VICTIMS of an asbestos-related lung cancer in the region are being warned that compensation payouts could be cut if lawyers lose a vital case.

Ian McFall, head of asbestos legislation with Thompsons Solicitors, revealed that claimants and their families face a serious threat in the courts.

If lawyers representing insurance companies win their test case in the House of Lords in two weeks, it could reduce payouts to victims and their families.

Mesothelioma is an incurable form of lung disease triggered by inhaling asbestos fibres. About 2,000 cases are diagnosed in the UK every year, including many in the North.

The test case is being brought by insurers seeking to limit payouts to former shipyard workers.

It involves three deceased former shipyard workers, including John Murray, from Sunderland.

His claim is based on his exposure to asbestos fibres while working at a number of shipyards on Wearside.

Part of the claim relates to shipyards that still exist, but a significant part of the claim - calculated as accounting for 57 per cent of his total exposure to asbestos - relates to a firm that no longer exists and which was not insured at the time.

The insurers say any compensation should only be for the rest of the estimated exposure risk, based on the time Mr Murray worked with known, insured companies.

Mr McFall said: "If we lose, there will be substantially lower compensation payments to sufferers and their families."

The warning came during a seminar in Newcastle organised by the Mick Knighton Mesothelioma Research Fund charity yesterday.