reports.

A US federal court in Massachusetts may rule tomorrow on key issues in the dispute involving EMLICO (Electric Mutual Liability Insurance Co.) and some of its reinsurers.

And a controversial request by Bermudian authorities that the Massachusetts commissioner of insurance be pushed into a cross-border protocol that would make her a party to the continued Bermuda liquidation of EMLICO, appears set to fail.

Sources close to the legal wrangle said yesterday that EMLICO's liquidators and the insurance commissioner, Linda Ruthardt, are expected to report to the Hon. Douglas P. Woodlock of the US District Court of Massachusetts that after the court-required 30 days, they remain at a stalemate.

As much has been confirmed by a joint status report of the negotiations the two parties have written to the US judge.

Both sides are seeking effective control of the liquidation of EMLICO. The commissioner asked for at least co-equal status. The liquidators offered only a junior, consultative role.

The Finance Minister Grant Gibbons had sought an accord between the two sides, after it appeared that EMLICO had become a corporate creature of two jurisdictions, simultaneously. In light of that untenable situation, both jurisdictions appeared intent on controlling the liquidation.

Now the commissioner appears set to press her claim for receivership of EMLICO, based on the irreversible January 5 ruling of the Massachusetts Supreme Judicial Court (SJC) that EMLICO never left the state, and remains a Massachusetts insurer.

As the commissioner, she is required by law to take control of the assets of an insolvent Massachusetts insurer and commence a liquidation.

EMLICO's Bermuda liquidators have been resisting that notion, claiming that the company has already moved to Bermuda and is the subject of a winding up order in the Bermuda Supreme Court.

The court is also entertaining applications from some of EMLICO's reinsurers, Kemper Re of the US and London reinsurers, who wish to be a party to the federal court hearings.

The commissioner's motion is that the case should be remanded back to the SJC, because insurance matters are state regulated.

The liquidators' oppose that motion, and are awaiting a court decision to dismiss Ms Ruthardt's bid to become the receiver of the company, in effect replacing them as the controller of the EMLICO estate.

Meanwhile, parties are also preparing for a crucial March 23 battle in the Privy Council in London, as Kemper Re seeks judicial review of the regulatory decisions made by the Finance Minister and the Registrar of Companies that purportedly allowed EMLICO to come here in 1995.

Page 11: EMLICO liquidators under fire Liquidators oppose Kemper TROUBLE-SHOOTER -- Finance Minister Grant Gibbons COURTS CTS