Having predicted the end of Auldrant, at least one possible version of it, the order of Lorelei sealed up Lorelei inside a replica of Ion to try to guide the world into a better future. Unfortunately, Lorelei and Ion lost their memories in the process so he forgot its name, and was dubbed Lambda by the scientists and Emeraude. So with no way of being able to predict a better future, Lambda more or less became the Lambda we knew in the storyline and nobody knew how to rebel against destiny and the planet eventually went into ruin.
This is a common scenario in Science Fiction. The devices that used the energy and life force of the Merines in Tales of Legendia weren't originally meant for the people of the sea; they were meant for Lambda. However, the Fodorans who were behind this scenario couldn't get ahold of Lambda; so they had to settle for a different power source that could just get them out and they escaped. Eventually they landed on a world that was an Ocean Planet, but it was populated by people already...the Ferines. The Fodorans who occupied the ship quickly realized that they could use the Ferines to power their ship, and the Merines was used as a demi-lambda, and they used many Ferines and Merines to terraform the planet for them to live on, as well as the Legacy itself. As they spread out, eventually their ancestors more or less forgot who they once were like in Pern and became convinced they were natives of the planet when only the Ferines really knew that they were from another planet. Eventually, the Ferines struck back against the Fodorans, now called the Oerines, and used the legacy against them - and then many years later, the events of Tales of Legendia happened.
...and then Kratos hitchhiked with the Amarcians to Ephinea. And then he formed the Knight Academy in Barona. Yeah, it's kind of goofy, but it explains why there's a substance on Fodra called derris ore and why the statue of the Knight Academy's founder is a statue of Kratos.
Shortly after the duel with Hubert (which is unwinnable by any means), Asbel starts running a fever. He may have had a fever during the duel with Hubert, which would explain why he can't win no matter how much leveling you do for him.
- Possible Fridge Brilliance: There is a skit at the Lhant Caverns where Asbel says the party should be careful not to catch a cold after diving in the water the first time. It's possible Asbel could've caught a cold that eventually worsened into a fever following the unwinnable fight at Lhant Manor.
When Asbel and the Lhant forces attempted to sneak through the underwater caves to attack the Fendelian forces, and the Fendel Army launched a surprise attack against the suddenly defenseless Lhant, the team comments how odd it is that Fendel attacked at the perfect moment, but then the plot point is forgotten as the group focuses on defending the town. And no comment is made about the Strahtan showing up out of nowhere at just the right time to help. So how did these two apparent coincidences happen? One possible answer is that Hubert learned of the sneak attack (either by having someone watch the road between Lhant and the Fendel border, or by having contacts in Lhant), and informed the Fendelian forces about it. That way, when the attack fails and Hubert has to save the day, Asbel looks incompetent and unfit to rule Lhant, while Hubert and his forces are Big Damn Heroes, justifying Hubert's replacement of Asbel as Lord of Lhant as well as his exile.
Alternately, Raymond might have done it instead for similar reasons; Hubert may not have been willing to endanger his hometown.