High Court backs Lloyd's

DAVID HELLIER

The Lloyd's of London insurance market claimed a significant legal victory yesterday when a High Court judge upheld the principle of the "pay now, sue later" clause contained in agreements between Lloyd's agents and its names.

The ruling, which will be the subject of an appeal, was described by Lloyd's as "significant" and "one which will produce positive benefits for the society and its members".

The test case was brought by Lloyd's managing agent, Marchant and Eliot Underwriting, over two unpaid cash calls of pounds 6,000 by Dr Andrew Higgins, a member of its syndicates. Mr Justice Rix delivered his 58-page judgment yesterday.

Dr Higgins's defence, based on Article 85 of the Treaty of Rome, which prohibits anti-competitive practices, argued that the "pay now, sue later" clause was anti-competitive. The judge said he could not understand how the obligation to pay outstanding cash calls could be said to distort competition. Lloyd's could not operate without such a concept; rather than giving Lloyd's a competitive edge it simply allowed it to compete on a level playing field with insurance companies.

Lloyd's said the effect of the decision was to enable underwriting agents to obtain judgments against members who do not respond to cash calls and writs requiring payment. A spokesman said he hoped that members would see the judgment for what it was and that "those who fall in the category of won't rather than can't pay will pay up".

Philip Holden, head of Lloyd's financial recovery department, said: "The judgment will enable agents in the market to take positive action to recover many outstanding cash calls. It also represents an unambiguous warning to those who won't pay their Lloyd's losses. I hope sincerely that Lloyd's can begin discussions with those members and, as a result, avoid costly and time-consuming litigation."

Susan Dingwall, partner and head of Dibbs Lupton Broomhead's insurance and reinsurance group in London, who acted for Marchant & Eliot, said: "This is a significant ruling, which will be welcomed not only by the Lloyd's agency community but also by those names who have been paying their losses, and by potential investors in the Lloyd's market."

Start your day with The Independent, sign up for daily news emails
Sport
Super BowlAfter Katy Perry madness it's back to The Independent's live coverage of Super Bowl 49!
News
See what Twitter had to say about the first half of the Super Bowl
News
people
News
people
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

The super-rich now live in their own Elysium - they breathe better air, and eat better food, when they're not making beans on toast for their kids

The super-rich now live in their own Elysium

They breathe better air, eat better food, take better medicine
A generation of dropouts failed by colleges

Dropout generation failed by colleges

£800m a year wasted on students who quit courses before they graduate
Entering civilian life 'can be like going into the jungle' for returning soldiers

Homeless Veterans appeal

Entering civilian life can be like going into the jungle
Sam Taylor-Johnson: Woman on top

Sam Taylor-Johnson: Woman on top

Fifty Shades of Grey director on bringing the hit to the screen
Shazam! Story of the $1bn 'what's that song?' app

Shazam: Story of the $1bn 'what's that song?' app

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch