Nicola Mawson
A South African company is taking on a Russian insurance giant in a multi-million-dollar court matter over the Russian company’s refusal to pay out an insurance claim, with wrangling over the issue dating back to 2012.
South Africa’s Global Aviation Investments, a company that provides charter flights including for the United Nations, is arguing that Russia’s insurance company, Ingosstrakh, owes it money after one of its aircraft suffered engine damage before takeoff when the motors were at full throttle.
The matter went all the way to the Constitutional Court, which ruled in January 2022 that Ingosstrakh could not appeal a Supreme Court of Appeal (SCA) ruling, which allows Global Aviation Investments to proceed with a default judgement for a claim worth millions.
In 2012, Ingosstrakh agreed to provide insurance to Global Aviation covering the charter company for $2.5 million (R45m) for loss regarding damage to a plane, with the agreement that, if damages exceeded 75% of the insured value of the aircraft, it would be written-off and Global Aviation would be paid out.
Shortly after the insurance deal was concluded, both engines were impaired before takeoff, which caused severe damage to the plane, resulting in it being useless. A claim was lodged, and Ingosstrakh refused to pay, arguing that the aircraft was not a write-off.
The matter ended up in court, with papers being filed in the Johannesburg High Court in 2014 to force Ingosstrakh to pay out. That application was dismissed: the court found that there were material disputes when it came to the facts.
Not being deterred, Global Aviation then, in 2015, went back to court to force Ingosstrakh to pay. Ingosstrakh didn’t lodge a defense, and a case-within-a-case then bared it from doing so, with Ingosstrakh then – after the bar – arguing it should be allowed to defend the action.
That technicality went to the Supreme Court of Appeal (SCA), which dismissed the Russian company’s request to be allowed to fight Global Aviation’s order for the insured value. By then the insured value was R90m given interest and costs incurred during the legal wrangling.
Ingosstrakh then appealed the ruling, in which the SCA decided that the Johannesburg High Court had been competent to rule that the Russian company could not fight the claim for payout. The SCA also granted default judgement to Global Aviation worth R45m. Ingosstrakh went to the Constitutional Court to overturn the SCA.
The Constitutional Court ruled it did not have jurisdiction, essentially sending the entire claim back to the Johannesburg High Court with Global Aviation now seeking to secure the R45m through a default judgment.
And there the matter sits, with Global Aviation waiting to get its insurance payout.
To complicate matters, Global Aviation still wants damages because it’s arguing that it should be paid out the value of having lost income. This claim is based on the fact that the damaged engines still have five years of service left in a claim worth R162.6m.
That matter still needs to be finalised. In a recent judgement, from September of this year, the Johannesburg High Court found that Ingosstrakh could also not defend that action, based on the previous bar also covering this side of the case.
Business Report understands that, all told, the claim is now worth a total of some R400m. According to Statista, Ingosstrakh reported a net profit of about 30.3 billion Russian rubles in 2023 – or R5.14bn.
Lawyers for Ingosstrakh declined to comment, given that the legal mess is still in court, while Global Aviation’s legal representatives did not respond to a request for comment.
BUSINESS REPORT