Bermuda Supreme Court has taken what is believed to be an unprecedented legal step and ordered the winding up of a company domiciled in a foreign country.

On January 20, the court ordered the liquidation of United Security Life Insurance Company (USL), which is based in Trinidad.

Provisional liquidator Mr. Gil Tucker, of Ernst and Young, said: "It's certainly going to be an interesting liquidation because most of the company is outside our jurisdiction. We don't have any power to go to Trinidad and make any demands.

"As far as we're aware, this is the first time something like this has happened in Bermuda. As such, we are going to be particularly methodical and careful in our procedure and we will work our way through it meticulously.'' He added: "We want to avoid as much controversy as possible.'' Although the court has no legal jurisdiction outside Bermuda, its order will allow the liquidation of USL's local branch, which went out of business last summer, to go ahead.

But the ruling could also open up a number of complex legal issues which have never been raised before in Bermuda.

In particular, some people involved with the case believe a legal tug-of-war may develop between Trinidad and Bermuda for control of USL's local assets.

Thousands of policyholders in Trinidad and other parts of the Caribbean will be dismayed to learn that USL's Bermuda assets are not being made available to meet the company's multi-million dollar total debt.

But Bermuda's Registrar of Companies, Mr. Malcolm Butterfield, was putting USL's 2,000 Bermudian policyholders first when he applied for the winding up order last August.

It was feared local policyholders might end up with virtually nothing if the company's Bermuda assets had been allowed to go back to Trinidad, where the company is still trying to stay alive.

Mr. Butterfield said yesterday he was limited in what he could say because of the Official Secrets Act.

But he added: "We took this move to safeguard the assets in Bermuda and we're moving as quickly as possible to convene the first creditors' meeting.'' USL's Trinidad-appointed Judicial Manager, actuarial firm Acumen Ltd., had strongly resisted the winding up order.

They wanted to use the Bermuda assets to try to keep the company running, which it believed was in the best interests of all the company's policyholders.

In a report which went before the High Court of Trinidad and Tobago last September, Acumen said: "It is generally accepted that the liquidation of a long-term insurance company is a last resort.'' It went on: "Despite all our objections, a provisional liquidator was appointed in Bermuda and all staff were dismissed soon after his appointment.

"It is arguable that the actions taken to date may have compromised the interests of the Bermudian policyholders.'' Controversy has dogged USL since it was placed into Judicial Managership last June.

Mr. Brian Fortier, who at the time was handling USL for Acumen, accused Bermuda's regulatory authorities of "total amateurism''.

In particular, he criticised them for allowing USL to continue taking premiums from Bermudians for five years while it was known the company was insolvent.

USL had been prevented from issuing new business in Trinidad and Tobago in 1987 but was allowed to continue doing so in Bermuda until February, 1992.

Mrs. Verbena Daniels, who was Bermuda's Registrar of Companies when USL became insolvent, has declined to comment on the situation.

Mr. Fortier said he had received little or no help from the local authorities in trying to sort out the company's troubled financial affairs. But his outbursts to The Royal Gazette caused his firm considerable embarrassment and, a few weeks later, Acumen sacked him.

Bermuda's Ministry of Finance denied claims that it had been negligent and claimed it had been misled for years about the true financial state of USL.

As of June 17, 1992, USL was estimated to have had liabilities of 40.2 million Trinidad and Tobago dollars and assets of only TT$26.1 million, leaving a deficit of TT$14.1 million.

Mr. Tucker said the first meeting of USL's shareholders and policyholders would be held as soon as possible.