Damages for Late Payment of Insurance Indemnities Beyond Courts Act Interest in Agreed‑Value Aviation Policies: Commentary on CDB Aviation Lease Finance DAC v PICC Property and Casualty Co Ltd [2025] IEHC 657

Damages for Late Payment of Insurance Indemnities Beyond Courts Act Interest in Agreed‑Value Aviation Policies

Commentary on CDB Aviation Lease Finance DAC & Ors v Lloyd's Insurance Company S.A. & Ors (PICC) [2025] IEHC 657

1. Introduction

This Commercial Court judgment of the High Court of Ireland (Mulcahy J, 27 November 2025) sits within the wave of international aviation insurance litigation arising out of the Russian invasion of Ukraine and the loss of leased aircraft detained in Russia.

While the underlying liability of insurers for the losses was not contested in this particular application (because judgment had already been entered in default of appearance against the eighteenth defendant, PICC Property and Casualty Company Limited (“PICC”)), the decision is legally significant for two main reasons:

  1. It re‑affirms, in an Irish Commercial Court context, that under an “agreed value” aviation hull and war risks policy, the agreed value is the measure of indemnity in a total loss, irrespective of market value at the date of loss.
  2. More innovatively, it recognises that an insured may recover damages for late payment of insurance monies—calculated here by reference to the insured’s Weighted Average Cost of Capital (WACC)—in addition to or instead of statutory interest under s.22 of the Courts Act 1981, where such loss is pleaded and proven.

The judgment therefore provides an important Irish precedent on (i) the assessment of damages in complex, multi‑layer aviation insurance programmes and (ii) the relationship between Courts Act interest and common law damages for delay in payment of an indemnity.

2. Background to the Case

2.1 The parties and the policy

The plaintiffs are a group of special purpose leasing entities within the CDB Aviation group—aircraft lessors owning nine aircraft leased to Russian airlines at the time of the Russian invasion of Ukraine on 24 February 2022.

The insurance cover at issue was the Contingent and Possessed Aircraft Hull, Spares and Equipment, Aviation Liability and Personal Accident Insurance Policy (“the Policy”), running from 15 June 2021 to 14 June 2022. It provided:

  • “All risks” hull cover; and
  • “War risks” cover, including perils associated with war and similar hostilities.

The Policy was written on an agreed value basis. A schedule agreed with the broker Willis Towers Watson on 17 May 2021 set out an agreed value for each aircraft, totalling USD 441,203,612.18 for the nine aircraft.

PICC joined the insurance subscription via a slip dated 18 May 2021, committing to provide 10% of the total cover. Numerous other insurers participated on different lines.

2.2 The loss and claim

At the time of the Russian invasion, all nine aircraft were on lease to Russian airlines. Following the invasion, the plaintiffs attempted repossession, but pleaded that by about 8 March 2022 they had effectively suffered a total loss of each aircraft (inability to recover them).

On 18 July 2022, the plaintiffs made a claim under the Policy for the loss of all nine aircraft. When indemnity was not paid, they issued proceedings on 15 November 2022. PICC was joined on 27 February 2023; solicitors entered appearance (for “all risks” only) on 23 March 2023 but later came off record on 28 July 2023.

2.3 Default judgment and assessment of damages

On 29 April 2024, the High Court (McDonald J) granted judgment in default of appearance against PICC. Accordingly, PICC’s liability under the Policy was no longer in issue. What remained was the assessment of damages against PICC, heard by Mulcahy J on 6 November 2025.

By that point, the plaintiffs had settled with a number of other insurers in respect of seven of the nine aircraft, receiving significant (but not full) recovery against their agreed values. The plaintiffs therefore sought:

  1. Indemnity for PICC’s 10% share of their net loss on all nine aircraft after giving full credit for settlement payments, totalling USD 18,631,601.20; and
  2. Damages for delay in payment, quantified by reference to the plaintiffs’ WACC over the period of non‑payment, totalling USD 5,878,835.

The total claimed thus came to USD 24,510,436.20.

