Impact of Russian sanctions on the aviation industry – update on UK Sanctions

United Kingdom

Following an announcement on 3 March, the UK Government published legislation implementing new sanctions relating to the aviation industry.  The Russia (Sanctions) (EU Exit) (Amendment) (No.6) Regulations 2022 (the “Regulations”) are similar to those introduced by the EU on 25 February.  The sanctions took effect as of 8 March 2022 but a general trade licence was also introduced allowing for the provision of (re)insurance services until 28 March 2022.

New Prohibitions

The Regulations provide for:

  1. A more extensive prohibition on Russian registered, owned, chartered or operated aircraft from entering or landing in UK airspace except in the case of emergency.  Russian operated includes a designated person/ entity or a person/ entity connected with Russia.  They also confer powers on the Secretary of State, Air Traffic Control, the Civil Aviation Authority and airport operators to ensure compliance;

  2. An extension to the existing list of restricted goods and technology to encompass aviation and space related products and technology including technical assistance; and

  3. A prohibition on the provision of (re)insurance  for aviation and space related products or technology to a person or entity “connected with Russia” or for use in Russia.  It is a criminal offence to contravene this prohibition.

Impact for aviation insurance

Recognising that the Regulations had immediate effect, a General Trade Licence: Russia sanctions, aviation insurance was also published which authorises the continued provision of aviation (re)insurance until 28 March 2022 for policies entered into before 8 March 2022 provided:

  1. the provision of aviation and space insurance services provided the insurer did not take out reinsurance before 8 March 2022 or, if it did take out reinsurance that the reinsurance cover has not, as a matter of the relevant applicable law, been rendered unenforceable, suspended, frustrated or prohibited by any applicable sanctions; and

  2. The provision of aviation and space reinsurance services provided the insurance obligations that they are reinsuring have not, as a matter of the relevant applicable law, been rendered unenforceable, suspended, frustrated or prohibited by any applicable sanctions.

Conclusions

The UK Regulations broadly follows the EU sanctions published on 25 February 2022 and were widely expected following the Government’s announcement on 3 March 2022.  UK (re)insurers will now have until 28 March 2022 to cancel sanctioned policies.

See our recent article  for further commentary on the ramifications for aviation and insurance market participants.