Lloyd’s $96mn lawsuit against US gov. over terror attacks goes forward

The US government’s move to dismiss a multi-million lawsuit filed by Lloyd’s underwriters over Libyan terror attacks was not granted

Insurance News


A $96 million lawsuit filed against the US government by Lloyd’s, New York Marine and General Insurance Co. and Aviation & General Insurance Co. went forward this week after the Court of Federal Claims failed to dismiss the suit as the government requested.

The plaintiffs are seeking remuneration from the government after it allegedly blocked certain underwriters from recovering $96 million from Libya for sponsoring two terrorist attacks in the 1980s – the Lockerbie bombings that affected EgyptAir 648 in 1985 and Pan Am Flight 103 in 1988. The insurers had filed suits against Libya before US officials stepped in and terminated the proceedings.

In denying the government’s motion to dismiss, the court held that Lloyd’s and the other plaintiffs had a legitimate property interest on which to base their claims.

The denial closely resembles those filed by the government in a suit brought by Aureus Asset Managers Ltd. and Riverstone Insurance Ltd., which sought more than $1 million in damages against Libya following EgyptAir Flight 648.

Nevertheless, the case holds landmark status as the first time the government has been denied a dismissal in a foreign claims suit.

“Here, where plaintiffs were excluded from receiving any just compensation whatsoever, the court must decide whether the government violated the Fifth Amendment prohibition of takings without just compensation,” wrote Judge Thomas Wheeler in the court decision. “Accordingly, the court finds that it is well within its jurisdiction to decide this takings claim against the United States.”

Lloyd’s originally sued Libya in 1988, looking for reimbursement for their coverage of the attacks, which cost more than $41 million for the EgyptAir flight and $55 million for the Pan Am flight. The other insurers filed a similar suit in 2006.

However, Congress passed the Libyan Claims Resolution Act in 2008, which took the right to oversee suits against Libya away from federal courts’ jurisdiction. Shortly afterward, the government stopped all suits pending against Libya.

After the plaintiffs filed suit against the US government, governmental officials sought a dismissal on the grounds that the insurers do not possess a valid property interest on which they can base their claims.

The court, however, ruled that plaintiffs demonstrated sufficient facts to establish a “property interest in the insurance contracts they sought to protect with a legal claim against Libya, which the United States subsequently extinguished.”

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