3. Summary of the Judgment

3.1 Indemnity on agreed values and PICC’s 10% share

On the basis of documentary evidence and the unchallenged testimony of Ms Stefania Raimondi (Senior Vice President, transaction legal team, CDB Aviation), the Court held:

  • PICC had agreed via slip to provide 10% of the total cover under the Policy.
  • The Policy was on an agreed value basis as between insured and insurers.
  • There had been a total loss of each aircraft.
  • The plaintiffs had correctly calculated PICC’s share by:
    • using the agreed value of each aircraft as the measure of loss; and
    • giving PICC full credit for all settlement sums received from other insurers, including advantages of currency fluctuations.

The Court accordingly awarded the plaintiffs USD 18,631,601.20 as damages for breach of contract (failure to indemnify).

3.2 Damages for delay in payment

The plaintiffs also sought damages for the delay in receiving indemnity, calculated by reference to their Weighted Average Cost of Capital (WACC) over the relevant period. Evidence showed:

  • The plaintiffs are required to fund the cost of capital.
  • The WACC is an audited, board‑approved benchmark used internally for pricing and management analysis.
  • The WACC over the period from 1 September 2022 to 23 October 2025 averaged 6.02%.
  • Applying the relevant WACC as it changed over time to the outstanding sums yielded a total delay loss of USD 5,878,835.

Mulcahy J:

  • Accepted that this was a case where it was appropriate to compensate the plaintiffs for the loss caused by delayed recovery.
  • Recognised that Courts Act interest at 2% would under‑compensate the plaintiffs relative to their proven funding cost.
  • Found no principle requiring the plaintiffs to be confined to Courts Act interest rather than claiming damages reflecting their actual loss.
  • Noted PICC’s failure to appear or to contest the claim, including the claim for delay damages.

He therefore awarded USD 5,878,835 as damages for delay in providing an indemnity or cover.

3.3 Total award and costs

The Court entered judgment against PICC for:

  • USD 24,510,436.20 in total (USD 18,631,601.20 + USD 5,878,835).

On costs, the Court expressed a provisional view that the plaintiffs, having succeeded entirely against PICC, were entitled to their reasonable costs occasioned by the claim against PICC, subject to short written submissions within two weeks if either party sought a different order.

4. Detailed Analysis

4.1 Precedents and authorities cited

4.1.1 AerCap Ireland Ltd v AIG Europe SA & Ors [2025] EWHC 1430 (Comm)

The plaintiffs noted that in AerCap Ireland Ltd v AIG Europe SA & Ors, the English High Court (Butcher J) broadly found in favour of a case similar to that pleaded by the plaintiffs here on liability under all‑risks and war‑risks aviation policies arising from the Russia/Ukraine situation.

Although Mulcahy J expressly stated that, because this Irish application concerned only assessment of damages after a default judgment, the Court did not need to engage with “the complex issues concerning liability” under the policies, reference to AerCap is relevant in several ways:

  • It situates this Irish judgment within a wider international trend of courts accepting that aircraft detained in Russia constituted insured total losses under similar policy wordings.
  • It reinforces that the plaintiffs’ theory of liability, although uncontested here, has been judicially vindicated after full contested trial in another common law jurisdiction.
  • It confirms the acceptance of agreed values as the measure of indemnity in total loss cases—Butcher J noted that this was not controversial in AerCap.

Though not determinative in this damages‑only context, AerCap lends legitimacy to the plaintiffs’ underlying narrative and to the Court’s comfort in treating liability as substantively well‑founded.

4.1.2 AerCap Ltd v AIG Europe SA & Ors [2025] EWHC 2529 (Comm) (damages/interest judgment)

The second AerCap judgment, [2025] EWHC 2529 (Comm), is more directly relevant to the issue of timing and financial consequences of delayed indemnity. In that case:

  • Butcher J addressed the start date and rate of interest under the UK statutory regime.
  • AerCap sought interest from the date of loss (10 March 2022) or alternatively the date of claim (29 April 2022).
  • The Court recognised that insurers should have some reasonable period to consider their position, referring to Quorum v Schramm (No. 2).
  • Butcher J fixed 9 June 2022 as the appropriate start date for interest, giving insurers a relatively short but fair period to respond.
  • He rejected the insurers’ argument that there should be no pre‑judgment interest, holding that they had deprived AerCap of the use of its money since that date.
  • He then applied the English statutory interest regime, ultimately awarding interest at 8.25%.

