accusing London reinsurers of seriously impeding the efficient winding up of the insolvent insurer by their conduct in litigation over a Superfund site.

They have moved their lawsuit against London reinsurers from state to federal court, and are now seeking injunctive relief against them, "enjoining the continued conduct of a civil action'' between the two parties pending in the Superior Court for Suffolk County (state court).

EMLICO and its principal insured, the General Electric Co. (GE), settled GE's insurance claims for coverage for GE's cleanup of a Superfund site located in Lanesborough, Massachusetts (the Rose site).

Superfund is a controversial US federal programme charged with cleaning up toxic waste sites around the US, using private and public funds.

In February 1993 in the state court, EMLICO's joint liquidators sued Underwriters at Lloyd's, London and certain London market insurance companies (together, the "London reinsurers'') seeking the reinsurance payment of $4.6 million.

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

They are now complaining that for over two years, the London reinsurers "have waged a relentless battle to defeat the orderly liquidation of EMLICO and thus to avoid paying EMLICO for any liability under their reinsurance contracts.'' The liquidators said the London reinsurers first opposed EMLICO's winding up petition and then sought to commence judicial review proceedings against the regulatory decisions that allowed EMLICO to move to Bermuda. A similar application by another reinsurer, Kemper Reinsurance, led to the Bermuda court decision that judicial review was not their appropriate remedy for challenging the redomestication (the relocation of EMLICO from Massachusetts to Bermuda in 1995).

Liquidators go on the attack The liquidators on Monday told a federal judge that whether or not that decision is appealable is the subject of a hearing in the Privy Council in London that began this week.

Finally, they said, the London reinsurers unsuccessfully challenged the Massachusetts commissioner of insurance's decision to allow EMLICO to move to Bermuda. But they, and other reinsurers, were ruled to lack standing for the challenge.

Lawyers for the liquidators said in papers filed with the federal court: "Having failed in these manoeuvres to defeat the orderly liquidation of EMLICO, London reinsurers are now attempting to achieve the same end by engaging in disruptive practices in the Rose site litigation.'' While courts have deferred litigation in that dispute, in favour of arbitration, EMLICO's liquidators put the arbitration on hold because they were concerned that tying themselves up over one environmental waste site would not be time efficient, in that GE has already submitted claims for clean up at more than 300 sites, and is expected to submit more.

But they claim the London reinsurers have sought to awaken the matter by seeking discovery of a myriad of documents which have nothing to do with the Rose site issue; but are instead concerned with EMLICO's redomestication, insolvency and hundreds of other clean up sites.

Further, said the liquidators, the reinsurers have adopted the view that EMLICO cannot be represented by the liquidators or their lawyers and have no right to be heard on the matter.

Reinsurers have pointed to the shock January 5, 1998 Massachusetts state court ruling that EMLICO never left Massachusetts and remained a state insurer. They then claim that the Bermuda liquidators and their lawyers are representing EMLICO Ltd., a Bermuda company. Therefore they cannot be representing EMLICO, the Massachusetts insurer, they are in dispute with. In fact, London reinsurers have refused to meet with them, rejected their appointment of an arbitrator and on March 13 sought to strike the appearance of EMLICO counsel.

A hearing is scheduled for today to determine the discovery disputes. Even the commissioner of insurance, Linda Ruthardt, is taking a position that EMLICO Ltd., purported to be domiciled in Bermuda and represented by the Bermuda liquidators and their lawyers, cannot be the same EMLICO that the state court said, in an irreversible decision, remains a Massachusetts insurer.

But the joint liquidators argued before the court that as a result of reinsurers' actions, there is a serious risk that EMLICO's interests would go unrepresented in the Rose site proceedings. And court decisions in Bermuda and the US could be conflicting, leading to a lengthy and expensive international dispute "which would further tax the resources of the insolvent estate and distract Bermuda liquidators from their duties as officers of the Bermuda court.

Their legal briefs stated: "The London reinsurers' motive is transparent: to delay the liquidation and avoid their contractual obligations to EMLICO.'' COURTS CTS