Holland & Knight LLP said on Sunday that aviation cover for leased aircraft may have "ceased to be effective" following European Union sanctions on Moscow.
The EU adopted a second set of restrictions on the sale or provision of goods to Russia on Friday, following the country's invasion of Ukraine. Included in that was a set of rules banning the lease of aircraft to customers based in Russia.
Holland & Knight said a longstanding principle in aviation insurance contracts means that cover effectively ceases where to continue to provide it would be "unlawful because it breaches an embargo or sanction."
"Such policies should be reviewed urgently to determine policy insuring clauses, conditions and exclusions," the firm said in a briefing note. "Steps may need to be taken by the lessor or lender to preserve the right to claim and to comply with other obligations."
The EU sanctions followed an initial set of restrictions on Russian banks and financial assets when the Russian tanks started rolling into Ukraine on Thursday.
It introduced a ban on any aircraft owned, chartered or otherwise controlled by Russian nationals from landing on EU soil, as well as a ban on Moscow's mouthpieces, such as RT and Sputnik, from operating in the bloc.
The measures included bans on the export to Russia of a wide range of goods not only from the aerospace and energy markets but also "dual use" items that could be used for both military and civilian purposes.
The warning from Holland & Knight comes as investment bank Peel Hunt LLP said Lloyd's of London could potentially face a "sizable" loss from its share of a $2 billion political risk insurance market in Russia and Ukraine.
--Editing by Joe Millis.
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