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Global Crossing sues Tyco for $1 billion

The international communications carrier sues one of its primary network construction companies, Tyco Submarine Systems, for $1 billion.

Global Crossing, an international communications carrier, is suing one of its primary network construction companies, Tyco Submarine Systems, for $1 billion in damages.

As previously reported, Global Crossing and its South American Crossing subsidiary filed the lawsuit for "tortious conduct" and "breach of contractual obligations."

The suit is related to agreements with Tyco Submarine Systems, a unit of design and manufacturing firm Tyco International, to install an undersea fiber-optic network linking the United States and South America, in addition to other projects.

In a statement released late yesterday, Tyco said it believes the lawsuit is "part of an ongoing effort by Global Crossing to avoid payment of outstanding balances due as a result of work performed by (Tyco Submarine Systems)." According to various media reports, however, the lawsuit is related to the revelation of certain Global Crossing trade secrets by Tyco.

Global Crossing is building a series of high-capacity international communications networks, which will eventually total more than 101,000 route miles in 27 countries. Qwest Communications International, Level 3 Communications, 360networks and many other communications newcomers are among Global Crossing's competitors, all of which are racing to complete their networks and lock down major corporate customers.

Leo Hindery "We deeply regret having to resort to litigation with Tyco, our vendor for a number of our early systems," Global Crossing chief executive Leo Hindery said in a statement. "But after spending nearly a year seeking unsuccessfully to resolve our differences, we have no alternative to legal action in order to enforce our rights and protect our shareholders."

Tyco representatives could not immediately be reached for comment.

The lawsuit was filed in U.S. District Court for the Southern District of New York.

Atlantic Crossing, another Global Crossing subsidiary, also filed for arbitration awards against Tyco for certain alleged breaches stemming from the construction of AC-1, a trans-Atlantic network linking the United States and Europe and Global Crossing's first undersea network.