Mulcahy J drew two key elements from this reasoning:

  1. The concept of allowing insurers a reasonable, but not extensive, period to assess a claim before interest or equivalent compensation starts to run. The plaintiffs mirrored this by calculating WACC‑based damages only from a date some weeks after submission of the claim.
  2. The principle that, where insurers have wrongfully failed to pay sums for which they are found liable, they have deprived the insured of the use of its money, and some financial compensation (whether statutory interest or damages) should be awarded for that deprivation.

Crucially, however, Irish law differs from English law: in the UK, interest in such cases is governed by statutory provisions that allow the court to choose the rate. In Ireland, Courts Act interest is at a fixed statutory rate (currently 2% per annum), without judicial discretion as to the rate. This difference shapes the move in this case towards common law damages for late payment rather than reliance on s.22 interest.

4.1.3 Reaney & Ors v Interlink Ireland Ltd [2022] 1 IR 213; [2018] IESC 13

The Supreme Court decision in Reaney is fundamentally about the award of interest under s.22 of the Courts Act 1981. O’Donnell J (as he then was) made several important observations:

  • It is “rudimentary economic theory that money has a time value”; a creditor deprived of money suffers a cost, either by losing investment returns or by incurring borrowing costs.
  • Courts Act interest is a crude mechanism:
    • the rate is fixed by statutory instrument;
    • interest is simple, not compound; and
    • the court can adjust the period but not the rate.
  • Whether interest truly compensates a plaintiff depends on their financial circumstances (borrowing rates, actual investment returns etc.), but the statute does not attempt a precise match to actual loss.
  • Interest has historically been treated in a discretionary, ad hoc manner by trial courts, with little appellate interference.
  • Claims that approximate to a price paid or a debt due are especially suitable for routine awards of interest.

The plaintiffs in CDB Aviation v PICC relied on these passages to argue:

  • that their insurance claim is analogous to a debt due (a fixed sum payable under a policy once triggered), and
  • that the crudeness of Courts Act interest justifies seeking separate damages that better reflect their actual loss from delayed payment.

Mulcahy J accepted that Courts Act interest at 2% would not adequately compensate the plaintiffs in the factual circumstances, and—importantly—saw no principle preventing the award of damages for delay instead of or in addition to statutory interest. This is where the judgment moves beyond the immediate context of Reaney.

4.1.4 Margo on Aviation Insurance, 4th ed. (2014)

For the measure of indemnity under an agreed‑value aviation policy, the Court quotes Margo:

“In the case of an ‘agreed value’ policy, the insurers are obliged to pay to the insured the value agreed in the event of a total loss regardless of whether this exceeds the market value of the aircraft at the date of the loss… An agreed value fixes the value of the subject matter insured as between the insured and insurer in the case of total losses, but not in respect of partial losses.”

This textbook authority underpins the Court’s straightforward acceptance that:

  • once a total loss is established; and
  • the policy is on an agreed value basis,

then the insurer’s liability is for the full agreed value (subject to policy limits and deductibles), and market value evidence is essentially irrelevant. The plaintiffs’ approach to damages, using agreed values and crediting recoveries, was therefore orthodox and legally sound.

4.2 Legal reasoning of the Court

4.2.1 Scope of the Court’s inquiry: liability vs assessment

Given the prior default judgment, PICC’s liability was not open to challenge. Mulcahy J explicitly noted that:

  • the Court did not have to revisit the intricate liability issues associated with “all risks” versus “war risks” coverage, which have been litigated elsewhere (e.g. AerCap);
  • its role was confined to quantifying the plaintiffs’ loss as against PICC.

This procedural posture is important: the judgment’s precedential value lies largely in damages principles, not in the construction of the policy wording.

4.2.2 PICC’s 10% participation: slips and subscription

The Court accepted, on documentary evidence, that:

  • PICC signed a slip on 18 May 2021 committing to 10% of the total liability under the Policy.
  • The Policy was a typical subscription market placement, with multiple insurers each on a defined percentage of the risk.

