Lloyd's Names


Note: To recover for UK£168,000 paid to Lloyd's on LCs issued on behalf of a Name/applicant, issuer sued and applicant joined the beneficiary (Lloyd's) as a third party, seeking damages for alleged false representations, negligence and statutory causes of action. The issuer also brought a claim against the beneficiary in the event that applicant were to succeed. The applicant alleged that the issuer had paid after the LC expired and violated an implied term in the application that "the [issuer] was not to pay Lloyd's if [applicant] so directed and that the bank knew of 'clear evidence of fraud or unconscionable conduct by Lloyd's which would release the defendant from his underlying obligations to Lloyd's'."

Applicant and beneficiary were also simultaneously involved in the proceedings in England styled The Society of Lloyd's v. Sir William Otho Jaffray. In those proceedings, Lloyd's had sued a number of Names for unpaid premiums. The Names counterclaimed, "raising the issue of knowledge, fraud and unconscionability against Lloyd's that relate to the knowledge issue asserted by White against the [issuer] ... ." In the course of the UK proceedings, Cresswell, J., of the Commercial Court, Queens Bench Division of the High Court of Justice in England enjoined the applicant from "pursuing in the courts of any country other than England any claim against Lloyd's arising out of or relating to his membership of Lloyd's ... ."

Issuer moved to separate its action against the applicant from the third party action by the applicant against the beneficiary, arguing that the applicant had been enjoined from bringing an action against Lloyd's outside of England. In rejecting the issuer's application for severance, the court stated that "[t]he claims of [applicant] based on misleading and deceptive conduct and breaches of the companies legislation have no counterparts in the London litigation. [T]his means that the evidence in the Jaffray proceeding will be very different from that in this proceeding."

The court did, however, grant the beneficiary's application for a temporary stay pending the outcome of Jaffray because the applicant was seeking relief from the beneficiary in two different forums in cases with similar facts.



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.