts is seen as a major boost for “Ireland for Law”, a government-sponsored initiative aimed at bringing international commercial disputes before Irish courts.

The lawsuit involves six identical cases alleging the refusal of various international insurers to compensate the plaintiffs for the loss of aircraft. The lessors claim that EU sanctions imposed after Russia’s invasion of Ukraine forced them to terminate leases in Russia and they cannot get their aircraft back. The insurers deny that “all-risks” or “war perils” policies apply or that any payments are due.

The case will be heard in a new courtroom on the ground floor of the Phoenix House complex near the Four Courts in Smithfield, directly opposite the vacant site that will become the long-promised state-of-the-art family court complex. Some of the parties were unhappy with the proposed venue and wanted the case to be heard in the Pillar Room in the Rotunda, where the Stardust fire inquest was held. The Courts Service disagreed and instead set up the Phoenix House premises, on grounds that, among other things, this venue would be available as a much-needed additional courtroom after the trial.

( Supreme Court begins hearing mammoth case for compensation for planes stranded in Russia worth $2.5 billion )

The courtroom at Phoenix House has space for around 50 lawyers and three journalists. Several screens in the room provide a live feed of the case via the TrialView system. Next to the courtroom is an additional area with further seating and tables, mainly for legal teams, as well as hubs for media and members of the public. There are also further screens to follow proceedings.

It is estimated that up to 500 lawyers regularly follow the court proceedings, partly because of the potential impact on other cases. The Irish Commercial Bar Association is male-dominated and in the courtroom, male lawyers outnumber their female colleagues by around three times.

Insurance law is not for the faint of heart and the case raises many complex questions about insurance coverage. Twenty-three questions were identified relating to the meaning of “possessed coverage” alone.

Legal research can sometimes uncover treasures, including gold bars. In his opening arguments for SMBC, lead counsel Michael Collins referred to a case about who had legal control over a quantity of gold bars captured from the Germans during World War II but later acquired by the Allies and stored at the Bank of England.

A French citizen claimed ownership of the gold bars and was seeking legal action to get them back or to seek damages in lieu of return, he said. The question was whether they were in the control or possession of the Trilateral Allied Commission, which had entrusted them to the Bank of England. The British Court of Appeal had ruled that the Trilateral Commission still had control of the gold, even though it was in the physical possession of the bank, and dismissed the French plaintiff’s claim.

The “accidental” sale of 13 gold bars by the Bank of England to another party raised further questions that were not relevant to the aviation case, the lawyer said.

( Identity of endangered witness in Russia plane case protected by Supreme Court )

Another bizarre case that Collins and his team uncovered involved liability for a Venetian gondola that was damaged by a forklift en route to Australia. An Australian had bought the gondola – “for reasons known only to him” – and made a claim when it was damaged in transit, Collins said. A legal battle ensued and a court ruled that an exclusion in the insurance policy applied because the gondola was in the control and custody of the transport company.

Collins’s statements gave an insight into the scale of the plaintiff lessors’ business. SMBC has a fleet of 400 aircraft, each valued at around €70 million, for which the company continues to pay insurance premiums. The company’s insurers “have a duty of loyalty to us,” he said.

“We are still paying them premiums. It is just extraordinary that they have not paid out the policies as they should have.”

It was “extraordinary”, he added, that the insurers had chosen such defences and put forward such “technical arguments”.

Another senior lawyer, Eoin McCullough, who represents aircraft lessors including Avolon – co-founded by businessman Dómhnal Slattery – and BOC, was also critical of the insurers’ approach.

Some of the defences put forward seemed to suggest that his client might have to spend millions of euros in unrecoverable costs pursuing Russian insurers and reinsurers, with no guarantee of payment even if successful, before he could even receive any coverage, he said.

“Is it really the correct interpretation of the policy that I have to accept all of this as the basis for payment under the contingency cover?” he asked.

The insurers have rejected the claims.

Only time will tell whether their “technical” arguments will be successful – and that will entail high legal costs.

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