The New York Supreme Court has ruled that NRAM, formerly Northern Rock Asset Management, can sue French bank Societe Generale (SocGen) for allegedy mis-selling mortgage products to Northern Rock before its collapse.

NRAM, owned by UK Asset Resolution (UKAR), can take legal action against SocGen for mis-selling $34m of products, originally purchased from the US, including collateralised debt obligations.

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SocGen filed a motion to dismiss the case but the judge did not grant it, ruling in favour of NRAM. The case may proceed to trial but SocGen has the right to appeal.

The allegedly mis-sold financial products were partly to blame for the UK lender’s downfall.Northern Rock was nationalised with a £1.4bn ($2.3bn) bailout in February 2008, and later split into so called ‘good bank’ and ‘bad bank’ divisions. The bad assets were placed into Northern Rock Asset Management. This became known as NRAM plc in May 2014.

SocGen’s grounds for dismissing the case were that it drew Northern Rock’s attention at the time to a small print disclaimer saying it could not be held accountable for some of the statements in the marketing material.

The highest court in New York ruled there was "no precedent for allowing an offerer of securities to use such a mechanic to amble away from liability for key misrepresentations".

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Bruce Grace, lawyer at Lewis Baach, representing NRAM and UKAR, said the ruling will make it challenging for banks to use fine print in advertising and marketing material to renounce responsibilities.

"That is a typical argument that the banks make in these bargains. They look at the fine print and say you should not have relied on anything that was in any of the marketing and advertising material. Right here is a seriously potent instance of the court rejecting that," he said.

He added that there were a number of similar circumstances that are "only now wending their way through the court" and are most likely to be admitted to trial in the same way.