case on the fraud allegation'' against EMLICO (Electric Mutual Liability Insurance Co.) in their move to Bermuda.

Puisne Judge Norma Wade came to this conclusion this week as she threw out the opportunity for EMLICO reinsurer, Kemper Re, to enjoy an extension of the time limit under which it could seek judicial review of the government decision to allow EMLICO to move from Massachusetts to Bermuda.

The effect of Mrs. Justice Wade's ruling also removes Kemper's Supreme Court permission to originate a summons to quash the decisions taken by the Minister of Finance and the Registrar of Companies to allow the company in.

The court allowed an EMLICO application and set aside the order of Justice Ground that granted Kemper Re leave to pursue judicial review of the regulatory approvals.

But Kemper Re is less than impressed with the court's recommendation that they take their complaint to arbitration.

Yesterday, a Kemper Re attorney, said: "I can confirm that Kemper Re is going to appeal the decision of Justice Wade. We will be filing that appeal very soon.'' But in a 33-page ruling, issued on Tuesday, Mrs. Justice Wade said: "The court's function is to determine whether Kemper Re has shown that there is a point fit for further investigation. Having regard to the evidence before the court, I am satisfied that there is a good arguable case on the fraud allegation.'' It is not the first time a Supreme Court judge has come to that conclusion.

Last July Justice Ground wrote: "...I think that Kemper have demonstrated a serious issue to be tried on their fraud allegation...'' This week the court held that Kemper should take its case to arbitration, even though Kemper said that they could never obtain their major objective, which is to send EMLICO back to a Massachusetts liquidation.

The judgment said: "I have been persuaded that arbitration proceedings will provide the most appropriate vehicle to secure, fully and directly, the relief they seek.'' Justice Wade concluded: "The actual remedy which Kemper Re seeks is to avoid its obligations under the reinsurance treaties. Redomestication of the company (back to Massachusetts) is a mere route to that end. In addition, I am convinced that the most appropriate way of resolving the factual conflicts with respect to the issue of fraudulent redomestication (to Bermuda) is in a forum where the facts can be fully aired and distilled with the parties having the benefit of the prior discovery of all relevant documents.

"In this regard, it appears clear to me that the provisions of the Administration of Justice Act 1978 and the accompanying rules make no provision for discovery in actions for judicial review.'' She added: "I remind myself that the respondents in this case, the regulators, have filed affidavit evidence which states quite clearly that they do not believe that they granted the certificate of continuance to the company as a result of fraudulent representation.

"For those reasons, I accept the submissions made by EMLICO and find that arbitration is the appropriate remedy and procedure by which Kemper Re should pursue the actual remedy which they seek.'' Kemper Reinsurance only learned on October 17, 1995 of EMLICO's June move to Bermuda -- just days before EMLICO on October 20 declared itself insolvent and petitioned the Bermuda Supreme Court to be wound up.

But Kemper Re continued playing catch-up, failing to file for judicial review of the Bermuda decision to allow the redomestication before the end of 1995 deadline. They were three and a half months late and conceded in court documents that they simply didn't realise until the end of March 1996 that an application for judicial review in Bermuda was necessary.

The reinsurer waited until the last possible day, October 15, 1995, in filing in Massachusetts for judicial review there against the Massachusetts Insurance Commissioner's decision to allow the redomestication.

But Kemper and other EMLICO reinsurers have claimed that EMLICO and GE conspired to move the company to Bermuda after splitting off the "good business'' to a subsidiary. The conspiracy, say the reinsurers, was to deceive regulators here and in Massachusetts of their insolvency and move to "creditor friendly'' Bermuda, forcing the reinsurers to pick up the tab for hundreds of millions of dollars in GE claims for toxic waste sites.

EMLICO probe deamnde: Page 36 COURT CTS