A decision by Justice Langley, of the High Court in London, has dismissed a class-action lawsuit brought by Lloyd’s “Names”, individual investors, against the British government for the financial losses they suffered during the 1980’s and ’90’s.
More than 1,000 underwriting Names had sought to recover damages from the Treasury for its alleged failure to implement European Union legislation requiring insurance businesses to maintain adequate reserves.
However, following a preliminary hearing, the judge ruled last Wednesday, Nov. 8, that the directive in question did not grant any relevant rights to the investors, and that their claims were “statute-barred.” “There is no grant of rights to Names on whatever basis they seek to claim it,” Justice Langley stated, adding that the lawsuit
should be dismissed.
Before the ruling, the lawsuit by the Names, who include politicians, businessmen and philanthropists had the potential of landing the government with a compensation bill running into hundreds of millions of pounds (dollars) over its alleged failure to adequately regulate the 300-year-old Lloyd’s insurance market.
Welcoming the decision, the Treasury said the claims were based on a “misunderstanding” of the European legislation.
Lawyers for the investors may seek permission to appeal Langley’s ruling.
Until 1994, individual Names were the sole source of the capital that financed Lloyd’s Syndicates. The system, which dates to the late 17th century, required the Names to pledge the full extent of their wealth, i.e. unlimited liability.
In a reaction to the plight of the Names, Lloyd’s changed its by-laws in 1994 to allow corporate capital to back its Syndicates. Individual Names now account for less than 15 percent of Lloyd’s capital, and they are being converted to limited liability partnerships.
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