Two insurance giants locked in a legal battle in the US over a $15 million (€11.8 million) art collection yesterday secured permission from the High Court in Dublin to have an Irish witness examined in the case.

Mr Justice John Quirke made an order that an executive of PricewaterhouseCoopers (PwC) should be examined by a person nominated by the US ambassador. The judge made the order after hearing an application brought under the Foreign Tribunals Evidence Act.

After testimony is taken here in the next few weeks, the record will be returned under seal to the clerk of the US district court for southern New York.

The application was made on behalf of American International Group (AIG), a defendant in an action taken by Starr International Company (Sico) before the US district court in New York. AIG has brought a counterclaim in the action.

The lawsuit revolves around Starr International's demand for the return of $15 million in art that it had allowed AIG to display in its offices.

In court papers, AIG described the long history of its relationship with Starr and consolidations that left AIG and Sico linked to each other.

In the High Court, AIG said it required testimony from PwC and documents relating to representations to the Irish Government that PricewaterhouseCoopers Ireland made on Sico's behalf.

In 2004, Sico successfully relocated its tax residence from Bermuda to Ireland in order to take advantage of an Irish tax treaty with the US that allowed Sico to reduce its withholding tax on AIG dividends from 30 per cent to 5 per cent, saving about $35 million in the last fiscal year.

PricewaterhouseCoopers was in charge of Sico's relocation to Ireland, the court heard.

According to court documents, an executive with PwC Ireland also played a central role in the representations made to the Government that, the court was told, is critical to the litigation in the US.

This includes a letter in February 2004 sent to the Revenue Commissioners seeking a determination that Sico would not be deemed a "close" company under Irish law. If Sico was deemed a close company, this would have significantly altered the financial consequences of a move to Ireland and perhaps prevented its relocation as a result, it is claimed.

In March 2004, the Revenue Commissioners decided, based on Sico's voting shareholders trustee/custodian role in relation to a deferred compensation, that Sico would not be deemed a close company.