JPMorgan Chase won a $700 million court case yesterday that has dealt a blow to investors claiming compensation for allegedly being mis-sold exotic investments.

Although the dispute relates to financial instruments sold a decade ago, lawyers have been awaiting the result because the issues involved are similar to those expected to arise in litigation stemming from the credit crisis.

These include what responsibility, if any, a bank has for the losses of its sophisticated clients on complex investments and whether the investments were mis-sold.

The High Court in London dismissed a claim by one of Greece's oldest and wealthiest shipping dynasties - the Polemis family - which sued JPMorgan in an effort to recoup losses suffered in the Russian debt crisis of 1998.

The family said that it had lost almost half of its $700 million portfolio in emerging markets securities after it hired JPMorgan on an advisory basis and only bought investments on the direct recommendations of JPMorgan bankers.

Adam and Spiros Polemis, the brothers who control the family interests, claim this advice was negligent because JPMorgan recommended high-risk securities despite knowing the family had requested a low-risk approach. Their lawyers had told the High Court that more than half of the Polemis portfolio was comprised of Russian or related securities.

“The portfolio that we ended up with is one that no reasonable adviser would have advised us to hold,” their barrister said.

JPMorgan claimed it did not have an advisory relationship with the Polemis family, which the bank says are experienced investors that chose their own trades in full knowledge of the risks involved.

Yesterday, Mrs Justice Gloster found for JPMorgan saying that the bank was not liable to compensate the family for its losses.

Lawyers said the judgment was a significant win for investment banks that are steeling themselves for a wave of similar litigation in the wake of the current credit crisis.

A litigation partner at one City law firm said: “Private bankers all over the City have been sweating over the prospect of mis-selling claims, where investors say they did not understand what was going into their portfolios and so the bank should pay when things go sour.

“This ruling sets the bar fairly high; it says you can't trade complicated investments when the sun shines then play dumb when it starts to rain.”

JPMorgan declined to comment. Springwell Navigation Corporation, the family's investment company, declined to comment.

The Polemis family's claim was so large because, in addition to investment losses, it also claimed that the collapse of its portfolio stopped it from expanding its core shipping business. It therefore added a further $450 million to its lawsuit as compensation for lost shipping profits.

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