A legal tussle for control of an Irish unit of insolvent Italian dairy firm Parmalat was steppped up yesterday when the Supreme Court said the the European Court of Justice would have to settle the issue.

The jurisdiction dispute has pitted Parmalat's emergency administrator Mr Enrico Bondi against Bank of America and bondholders of the Irish unit, Eurofood.

Bondi is seeking to keep a grip on Parmalat's assets as he prepares a massive debt-for-equity swap.

He had appealed to the Supreme Court in Dublin against the appointment of a local liquidator of Eurofood.

Bondi has also accused Bank of America of "seriously suspect" financial operations with Parmalat's disgraced former management, some of which involved Eurofood. The US bank has denied the accusation.

Bank of America said in a statement on Wednesday it continued to believe the Irish courts were the proper jurisdiction for the Eurofood liquidation.

Parmalat triggered one of the world's biggest financial scandals when it revealed a multibillion-euro hole in its accounts in December.

As well as prompting criminal investigations in Italy, there have been legal battles for control of the group's foreign companies including Eurofood.

In February, a court in Parma, near Parmalat's base, ordered Italian jurisdiction in the case. But a month later the High Court upheld the Irish jurisdiction, leading to the wrangle.

Eurofood has few assets but it was used to issue some of the bonds which Parmalat sold to investors before its crash under more than €14 billion of debts.

Eurofood owes bondholders €122 million euros and about €4 million to Bank of America.

Stephen Taylor, head of European restructuring at PriceWaterhouseCoopers, said "it would be lucky for the European Court of Justice to resolve the issue in under 12 months unless they can find a quick way through."

PriceWaterhouseCoopers has been employed by Parmalat's new management in a sweeping audit of its accounts.

The Eurofood dispute concerns interpretation of a European Union regulation on cross-border insolvency which states the assets of an insolvent company should be subject to the jurisdiction where the company's main interest is located.

It will be the first time that the regulation has been taken to the European Court of Justice. - (Reuters)