In a victory for the technology industry, the House of Representatives Thursday approved protections for companies against lawsuits stemming from year 2000 computer breakdowns.

The White House, which had threatened to veto earlier versions of the bill, said President Clinton would sign the measure, which was sent to the Senate for final passage.

Supporters said the legislation was needed to rein in lawyers plotting a millennium bug offensive that could bankrupt Silicon Valley companies and slow the nation's economic growth. According to some experts, Y2K-related litigation costs could add up to US$1 trillion.

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But consumer advocates who opposed the bill accused Clinton and Vice President Al Gore, the Democratic front-runner in the 2000 presidential election, of giving in to big business at the expense of American consumers.

The House approved the legislation 404-24. Passage by the Senate is expected by mid-July.

The legislation, hammered out behind closed doors by congressional negotiators and the White House, will delay the filing of Y2K lawsuits for up to 90 days, giving companies time to fix any problems.

It will also make it harder for consumers to win lawsuits stemming from the glitch, and will place a cap on punitive damage awards.

Though many Democrats said it hurt consumers, John Podesta, the White House chief of staff, said he would "recommend to the president that he sign the bill when it comes to his desk."

"In the normal course of business, the administration would oppose many of the extraordinary steps taken in this legislation to alter liability and procedural rules," Podesta said in a letter to lawmakers. But "the Y2K problem is unique and unprecedented."

Fearing a flood of lawsuits, politically powerful business groups representing IBM, Microsoft, AT&T and other technology firms asked Congress to step in. Republicans voted to limit the legal exposure that companies would face.

The action drew fire from trial lawyers and consumer groups, who said Republicans were offering too much protection to big business. Under pressure, the White House threatened to veto the legislation, unless Republicans agreed to give ground.

A compromise was announced Tuesday.

"This is a huge victory that comes in the face of fierce opposition from trial lawyers," said Tom Donohue, president of the Chamber of Commerce.

Public Citizen, founded by consumer activist Ralph Nader, derided the compromise as "cosmetic." They said the final bill still granted immunity to companies that manufacture Y2K-defective products, while rolling back consumer rights.

Under the compromise, the filing of Y2K lawsuits would be delayed during a 30- to 90-day cooling-off period. It will cap punitive damages at $250,000 for many small businesses, and ensure defendants pay for the damages they are responsible for by setting "proportional liability" guidelines.

The bill encourages companies to negotiate a settlement out of court, and clears the way for class action cases to be tried in federal court if they involve $10 million in claims or 100 or more plaintiffs.

The legislation will only apply to Y2K failures that occur before 1 January 2003. It will not apply to personal injury and wrongful death claims.

Copyright© 1999 Reuters Limited.