Lloyd's wins in US, but war still rages

Lloyd's of London won an important battle last week when the US Supreme Court refused to revive a law suit challenging its massive reconstruction and renewal settlement. But it is still far from total victory.

A group of US Names – known as the Allen group – is refusing to settle. Last August, it obtained an injunction from the District Court in Richmond, Virginia, requiring more information from Lloyd's and allowing the group more time before it had to settle.

The injunction could have scuppered the whole plan because it came just as the deadline for approval of Lloyd's massive reconstruction and renewal programme approached.

But over the weekend immediately following the August judgment, Lloyd's flew out Freshfield's partner Barry O'Brien to help its US firm Fried Frank Harris Shriver & Jacobson draw up a 60-page court brief. The following week this led to an appeal court in Baltimore staying the district court injunction and ordering the dismissal of the case. The Allen names applied for the US equivalent of leave to appeal to the Supreme Court in Washington. And it was this application that was dismissed last week.

But other groups of rebel US names have two appeal court cases pending over whether the “choice-of-law” clause in their contracts with Lloyd's – supposed to limit any action to English law – prevents litigation in the US. These may prove to be tougher nuts to crack.

Bob Mollen, Fried Frank's London partner, said: “This appeal was made under a writ of certiorari, which rarely succeeds. The names were out of time for the usual remedy of a writ of mandamus. It was an important victory for Lloyd's, but how the Supreme Court would rule on the choice-of-law clause on its merits is hard to tell.”

Harvey Pitt, Fried Frank Washington partner, acted for Lloyd's while Atlanta firm Kilpatrick & Cody represented the aggrieved US names.