The Court of Appeal has overturned a ruling that thousands of people suffering from an asbestos-related condition should receive compensation.
Asbestos exposure can cause pleural plaques
Insurance companies had appealed against a judgement that pleural plaques, a scarring of the lungs, often resulted in a more serious illness.
Judges said its presence did not mean a person was suffering from any disease and therefore could not make a claim.
Insurers potentially faced £1bn worth of claims after the earlier ruling.
By a majority, a panel of judges headed by the Lord Chief Justice, Lord Phillips, reversed the findings of a High Court judge and said the controversial case should now go to the House of Lords.
Lord Phillips said: "There are difficult issues of principle and this will affect a very large number of claims and in these circumstances we have concluded that we should take the rare course of giving permission to appeal to the House of Lords on the issue of liability."
He said statistics indicated "a small minority" of people who developed pleural plaques after asbestos exposure would go on to suffer from asbestos-related disease, but "the odds are that the asbestos fibres in his lung will remain innocuous".
As the condition has been compensated since the 1980s, Lord Phillips said the court realised the appeal ruling was against 20 years of court practice, but it did not believe this would result in injustice.
Thursday's ruling relates back to November 2004 when 10 men went to court seeking compensation from insurance companies who wanted to stop payments.
In February 2005, the High Court ruled there was an increased risk of developing other asbestos-related diseases, and that having the plaques caused anxiety.
However, it reduced payment from between £5,000 and £15,000 to £3,000-£7,000.
Overturning the High Court ruling, Justice Phillips said: "The law does not recognise a duty to take reasonable care not to cause anxiety."
ABI, the insurance industry body, said it appreciated the "clarity" of the ruling.
"It sets out that medical conditions that have no impact on health are not compensatable," said Nick Starling, ABI's director of general insurance.
"This will help claimants understand what conditions are eligible for compensation, and insurers to know when they may be liable."
Norwich Union, which acted as an umbrella group for other insurance companies in the case, was pleased with the outcome.
It had argued that compensation payments for pleural plaques should be ended as claimants usually have no physical symptoms other than the scarring to their lungs.
Norwich Union's technical claims director Dominic Clayden said: "We welcome the judgment and believe it to be a pragmatic result on the issue of compensation being awarded for an asymptomatic condition."
He added: "The issue of compensating claimants with serious asbestos-related conditions or who suffer from impairment as a result of exposure to asbestos has never been in question and they will continue to receive compensation."
The appeal ruling was described as "dreadful" by trade union Amicus.
Ian McFall, of Thompsons Solicitors who are representing the union, said it overturned 20 years of established legal practise.
"For many of our clients I think they will be outraged and offended that the Court of Appeal has trivialised their injury in this way by deciding that it is not worthy of any compensation."