interrupted the move to put EMLICO into US receivership, by petitioning to have a case involving the controversial insurer heard in the United States District Court for the District of Massachusetts.

Liquidators pre-emptively filed a notice of removal, which effectively moves the state insurance commissioner Linda Ruthardt's application to take control of EMLICO from state to federal courts.

And in Bermuda on Friday, the liquidators David E.W. Lines and Peter C.B.

Mitchell of Coopers & Lybrand Bermuda, together with Christopher Hughes of Coopers & Lybrand UK, obtained an in-chambers Bermuda Supreme Court ruling that affirmed EMLICO as a Bermuda insurer.

Last week, the Massachusetts insurance commissioner, Linda Ruthardt, armed with the state's Supreme Judicial Court (SJC) decision that EMLICO remained a Massachusetts insurer more than two years after it moved to Bermuda, applied to the SJC to put the insolvent company into US receivership.

But the joint liquidators claimed in court papers on Friday that they are the real parties of interest in the commissioner's application, and they are an "agency or instrumentality of a foreign state.'' Where the liquidation is conducted is potentially a billion dollar issue.

EMLICO and its principal policyholder and creditor, General Electric Co. (GE) want it liquidated in Bermuda.

The Boston Herald on Saturday reported a GE spokesman as saying that it will cost GE millions of dollars more, if the liquidation occurs in the US.

EMLICO declared insolvency in Bermuda four months after Ruthardt approved its move here in 1995.

But last week on Monday, the state's highest court said she had no authority to make that approval, and that the company effectively remained a state insurer.

EMLICO's reinsurers had long complained that Bermuda laws would force them to pay a larger portion of the potentially billion dollar claims, than if the liquidation was held in the US.

The SJC ruling came last week as the court denied Ruthardt's petition to become a US receiver for the Bermuda liquidation. It would have allowed the Bermuda liquidation to proceed, and allow her office to work in tandem with the liquidators.

But with courts here and in Massachusetts both now claiming jurisdiction over the company, observers believe the net effect may be that the Bermuda liquidators may end up working with her, after all.

The jurisdictional issue is complex. One requirement of local authorities for having allowed the company to come here in the first place was the appropriate authorisation of the Massachusetts insurance regulators.

Now that the SJC has said that right of authorisation never existed for Ruthardt, reinsurers could have hoped that Bermudian authorities would have relinquished any jurisdiction over EMLICO.

Yet section 15 of The Companies Act, 1981 states: "No defect in the formalities leading up to the incorporation of a company shall affect the validity of its incorporation and the certificate of incorporation shall be conclusive evidence of the due incorporation of the company and the date of its incorporation.'' On the heels of Friday's ruling by the Bermuda Supreme Court that EMLICO "continues to be a company incorporated and in liquidation under the laws of Bermuda,'' the Ministry of Finance said late on Sunday night that Government is "examining whether it can assist parties involved'' in the dispute.

Finance Minister Grant Gibbons said Government had no power under Bermuda law to send EMLICO back to the US. And the ruling reinforces Government's obligation to ensure that the liquidation continues in the form originally ordered by the Supreme Court.

He said, "Given the recent developments here and in Massachusetts, we are working closely with Bermuda's insurance regulators to find out whether there is some way that the Government can help facilitate a reasonable solution.'' The Ministry had remained substantially silent over this significant dispute for some time.

This week Dr. Gibbons explained in the prepared statement, "In keeping with the normal formalities existing under the British court system, (Government) had not taken a public position on the EMLICO dispute given the sub judice considerations and a belief that the dispute involved disagreements between contracting parties, each of whom had a range of legal and other remedies open to them.'' He said the Ministry had been constantly monitoring developments. But as was first indicated to The Royal Gazette last week, the Government is particularly concerned at the latest turn of events and has been "reviewing the implications'' of last Monday's ruling of the SJC.

Dr. Gibbons said, "We are dealing with a rather unusual situation involving a potential jurisdictional conflict. As a result, we have no simple answers.

"However, with the experience and expertise that now resides in the public and private sectors of Bermuda's international insurance industry, I am optimistic we will find some way to assist those involved in this increasingly complex and technical matter.''