The chief executive of CIE will seek a High Court interlocutory injunction today preventing the board of the company from changing his contract.

Mr McDonnell's contract was amended last year resulting in his salary being increased to £180,000 (€228,717) from £100,000 with substantial increases also to his pension entitlements. It is understood Mr McDonnell will claim he is entitled to the improved contract. CIE will claim the contract was never approved by either the Department of Public Enterprise or the Department of Finance.

Sources have indicated the new contract was agreed between Mr McDonnell and the former CIE chairman, Mr Brian Joyce, but there is clear disagreement between Mr McDonnell and CIE over whether the new contract received the required approval.

CIE has told Mr McDonnell that since the new contract was not sanctioned by the Departments of Public Enterprise and Finance, he must revert to his former contract of employment which gives him a salary almost half the £180,000 he has received since last February. Mr McDonnell's court action today is to prevent CIE reverting to his former contract.

It is understood Mr McDonnell (58) has indicated his willingness to take out early retirement, but on the terms of his disputed contract. These would give him a pension of over £90,000 a year and would cost the E pension fund more than £1 million.

Whether or not Mr McDonnell receives this enhanced pension will depend on the outcome of the High Court proceedings.