First Atlantic Commerce is suing Bank of Bermuda over an "ongoing" commercial dispute, and neither side would reveal details of the action.

FAC filed a writ in the Supreme Court on February 10 after it said all other methods of sorting the matter out had failed and Bank of Bermuda claims the case is without merit.

"This action is the result of an ongoing commercial dispute that has been outstanding for a number of years and has been the subject of very reasonable discussions," said Andrea Wilson, chief executive officer of FAC. "Regrettably the parties have been unable to reach a satisfactory conclusion in these discussions and so the matter has gone before the courts.

"As the matter is before the courts, First Atlantic Commerce is unable to provide any additional information at this time."

A spokeswoman for the bank said: " We have already reviewed and investigated this matter. We are confident that the FAC's allegations are without merit. We had worked closely with FAC for an extended period of time to assist them with their problems. We are therefore very disappointed that the FAC would commence this action. As this matter is now before the courts, we have no further comment on the matter."

It is understood, however, that the matter is not connected to an earlier dispute between FAC and Bank of Bermuda over a credit card fraud which led the bank to write off millions of dollars worth of investment in FAC.

FAC, which is a payment processing company used by merchants selling their goods on the web, had worked closely with Bank of Bermuda to process credit card payments, but they were caught up in a transatlantic credit card fraud. The following investigation included the FBI and the Royal Canadian Mounted Police, and discovered a ring of fraud which involved crooks telephoning credit card holders and claiming they had won Premium Bonds, and then asking for confirmation of their details by reading back the number on the back of their credit card.

The telephone fraud ring was cracked, but Bank of Bermuda stopped processing Internet credit card payments and the relationship between FAC and the bank was soured.