Geopolitical disruption, sanctions, supply chain issues and the consequential impacts for the aviation industry were the focus of Hot Topics in Aviation Disputes, hosted by Norton Rose Fulbright as part of London International Disputes Week (LIDW) on 3 June 2026.

The panel provided an engaging discussion between experts in the industry: barristers Steven Thompson KC and Erin Hitchens of XXIV Old Buildings, partner Ned Beale of Hausfeld, David Bartlett founder of AERIAL and consultant Patrick Farrell of Norton Rose Fulbright. Below, we set out the key themes and takeaways from the discussion. 

Russian aircraft lessor insurance claims: an update

The panel opened with an update on the lessor insurance claims arising from Russia's invasion of Ukraine. Judgments were against the insurers in 2025, but permission to appeal has been granted and further clarity on this area of law will be provided once a hearing date is confirmed. A fresh trial on operator policies is also on the horizon for October 2026, which the panel expects will bring to light new issues alongside matters being relitigated. 

The panel observed that litigation of this scale has produced notable insights - not least the English court's ability to manage such sprawling, multi-party proceedings in unprecedented circumstances. News of large, complex aviation disputes is likely to continue as Boeing prepares for arbitration against Ethiopian Airlines' insurers and reinsurers over the fatal Flight 302 crash in 2019.

Sanctions: the UK Courts’ interpretation

The discussion then turned to the growing significance of sanctions in aviation, with a particular focus on the recent Supreme Court decisions relating to banks’ abilities to pay out under security arrangements where the underlying transaction or agreement has since become subject to UK sanctions regulations.  

Context is important and broad statements about the applicability of sanctions need to be tested against specific circumstances. The panel stressed that even where regulations did not apply on the facts, the Court has noted that where a licensing regime is in place, it ought to be utilised and sanctions have been interpreted widely as a result. 

Insurers involved in Russian aircraft litigation argued that EU and US sanctions prohibited them from paying out to lessors. However, the court disagreed in these instances, drawing the distinction that the EU sanctions regime did not provide a licensing regime and so ought to be confined in scope.

The panel's overarching observation was that sanctions as a defence have become a defining feature of aviation disputes. Where a licensing regime exists, sanctions should be construed broadly and there should be caution in refusing payment without first exhausting available licensing avenues. 

The Middle East conflict: consequences for the aviation industry

The panel then turned to the current and anticipated impacts of the Middle East conflict on the aviation industry. With the region previously accounting for around 10–11% of global air traffic and serving as a vital connecting hub, prolonged disruption is being felt worldwide. The panelists identified the most pressing concerns, namely fuel supply disruptions, operational threats posed by force majeure and excusable delay notices across the supply chain, and disruption to flight schedules and passengers. 

The panel offered several practical observations. Passenger disruption must be considered in light of EC 261: while military action might constitute an extraordinary circumstance, commercially driven cancellations are likely to attract greater scrutiny. The panel also highlighted new ICAO guidance released on 9 April 2026, addressing the mental health risks for aviation personnel working in or near conflict zones.  

The panel's view was that if the conflict continues, pressure will mount across the board, but the most vulnerable will be those operating older, less fuel-efficient fleets with limited hedging.

Vietjet litigation: an update

To conclude discussions, the panel provided a review and update on the recent Vietjet litigation with FW Aviation (FWA), a subsidiary of FitzWalter Capital. The proceedings concern the enforcement of leasing agreements for four Airbus aircraft under JOLCO structures. Following the COVID-19 travel restrictions, Vietjet fell behind on rental payments and the security trustees issued termination notices for each leased aircraft. Vietjet disputed the validity of each termination notice and argued that the termination sums were penal. The court ruled in favour of FWA as assignee of each security trustee. The Court of Appeal confirmed the original court decision in respect of the validity of the terminations and the assignments.  VietJet sought permission to further appeal to the Supreme Court but its application was denied.  In a separate decision, the court also confirmed that the JOLCO termination sums were not void as penalties.  Again, Vietjet subsequently sought permission to appeal to the Court of Appeal on this aspect of the case, but this application was also denied. Outstanding issues of quantum remain to be determined, relating to the redelivery of the aircraft.

The panel noted that the case has prompted broader discussion around JOLCO structures, the enforceability of termination sums and the interpretation of security assignments. These are questions of considerable interest to the aviation finance market and further developments are anticipated in the coming months. 

Looking ahead

The panel’s discussion underscored the extent of the current volatility facing the aviation industry and the need for individuals working in the sector to keep informed of these developments. The aviation landscape is evolving rapidly, with significant case law emerging from sanctions-related proceedings, insurance claims and JOLCO structures. With recent geopolitical unrest, the aviation landscape this time next year could look very different.