Thus PICC’s share of any indemnity obligation, and correspondingly of any unpaid loss after crediting settlements, was 10% of the plaintiffs’ total net loss.

4.2.3 Use of agreed values in total loss

Mulcahy J held that:

  • The Policy clearly provided cover on an agreed value basis.
  • The schedule of agreed values (confirmed by the broker on 17 May 2021) was binding between insured and insurers.
  • As a matter of law, once a total loss has occurred (as pleaded and accepted here), the agreed value is the proper measure of indemnity, not market value at the date of loss.

This reasoning follows Margo and is aligned with Butcher J’s approach in AerCap, where agreed values were largely uncontroversial. The Court did not require independent valuation evidence of each aircraft’s market value; to do so would undermine the commercial certainty of agreed‑value policies.

4.2.4 Treatment of settlements with other insurers

The plaintiffs had settled with other insurers in respect of seven aircraft, in four main tranches (September 2023, December 2023, June 2025, July 2025). For each:

  • The agreed value of the aircraft was identified (e.g. USD 251,350,000 for four aircraft in the first settlement).
  • The settlement amount actually received was identified (e.g. USD 194,082,419.82).
  • The shortfall between the agreed value and the settlement payment was calculated.
  • PICC’s 10% share of the shortfall was claimed.

The Court also accepted Ms Raimondi’s evidence that the plaintiffs:

  • gave PICC the benefit of any favourable currency movements, where converted settlement amounts exceeded the “headline” settlement figure in US dollar terms; and
  • gave full credit for all sums received from other insurers, avoiding any suggestion of double recovery or over‑indemnification.

In respect of the remaining two unsatisfied aircraft (combined agreed value USD 106,693,333.42), PICC’s liability was simply 10% of that amount, i.e. USD 10,669,333.34.

The Court found the overall calculation to be correct and transparent, and thus awarded USD 18,631,601.20 as the principal indemnity sum.

4.2.5 Damages for delay vs Courts Act interest

The most legally significant part of the judgment concerns whether the plaintiffs could recover damages for delay in payment calculated by reference to WACC, instead of merely receiving statutory interest under s.22 Courts Act 1981 at 2%.

The Court’s reasoning unfolds in several steps:

  1. The factual delay and deprivation of funds
    PICC did not appear to defend the proceedings, and had effectively failed to provide indemnity for more than three years since the loss. In line with AerCap, this amounted to depriving the plaintiffs of the use of funds to which they were entitled.
  2. The suitability of pre‑judgment interest
    Mulcahy J recognised that this was a classic case in which pre‑judgment interest could appropriately be awarded under s.22:
    • The claim was “clear‑cut” and “diligently prosecuted” (using the language of Reaney).
    • The insurance indemnity was akin to a debt due.
  3. Limitations of Courts Act interest
    Following Reaney, the Court accepted that Courts Act interest is inherently crude and not calibrated to the actual financial cost to a specific plaintiff. At the current 2% rate, it plainly understated the plaintiffs’ real funding cost, evidenced by:
    • the WACC averaging 6.02% over the relevant period; and
    • the plaintiffs’ need to fund capital at or around that rate.
  4. Availability of common law damages for delay
    Critically, the Court was not persuaded that plaintiffs in this position must be confined to statutory interest. The plaintiffs had from the outset pleaded a distinct claim for damages for delay. There was:
    • no articulated principle of Irish law forbidding such damages; and
    • no defence advanced by PICC to contest either the availability or the quantum of such damages.
    On that basis, the Court accepted, as a matter of principle, that an insured may recover damages for the financial loss caused by late payment of an insurance indemnity, provided the loss is properly proven.
  5. Measurement of delay damages: WACC
    The plaintiffs’ method—applying the actual WACC from 1 September 2022 onwards to the outstanding sums, recalculating when WACC changed—was accepted as:
    • grounded in corporate finance practice;
    • formally audited and board‑approved; and
    • a realistic measure of the plaintiffs’ cost of capital.
    Importantly, the plaintiffs’ start date refrained from claiming from the date of loss, mirroring AerCap in giving insurers a period to consider the claim. This moderation made the calculation more credible.

