Bermuda-based manufacturing giant Tyco International has claimed that a $1 billion lawsuit filed against it on Monday night is "totally without merit''.

Bermuda-based telecommunications giant Global Crossing filed the lawsuit against Tyco claiming breach of contract.

Yesterday The Royal Gazette reported that the two giants had gone head to head through a dispute between their subsidiaries over the laying of a cable to link up with South America, but at the time of going to press, Tyco had not seen the legal action.

But now more details are emerging from both sides about the dispute which has led to the action being filed in the US District Court for the Southern District of New York. A spokesperson for Tyco said: "Tyco International has had the opportunity to review Global Crossing's lawsuit against Tyco's Tyco Submarine Systems Ltd (TSSL) subsidiary. The complaint is totally without merit.

"We view this action as the latest attempt by Global Crossing to avoid payment of balances due as a result of work performed by TSSL.

"We have tried to resolve this matter and we are disappointed that Global Crossing has chosen the tactic of litigating rather than attempting to proceed in a business-like manner.'' Tyco, a long-time vendor and manufacturer of Global Crossings telecommunications hardware, is accused of "tortuous conduct'' and "breach of contractual obligations'' by Global through its subsidiary South American Crossing Ltd.

The disputed contract was to build a fibre-optic network around South America for South American Crossing.

But the disagreement started when Tyco took on a contract that Global saw as being from a rival firm.

Just over a year ago, on May 11, 1999, Tyco announced it would build a similar system for Spain's Telefonica SA, and took a 25 percent stake in the venture.

Global sees this move by Tyco as a breach of contract. "We awarded them a $1 billion contract and approximately two weeks after we signed that contract they announced they would not only be building a competing system, but they would become 25 percent owners of the competing system.'' said Dan Cohrs, Global Crossing Chief Financial Officer.

" That amounts to a fraudulent violation of the contract and is also fraud.'' Global Crossing Chief Executive Officer Leo Hindery said he regretted having to resort to litigation but said they had no option.

"We deeply regret having to resort to litigation with Tyco, our vendor for a number of our early systems,'' he said.

"But after spending nearly a year seeking unsuccessfully to resolve our differences, we have no alternative to legal action in order to enforce our right and protect our shareholders.'' "We paid Tyco $40 million and they haven't returned it,'' said Mr. Cohrs, adding that officials from both companies had been talking for close to a year and the suit was filed because there were " some statute of limitations on some of our claims''.

Global Crossing filed the suit charging Tyco Submarine Systems Ltd. with fraud and theft of trade secrets.

The Tyco spokesperson said "This is part of a continuing effort by Global Crossing to stifle competition in the undersea cable market.

"Tyco remains committed in our focus to complete the TyCom Global Network undersea fibre-optic cable system.'' Another Global Crossing subsidiary, Atlantic Crossing Ltd., has also filed for arbitration awards against Tyco for alleged breaches of contracts stemming from the construction of the AC-1 system, a transatlantic network linking the US and Europe -- Global Crossing's first undersea cable network.

Leo Hindrey, Global Crossing CEO COURTS CTS