The ruling by the US Courts of Appeal for the Ninth Circuit is potentially damaging for Lloyd's, which intends to appeal. If its appeal fails, it will not be able to pursue its own claims for payment to cover previous years' losses from the 200-plus names who brought the proceedings.
"This is a banner day for US names," said Jeffrey Peterson of the American Names Association, based in California. About 600 investors filed the original suit in 1994, but many agreed to Lloyd's restructuring plan and abandoned the claim.
The latest ruling overturns a lower court decision in 1995 which said that the US names had to file suits in England, as provided in the original contracts between Lloyd's and most of its investors.
"Congress had already determined that such [contracts] were void," said the appeals court in San Francisco. "It was not for a court to weigh their reasonableness, not for a court to say whether they offended any policy of the United States."
The Securities and Exchange Commission, the leading US regulator, said the new ruling would help prevent sales abuses by foreign brokerages.
News of the ruling came on the day that Lloyd's announced that it had fined Sedgwick Oakwood Lloyd's Underwriting Agents a record pounds 60,000 for two cases of misconduct.
The penalty was one of six issued against Lloyd's agents or brokers in the last three months, according to the statistics that were published yesterday for the first time by the insurance market.
A spokesman for Lloyd's said the figures gave the first indication of the activities of the new regulatory regime introduced in the summer under David Gittings, who was hired from the Securities and Futures Authority, the City regulator.
Lloyd's said that during 1996 some 55 formal warnings were issued while so far this year 20 warnings have been issued for compliance breaches.
Last year Lloyd's also introduced an individual registration process, which has so far resulted in 32 applications being withdrawn or refused and 38 restricted by the imposition of conditions.Reuse content