Having accepted this methodology and quantum, Mulcahy J awarded USD 5,878,835 as damages for delay in providing an indemnity or cover, not merely as “interest” under s.22.

4.3 Impact and implications

4.3.1 For Irish insurance law: late payment as a compensable loss

The judgment is particularly notable for its implicit recognition that:

Failure to pay insurance monies when due can itself give rise to an independent head of loss – the cost of funding or opportunity cost – recoverable as damages in addition to the policy indemnity.

Historically, common law jurisdictions were reluctant to award damages for late payment of insurance claims, often treating delay as remediable only by interest. (In England & Wales, this orthodoxy was famously reflected in cases such as Sprung v Royal Insurance, though later moderated by statutory reform via the Enterprise Act 2016 and s.13A of the Insurance Act 2015.)

In Ireland, statutory interest under s.22 has typically been the main vehicle for compensating for delay. This judgment, however, suggests that where:

  • the insured pleads a claim for damages for late payment;
  • there is clear evidence of actual financial loss from delay (e.g. WACC, borrowing costs); and
  • no legal obstacle is shown to such recovery,

then the court may award damages beyond Courts Act interest.

Unless and until contradicted by appellate authority, this decision is likely to be relied upon by insureds, especially sophisticated corporates, to argue that:

  • Courts Act interest is a minimum or default protection; and
  • where they can prove a higher actual cost of funds, they should be entitled to recover that as damages for the insurer’s breach in not paying promptly.

4.3.2 For aviation and other large commercial insureds

For aircraft lessors and other large commercial insureds, the decision underscores several points:

  • Agreed value policies offer significant certainty in catastrophic loss scenarios; the court will not re‑open valuation debates in the face of a clear agreed value schedule and a total loss.
  • Insureds who can document their WACC or borrowing costs have a viable route to seeking compensation for late payment that approximates their actual economic loss.
  • When multiple insurers are involved, courts will respect the subscription percentages, and an insured is expected to be scrupulous in crediting all settlements and avoiding any double‑recovery.

The case therefore encourages:

  • careful preservation of financial evidence (e.g. board‑approved WACC calculations, auditor confirmations); and
  • clear pleading of delay‑based damages distinct from policy indemnity and statutory interest.

4.3.3 For insurers and claims handling

From the insurers’ perspective, the judgment highlights the potential exposure that can arise from:

  • failure to engage with proceedings (default judgment and unchallenged damages evidence); and
  • protracted delay in granting indemnity without adequate justification.

The possibility that Irish courts may:

  • award damages for late payment at rates aligned with insureds’ actual cost of capital, and
  • do so over multi‑year periods,

creates a significant incentive for insurers:

  • to respond promptly and substantively to large claims;
  • to consider interim payments where liability is probable but quantum uncertain; and
  • to recognise that the “cost of delay” may now be a material litigation risk, not merely a marginal interest cost at 2% per annum.

4.3.4 Harmonisation with international developments

The Court’s reliance on the English AerCap decisions, both on liability background and on timing/interest, indicates an openness to cross‑fertilisation with English Commercial Court jurisprudence in complex aviation insurance matters.

At the same time, the Irish approach necessarily diverges because of:

  • the fixed‑rate nature of Courts Act interest; and
  • the need to resort to common law damages rather than statutory flexibility to approximate commercial funding costs.

This judgment can thus be seen as part of a broader international trend towards recognising late payment loss as a compensable head of damage in insurance disputes, albeit taking a distinct doctrinal route in Irish law.

5. Simplifying Key Legal and Financial Concepts

5.1 “All risks” vs “war risks” cover

  • All risks cover: Typically protects against accidental or fortuitous physical loss or damage to the aircraft from most causes, subject to exclusions (e.g. wear and tear, war, nuclear perils, etc.).
  • War risks cover: Specifically insures against perils associated with war, invasion, civil war, confiscation, seizure, and similar hostile acts, often excluded from all‑risks policies.

In this case, while these distinctions were central to underlying disputes in related litigation, they were not revisited here because PICC’s liability was already determined by default judgment.

5.2 Agreed value vs market value

  • Agreed value policy: Insured and insurer agree in advance on a fixed value for the insured asset. In the event of a total loss, the insurer pays the agreed value, not whatever the market value happens to be at the time.
  • Market value: The price the asset would fetch in the open market at a given point in time.

