Bruce just fyi, I am already on top of this.  Ken Blades and I had a 
conversation with Justin Williams yesterday about this ongoing saga (which 
has been ongoing a long time...).  Essentially here's where we are and why it 
is a good thing that United India has sued us in the London Court.  

In the early part of the dispute, we gave consideration to litigation vs. 
arbitration, but we could only sue UI in India, which was a bad option.

Several months ago, after lengthy settlement discussions with United India 
(UI) and reinsurers about DPC's DSU claim resulting from the first rotor 
problems, UI served DPC with a notice of arbitration under the policy.  The 
notice was curious because UI clearly disputed both liability and quantum; 
however, the policy's arbitration clause states that arbitration can only 
include issues of quantum.

Through a series of correspondence, we believe UI has agreed to arbitrate 
liability & quantum in the same proceeding and to include reinsurers in the 
arbitration.  (The cut through clause in the policy enables DPC to recover 
directly from the reinsurers).  It appears, however, (at least we speculate) 
that UI has suddenly become uncomfortable with the anomaly, that while they 
have served DPC a notice of arbitration, the clause limits arbitration to 
quantum, not liability.  Hence UI's declaratory judgment action in the London 
Commercial Court to determine liability.  Now, this gives us an option we 
didn't have earlier: litigation in the London court since they have submitted 
to jurisdiction  or arbitration.  There are pros & cons to both which we are 
discussing with Justin and Peter.

An interesting piece of the puzzle is that UI is now trying to realign the 
parties since DPC is the insured seeking recovery.    The reason UI wants to 
do this is because (i) it would put the burden of proof on DPC as claimant & 
(ii) UI as claimant will have a very difficult time meeting its burden of 
proof on a dec action because they do not have all the technical information 
DPC has. 
Pros of litigation: The London court is less likely to permit this 
realignment than arbitrators who are typically more lenient in procedural 
matters of this type.  We also believe the London court will be cheaper (no 
cost of  3 arbitrators) and quicker, since there are statutory time lines.  
UI has no incentive to resolve this expeditiously and has, at every 
opportunity, slowed the arbitration process by rejecting everything DPC 
proposes from the number of arbitrators to the names submitted etc.  Also, in 
the London court, there is a strong possibility DPC can get an advance 
security for attorneys' fees as the defendant, which is not possible in 
arbitration.
Downside of litigation:  It is less likely that DPC can litigate directly 
against the reinsurers for procedural reasons.  Furthermore, DPC could 
potentially end up in two proceedings: litigation to determine liability & 
arbitration to determine quantum which could take longer and be expensive.   
Ken Blades believes the loss adjuster stipulated to quantum in a prior 
meeting which would enable us to avoid that scenario.  Until we see the 
document, however, we cannot determine whether the stipulation  is 
enforceable because of issues of authority etc.

The bottom line is, now that UI has sued us in London court, we have a choice 
we didn't have before.  We plan to obtain Ken's document re the stipulation, 
send a letter to UI and then see their reaction before we decide. Now that 
we've been served it just shortens our time limit to do this.  I'm inclined 
to go the litigation route, but I want to see that stipulation document first 
and discuss with Linklaters its value either as an enforceable agreement or 
its strength as evidence of quantum.  Call me if you have questions.  In the 
meantime I'll keep you informed.
Michelle
---------------------- Forwarded by Michelle Blaine/ENRON_DEVELOPMENT on 
12/21/99 03:38 PM ---------------------------


Robert C Williams
12/21/2000 09:09 AM
To: Michelle Blaine/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Bruce Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Insurance Claim under CAR/DSU Policy

Michelle, this looks like yours.
---------------------- Forwarded by Robert C Williams/ENRON_DEVELOPMENT on 
12/21/2000 09:16 AM ---------------------------


Sandeep Katwala
12/21/2000 01:51 AM
To: Wade Cline/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rob Walls/NA/Enron@Enron, 
Robert C Williams/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruce 
Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:  

Subject: Insurance Claim under CAR/DSU Policy

Gentlemen,
Santa is really working overtime as far as we are concerned. Peter Cornell 
will be preparing a response and I am working with Suhas to get all this in 
train. This is not the easiest time to collate all the information we require 
to put a response together given the holiday but the clock is running. Will 
get back to you as soon as I can once we have got our thoughts in order as to 
the way forward.
Sandeep
---------------------- Forwarded by Sandeep Katwala/ENRON_DEVELOPMENT on 
12/21/2000 01:13 PM ---------------------------


Suhas Tuljapurkar
12/20/2000 06:17 PM
To: Sandeep Katwala/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Paul 
Kraske/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Mukesh Tyagi/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mohan 
Gurunath/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Krishna 
Murthy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Insurance Claim under CAR/DSU Policy

We have been served with a Claim Form issued by the Commercial Court in 
London in respect of above claim. The service (alongwith the order of the 
Court & an acknowledgement form ) has been effected  through Mulla & Mulla 
acting under the instructions of M/s Beachcroft Wansbroughs on behalf of UII. 
We shall be collecting and collating the necessary back up documents so as to 
submit the Claim Form within stipulated period of 23 days.
I am connecting the hard copies .