The Cost of Delay in Payment of a Claim

The High Court has awarded damages reflecting 6.02% interest for delayed payment of an insurance claim, significantly departing from the usual 2% Courts Act rate. The decision highlights that where delay damages are specifically pleaded and supported by evidence, Irish courts may award compensation reflecting the true commercial cost of delayed payment. Mason Hayes & Curran acted for the successful plaintiff, CDB Aviation Lease Finance DAC, in litigation arising from aircraft stranded in Russia following the invasion of Ukraine.

In a judgment of Mr Justice Mulcahy, the High Court ordered a Chinese insurer, PICC Property and Casualty Company Limited (PICC), to pay over US$5.8 million to CDB Aviation Lease Finance DAC (CDB) for losses arising from the delay in payment of damages owed to CDB. We acted for the successful plaintiff, CDB. The decision arises as part of the long running aviation lessor litigation relating to aircraft leased to various Russian airlines which were stranded in Russia following Russia’s invasion of Ukraine.

This judgment is significant as it demonstrates that the Irish courts are prepared to depart from the standard 2% statutory interest rate and award plaintiffs the real costs of delays in paying money that is owed. In this instance, CDB recovered an amount equivalent to an interest rate of 6.02%, which is in stark contrast with the standard statutory interest of 2% awarded to most plaintiffs. In simple monetary terms, this meant a difference between US$5,878,835, the amount awarded by the court, and US$372,632, which would have applied under the standard statutory interest rate.

Crucially for CDB, it had specifically included a claim for delay damages, allowing the court to consider and award those damages based on the evidence presented.

Background

Following the invasion of Ukraine by Russia in February 2022, leasing companies attempted to repossess their aircraft but were unable to do so, resulting in a total loss of the aircraft by March 2022. Later, lessors pursued claims with their insurers and the Russian airline’s insurers and reinsurers simultaneously.

Proceedings were initiated by CDB in November 2022 and several related companies against their insurers for losses arising out of the total loss of aircraft leased into Russia. The proceedings were case managed together and heard alongside a number of similar cases brought by other aircraft lessors.

A cross-disciplinary team of lawyers from across our firm acted for CDB, one of the lead lessors, in proceedings before the Irish Commercial Court. The trial began in June 2024 and ran for almost 100 days before the majority of the claims were settled. The litigation itself required a legal review of millions of documents and oral evidence from dozens of factual and expert witnesses. The Irish courts had never before dealt with such a large, more complex, or long running set of commercial proceedings.

CDB ultimately reached settlement with the majority of its insurers.

Judgment in default

However, one of the insurers, PICC, failed to engage with the litigation process and therefore judgment in default of appearance was sought against PICC. CDB obtained default judgment against PICC in 2024, with the assessment of damages arising from the judgment to be addressed at a later date. In November 2025, following the resolution of the proceedings against the balance of its insurers, CDB brought an application before the Commercial Court for the assessment of damages owed by PICC.

PICC had insured 10% of CDB’s policy on both its all-risks and war-risks exposures. CDB claimed that it was entitled to the full insured amount, with appropriate credits to be given for certain prior settlements with a Russian insurer.

The court accepted CDB’s entitlement to the amount insured less credit for prior settlements. It therefore ordered PICC to pay $18,631,601.20, being the full amount of CDB’s substantive insurance claim.

Damages for delay

However, in additional to damages for the full claim made against PICC, CDB had pleaded and argued that it was entitled to damages for the delay in paying the full claim. CDB argued that the delay damages should be calculated by reference to the Weighted Average Cost of Capital (WACC). WACC is the minimum return a company must achieve to satisfy its providers of capital. It also provided evidence to the court regarding CDB’s WACC for the relevant time period, which was confirmed by the company’s auditor and approved by its Board. Specifically, CDB provided evidence to the court of the amount of damages arising from delay in payment using the applicable periodic WACC rates covering the relevant period of the loss from 1 September 2022 to 23 October 2025. The WACC was calculated as an average of 6.02% over the period.

Therefore, the total sum claimed in damages for delay in providing cover was calculated by CDB as $5,878,835. This amount is in marked contrast to the amount that CDB would have been entitled to under the Courts Act rate of 2%, being a mere $372,632.02.

Conclusion

This judgment highlights the potentially significant cost consequences that can arise where payment of a damages claim is delayed and damages for that delay are specifically pleaded. Defendants should take note that a failure to meet a claim for damages can have very significant consequences beyond the entitlement to claim Courts Act interest. Although the application was uncontested, the court carefully scrutinised the legal submissions and evidence provided before concluding that CDB was entitled to recover delay damages based on its WACC.

The decision does not formally establish a binding precedent that defendants will be held liable for the full commercial cost of delays in paying damages. It remains to be seen whether a similar approach would be adopted in similar factual circumstances following a contested hearing. That said, however, the decision reflects commercial common sense which should give some optimism that it would be adopted in other cases.

For more information, contact a member of our Dispute Resolution team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.