Bermuda officials this week rejected an assertion of the Massachusetts insurance regulator, Linda Ruthardt, that a recent Bermuda Supreme Court ruling was not final and binding.

They were issuing a point of clarification as EMLICO's reinsurers weighed in with a critical view of the events of recent weeks.

Ms Ruthardt's lawyers had told a federal judge in Massachusetts that a Bermuda court's January 9 order affirming the Bermuda liquidators' control over the estate of insolvent insurer EMLICO (Electric Mutual Liability Co., Ltd.) was ex parte and therefore only a provisional ruling.

They told the Massachusetts US District Court that the Bermuda order was issued after sealed submissions from the liquidators, and was "provisional by its very nature.'' But legal sources in the Attorney General's chambers here have clarified that a decision from Chief Justice Austin Ward was not an ex parte order, but simply a direction in the insolvency proceedings from the court that oversees the liquidation, and not provisional in nature.

The liquidators are David E.W. Lines and Peter C.B. Mitchell of Coopers & Lybrand Bermuda, together with their UK partner, Christopher Hughes.

The January 9 order came from Chief Justice Ward after an application from the joint liquidators the day before, which included a confidential report from Mr. Lines.

The commissioner was replying to the liquidators' opposition to her motion to remand her petition for receivership of EMLICO back to a state court.

Meanwhile, EMLICO's reinsurers were this week uncomfortably digesting the federal judge's agreement with the Chief Justice in seeking an end to the cross-border controversy over where EMLICO will be liquidated.

While the opposing jurisdictions could do without the controversy, a final decision is more important to EMLICO's estate, its liquidators, its creditor General Electric (GE) and its reinsurers.

Officials take issue with Ruthardt If reinsurers have it right, the difference in jurisdictions could mean a difference in many millions of dollars out of their pockets.

It could be understood then, why reinsurers found no solace in the Massachusetts court's view that EMLICO's liquidation could continue in Bermuda, as the liquidators and Ms Ruthardt discuss the potential for a joint liquidation.

The legal and jurisdictional issues do not appear to be disappearing any time soon.

Although the Honourable Douglas P. Woodlock of the US District Court in Massachusetts has given the commissioner and the liquidator 30 days to establish some cross-border protocol, he is still receiving submissions on issues relating to how the case came to him in the first place.

The commissioner had petitioned a state court to appoint her the receiver of EMLICO, an insolvent company which that court already had ruled to be a Massachusetts insurer. That decision is apparently irreversible, even though EMLICO purportedly moved to Bermuda in 1995 and is currently under a Bermuda Supreme Court winding-up order.

The liquidators tactically transported Ms Ruthardt's petition from state to federal court and promptly applied to have it dismissed. Just as it is for EMLICO's domicile, court jurisdiction is a key issue.

Christopher Grierson, a London lawyer with Lovell White Durrant, a law firm representing EMLICO reinsurer, Kemper Reinsurance, weighed in on the issue this week.

Kemper Re has been noticeably quiet since the Massachusetts state court ruled that EMLICO remained a state insurer. There may have been a quiet confidence that reinsurers would get their bottom line wish, after all: that EMLICO would be liquidated in the US, and not in Bermuda.

But Mr. Grierson said this week about the hearings before the US District Court, "There's a serious question over whether the federal court has jurisdiction. And although judges like to be seen to be brokering settlements, this is a very complex matter.

"He's only just got into the case and there is a lot that he needs to learn about it, with all due respect to him. I am in no way criticising the judge, but there is a lot for him to learn about this matter, and there are many more parties.'' COURTS CTS