Financier Dermot Desmond's lawyers are expected in court in New York today to block a multi-million dollar lawsuit by a US hedge fund investor who claims that Mr Desmond's company, IIU, should not have fired its star manager, David Morrison.

Mr Desmond fired Mr Morrison after he allegedly harassed a chambermaid at Desmond's luxury Sandy Lane Hotel in Barbados.

Stanley Druckenmiller, one of the wealthiest hedge fund managers in the US, is suing for tens of millions of dollars, claiming that Desmond's IIU hedge fund company wrongfully penalised him for withdrawing his funds following Mr Morrison's dismissal.

In a case that both sides had been hoping to keep out of the media spotlight, Mr Druckenmiller, a close friend of George Soros and a managing director of Soros Fund Management, is suing to recover the early redemption fee he says he was wrongfully charged by Mr Desmond for removing funds from IIU in 2002.

Last August, a New York magistrate court agreed that Mr Desmond could give his evidence in Ireland and that Mr Druckenmiller's lawyers would have to fly to Dublin to hear him give his deposition.

The judge ruled that cost was not a problem in the case, the witnesses would be "significantly inconvenienced" by travel to New York, and litigation efficiency was only slightly affected by hearing evidence in Dublin.

However, a US federal court judge ruled in October that the media-shy Mr Desmond would not have to give a deposition until his lawyers were given the chance to have the case thrown out of court.

They are due in court today to have a hearing in the judge's chambers, arguing that Mr Desmond was entitled to fire Mr Morrison and that it was not a breach of contract with Mr Druckenmiller, who is suing through his personal investment company, Druck Corporation.

A legal source said that Mr Desmond's lawyers wanted the case heard in the judge's chamber to avoid media publicity.

Lawyers for Mr Druckenmiller, who is listed in the Forbes 500 richest people in the world, will argue that his involvement in the fund depended on Mr Morrison's continued employment.

A source familiar with the case said he didn't know how long it would take for the judge to decide whether to throw out the case.

"It could take a day, it could take a month, depending on how it goes but it's unlikely he will dismiss the case out of hand," he said.

Mr Desmond, who has investments in sectors including airports, hotels, health insurance and sport, had recruited Mr Morrison to run a hedge fund as part of his International Investment and Underwriting (IIU) firm. He fired him in February, 2002, after Mr Morrison, a high-living financier with a multi-million dollar car collection, allegedly harassed a chambermaid at Desmond's Sandy Lane Hotel in Barbados, a claim Mr Morrison denies.

The Druck Corporation claims that IIU exacted a penalty of 10 per cent when it withdrew its funds.

Deutsche Bank and JP Morgan Chase have also taken cases against IIU to win back the redemption fee. Mr Morrison, who formerly worked as a foreign currency economist at Goldman Sachs, alongside Gavyn Davies, a leading economic adviser to British prime minister Tony Blair, moved to a rival investment company after his dismissal.