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."

News
peoplePaper attempts to defend itself
Voices
voicesWe desperately need men to be feminists too
Life and Style
food + drink
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
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

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum