Massachusetts over the EMLICO (Electric Mutual Liability Insurance Co.) controversy was underscored by developments this week.

Letters were simultaneously being fired off across the Atlantic on Monday, one from the Bermuda Court to a US district court in Massachusetts, and another from Massachusetts commissioner of insurance Linda Ruthardt to Finance Minister Grant Gibbons.

Bermuda's Chief Justice Austin Ward, with the backing of the Bermuda Government, asked a Massachusetts court for International Judicial Assistance in the matter.

Tension mounts over EMLICO The Chief Justice asked the US court to direct Ms Ruthardt to comply with directions he issued to EMLICO's Bermuda liquidators. But Ms Ruthardt wrote that the circumstances of EMLICO's redomestication application raises "serious concerns in my mind and in those of any neutral observer of the chronology of events.'' EMLICO's liquidators knew that once appointed receiver, she would proceed to Bermuda to seek control over EMLICO.

She said, "Instead of permitting that process to proceed, the joint liquidators -- claiming to be "agencies'' of (the) Bermuda Government -- removed my petition to the Federal District Court in Boston.

"I have filed a motion seeking the return of the matter to the state court. I have also directly informed the joint liquidators of my disappointment with their action and have requested that they withdraw...'' She said, "I ask that Bermuda Government officials publicly object to the removal of my petition by the joint liquidators and strongly encourage them to withdraw their removal of my petition to Federal Court and to not further obstruct entry of the proposed receivership order by the Massachusetts court. I believe it is particularly unseemly for individuals, claiming to be agencies of the Bermuda Government, to seek to preclude Massachusetts from acting under these extremely unfortunate circumstances in relation to a company which our highest court has determined to be a Massachusetts insurer.'' She intended, upon her appointment as receiver of EMLICO, to ask the official receiver, Registrar of Companies Kymn Astwood, to move the Bermuda court to stay the Bermuda proceedings and transfer all assets and property rights to her. She said, "I believe this is proper due to the overwhelming preponderance of US interests in EMLICO's liquidation and the circumstances under which Bermuda accepted the company. I would not seek to disturb any of the settlements made with reinsurers and approved by the Bermuda court during the course of the winding up proceeding. I strongly believe that those of us charged with responsibility for the regulation of insurance -- in both Bermuda and the US -- should take control of this long running controversy and bring it to a proper conclusion.

I hope that you will agree with me that what I have proposed fairly reflects the respective interests of our two jurisdictions. Would you please give consideration to my requests and inform me of your position at your earliest convenience?'' She said that all of EMLICO's business is in the US, and all its insurance contracts and reinsurance treaties were bound in the US. And when she purportedly allowed the company to move to Bermuda, it was after relying on financial information provided by EMLICO management under oath. But the Supreme Judicial Court has ruled that EMLICO remains a Massachusetts insurer and never left the state. She has sought to take control of the company as official receiver, as she is required to do of insolvent Massachusetts insurers.

Meanwhile, that same day, Chief Justice Austin Ward wrote to the US District Court Judge, the Hon. Douglas P. Woodlock: "I am sending this Letter of request for International Judicial Assistance to Your Honour in the interests of comity and in the hope of avoiding potential conflicts between our respective jurisdictions. "This letter is being sent with the support of both the Government of Bermuda...and the joint liquidators appointed by this court.'' Mr. Chief Justice Monday ordered the liquidators to within 30 days agree with the commissioner a protocol which will define and set out the respective functions of the liquidators and the commissioner; and failing that, if the District Court agrees, to arrange mediation with Ms Ruthardt to agree to a protocol; and, seek further directions from the court if no protocol is reached within 90 days.

He asked that the US Court assist the Bermuda Court by "giving directions to the commissioner in similar terms'' as those he gave to the liquidators. The Chief Justice concluded: "Your Honour's assistance is sought on the basis that, in the event that the proposed negotiations between the joint liquidators and the commissioner, or any subsequent mediation, fail to result in an agreed protocol then, of course, the fact that such attempts had been made with Your Honour's assistance to resolve the potential jurisdictional conflicts will not prejudice the rights of either party to make any submission they may deem appropriate before this court or any court in Massachusetts...'' The Chief Justice's letter came after Dr. Gibbons, as Finance Minister, wrote to the liquidators on January 30 expressing concern about "the impact such a (jurisdictional) conflict could have on future relations between insurance regulators in Massachusetts and Bermuda.'' He asked the liquidators to consider approaching courts in both jurisdictions, requesting help in negotiating a settlement, perhaps through the appointment of a mediator.

COURTS CTS