Two Bermuda-based corporate giants have gone head to head, after Global Crossing Ltd filed a $1 billion action against Tyco International Ltd. for breach of contract.

Tyco has responded to the court action, which was filed in the United States, by saying it is a ploy by Global to avoid outstanding debts.

Global Crossing, through its subsidiary, South American Crossing Ltd., is claiming `tortuous conduct' as well as the breach of contract.

The dispute, which started over a year ago, has arisen over the laying of fibre optic cable to South America as part of Global Crossing's race to link its telecommunications systems around the world via state-of-the-art sub-sea cabling technology.

Global Crossing's subsidiary had contracted Tyco's subsidiary, Tyco Submarine Ltd, to install the cable to South America.

The suit was filed on Monday night in the United States District Court for the Southern District of New York, claiming damages of $1 billion.

Global Crossing alleges tortuous conduct and breach of contractual obligations related to Tyco's agreements to install the South America Crossing fibre-optic cable system and unspecified `certain other projects'.

"We deeply regret having to resort to litigation with Tyco, our vendor for a number of our early systems,'' said Leo Hindery, Chief Executive Officer of Global Crossing.

"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.'' In addition, a Global Crossing subsidiary, Atlantic Crossing Ltd., together with some affiliates, filed arbitration claims against Tyco.

These were for breaches of several contracts for the development of another cable system called the AC-1 System.

In a release issued by Tyco International on Tuesday, the company said it has yet to see the lawsuit but said it believes the action to be a tactical move by Global Crossing to avoid payment of outstanding balances.

"We have tried to resolve this matter amicably. We were proceeding on that basis when Global Crossing issued its press release, which we believe was issued for tactical reasons, rather than for substantive or worthwhile legal concerns,'' said a Tyco spokesperson in the statement.

Both companies are based in Bermuda and have principal offices abroad including London, Los Angles, and Exeter, New Hampshire.

Global Crossing, which is listed on the Nasdaq stock exchange, is building what it claims to be the world's most extensive fibre-optic network which will eventually have more than 101,000 miles of cable linking five continents, 27 countries and over 200 cities.

The cable it is laying can take large amounts of information which can be relayed through hair-thin fibres across the ocean floor in seconds. The cable will be able to take telephone, Internet and fax transmissions.

Tyco last year had fiscal revenues of $22 billion and is the world's largest manufacturer and servicer of electrical and electronic components and undersea telecommunications systems.

It also is the world's largest maker and installer of fire protection services, electronic security systems and flow control valves, as well as being a leader in medical supplies, plastics and adhesives.

At the close of Tuesday trading, shares of Global Crossing tumbled 14.8 percent to close at $23.80. Tyco closed down $1.75, or four percent, to close at $42.25.