Insurance and reinsurance

Captive insurance

Summarise any captive insurance regime in your jurisdiction as applicable to aviation.

Insurance coverage in the Latvian commercial aviation setting is normally undertaken through insurance firms and brokers based in more mature jurisdictions, duly accounting for requirements under the relevant financing, securitisation or lease transaction documentation. Captive insurance and related fronting arrangements are still unknown in the Latvian aviation industry.

Cut-through clauses

Are cut-through clauses under the insurance and reinsurance documentation legally effective?

Because of Latvian commercial aviation players having recourse to foreign based insurance firms and brokerage service providers (see question 30), the matter is ultimately resolved through analysing the applicable laws to the particular insurance and reinsurance arrangements.

Reinsurance

Are assignments of reinsurance (by domestic or captive insurers) legally effective? Are assignments of reinsurance typically provided on aviation leasing and finance transactions?

Generally, see question 31. Assignment of reinsurance proceeds is practised occasionally upon the owner’s, financier’s or lessor’s request. These arrangements are typically governed by English law.

Liability

Can an owner, lessor or financier be liable for the operation of the aircraft or the activities of the operator?

No, it is the operator (lessee) that bears liability; see articles 97(1), 108 and 112 in the Latvian Aviation Law. The first provision is a rough and concise summary of the major principles enshrined in the 7 October 1952 Convention on Damage Caused by Foreign Aircraft to Third Parties on the Surface (Rome Convention). The second governs liability for damage caused to another aircraft (either through collision or otherwise), while the last determines an operator’s (lessee’s) liability in relation to passengers travelling without valid documentation.

Strict liability

Does the jurisdiction adopt a regime of strict liability for owners, lessors, financiers or others with no operational interest in the aircraft?

No; see question 33.

Third-party liability insurance

Are there minimum requirements for the amount of third-party liability cover that must be in place?

By virtue of Latvia’s membership of the European Union, the Regulation No. 785/2004 of the European Parliament and of the Council of 21 April 2004 on insurance requirements for air carriers and aircraft operators is fully applicable and has direct effect in Latvia.