Marriott Castle Harbour has suffered a bitter blow after a judge ruled the lawsuit over a mystery bug will be held in America -- not Bermuda.

The decision means that the company could now face a massive compensation bill.

It is thought that, with the US being more given to litigation than Bermuda, the chance of a high claim being approved has risen.

More than 400 people, many of them overseas visitors, were violently ill after dining at the hotel over the Valentine's weekend in February. A leaking sewage pipe feeding into the hotel's water tank was the cause of the outbreak.

Now a Massachusetts state judge has ruled that a lawsuit filed by 23 guests against the hotel chain will be heard in Boston. Marriott bosses argued that any litigation proceedings should be heard on the Island. Boston attorney Arthur Levine, who is representing 23 US guests, is suing the hotel and Marriott International Incorporated -- the US based parent company -- as well as Bermuda Properties Ltd, the company that owns the site.

Two other law firms based in New York and Illinois, representing a number of other American visitors, are also taking action against the Marriott while the Bermudian law firm Hector, Dwyer and Associates is representing about 20 clients.

Partner Dennis Dwyer, the attorney handling the case, said: "I have contacted my group of people to decide what action to take. At the moment I'm waiting for them to make a decision -- but we're not sitting back.'' It is understood that Marriott Castle Harbour Hotel chiefs did not want any legal action to take place in the US, arguing that, because they are based in Bermuda, they have no business or assets in Massachusetts.

But a state judge rejected that argument because Marriott International Incorporated, the hotel's parent company, operates in the state.

In a damage limitation exercise in March the hotel offered compensation, thought to be in the region of several hundred dollars, to each guest.

While it is understood that many locals have accepted that offer, the American lawyers believe their clients deserve much more.

Mr. Levine said: "We are not doing this just for nuisance value. You must understand my clients' distaste for the Marriott because of the horrendous, deceitful manner in which they were treated.'' And Angela Giannini of the New York-based law firm Clark, Gagliardi and Miller, said: "The claim is for the alleged outrageous conduct of the Marriott.

"Some employees had been quite ill and these symptoms continued throughout their stays, ruining their vacations and causing them grave concern for their health.'' Marriott bosses were unable to comment on the latest development. And they would not confirm if they in turn would be taking action against the Government's own health department. Government officials checked out the property the day before the outbreak and gave it a clean bill of health.

The Chief Medical Officer, Dr. John Cann, said that the outbreak had probably been spread by a virus passed on from one guest to another. Four days after the first victims began complaining of feeling unwell Dr. Cann claimed that the hotel was in no way responsible, despite evidence that the bug had been spread through contaminated water.

TOURISM TOU