Agreed value policies provide commercial certainty, especially in volatile or opaque markets. The insurer prices the premium knowing exactly what maximum payout is possible; the insured knows what they will receive in a total loss.

5.3 Weighted Average Cost of Capital (WACC)

WACC is a corporate finance metric representing the average rate of return a company must pay to all its capital providers (equity and debt) to finance its assets. In simplified form: 

WACC = (E / (E + D)) × Cost of Equity  +  (D / (E + D)) × Cost of Debt × (1 − Tax Rate)

Where:

  • E = market value of equity
  • D = market value of debt
  • Cost of Equity = expected return required by shareholders
  • Cost of Debt = effective interest rate on the company’s borrowings

In this judgment, WACC was used as a proxy for the plaintiffs’ financing cost: by not receiving the insurance indemnity, they had to finance their capital needs at this blended rate. The Court accepted WACC as a reasonable, audited measure of their loss from delayed payment.

5.4 Courts Act interest vs damages for late payment

  • Courts Act interest (s.22, Courts Act 1981):
    • A statutory mechanism allowing Irish courts to award interest on judgments.
    • Rate fixed by statutory instrument (currently 2%).
    • Simple, not compound interest.
    • Court may decide the period but not the rate.
  • Damages for late payment:
    • A claim that the insurer’s breach of contract in failing to pay when due has caused a separate financial loss (e.g. higher borrowing costs, lost investment opportunities).
    • Measured by evidence of the insured’s actual funding costs or lost returns.
    • Not limited to the statutory interest rate.

This judgment is significant because it confirms that, at least where properly pleaded and proved, damages for late payment can be awarded in addition to or instead of Courts Act interest.

5.5 Default judgment and assessment of damages

A default judgment is entered when a defendant fails to appear or defend proceedings. It establishes liability but not necessarily the amount of damages. The plaintiff must still:

  • prove the quantum of their loss; and
  • demonstrate that the claimed amount is properly attributable to the defendant’s breach.

Here, liability was fixed by McDonald J’s earlier default judgment, and Mulcahy J’s task was solely to assess damages—principally by examining the insurance documentation, the settlement history, and the WACC‑based delay calculation.

6. Conclusion and Key Takeaways

CDB Aviation Lease Finance DAC & Ors v Lloyd’s Insurance Co SA & Ors (PICC) [2025] IEHC 657 is a short but consequential Commercial Court judgment. It confirms and clarifies several important propositions:

  1. Agreed value as the measure of indemnity
    In an agreed‑value aviation insurance policy, once a total loss is established, the agreed value schedule determines the quantum of indemnity. Market value evidence is unnecessary, and insurers who subscribed via slips are bound to their percentage share of that loss.
  2. Proper crediting of settlements
    Where an insured has settled with some insurers, it must give full credit for those sums (including currency benefits) when claiming against a non‑settling or defaulting insurer. The Court will carefully scrutinise that arithmetic, but where transparently presented, will accept it.
  3. Recognition of damages for late payment
    The Court held that an insured may recover damages for delay in payment of insurance monies, measured by its actual cost of capital (here, WACC), where that loss is pleaded and proven. This is in addition to, and can be more generous than, the blunt instrument of Courts Act interest.
  4. Courts Act interest is not exhaustive
    Following Reaney, Courts Act interest is recognised as a crude approximation rather than a full reflection of actual loss. This judgment takes the further step of allowing bespoke financial loss (WACC‑based) to be compensated by way of damages in appropriate cases.
  5. Practical incentives for insurers
    Insurers who delay or fail to engage in proceedings risk not only being held liable for their share of the indemnity but also for substantial additional damages representing the insured’s financing costs over multi‑year periods.

In the broader legal context, this decision marks an important development in Irish insurance law. It aligns Ireland with international trends that recognise late payment of insurance indemnities as a compensable wrong, while doing so through traditional common law damages analysis, rather than statutory reform. For aviation and other high‑value commercial insureds, it offers a clear blueprint for structuring claims that fully reflect the economic impact of insurers’ failure to pay promptly.

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