Lawyers hoping to win back hundreds of millions of dollars for AIB shareholders who lost money on the Allfirst banking scandal are to lodge new court documents arguing that the case should be heard under New York law.

Last week, the Maryland Court of Appeals made a groundbreaking decision in which it agreed to review the shareholders' case, three years after a Baltimore Circuit Court judge ruled that it was a matter for Irish law and that Irish company law would not allow AIB shareholders to sue Allfirst directors for hundreds of millions of dollars.

Maryland courts are permitted to decide business cases using foreign or out of state laws if necessary.

In this case, shareholder lawyers want the Maryland courts to use New York to force Allfirst directors and officers to repay the money lost by John Rusnak.

They will argue before the Maryland Appeal Court next month that New York law should govern and that, even under Irish law, the shareholders' case would be allowed to proceed.

The case is being taken by AIB shareholder, Tomran Inc, against senior officials in Allfirst who were allegedly in charge of jailed rogue trader, Rusnak, who lost $691 million (€535 million) in currency trading .

Tomran lawyer Cy Smith said yesterday that he was confident the courts would allow New York law to apply, as the "deposit agreements" under which many shareholders purchased their shares stated that New York law would apply if a dispute arose.

The lawsuit attempts to force senior company officials to compensate for the lost money, mostly paid from their own professional insurance.

Allfirst was sold to M&T Bank but AIB, its former parent company, retains the right to recover compensation in court.

Mr Smith said he was confident the court would reach a decision by October both on whether the case should be ruled under New York, Maryland or Irish law and whether it should be sent to trial.

"The court could decide that a case should be tried under Texas or Dominican Republic or Irish law and still remain in the Maryland courts.

The decision on which jurisdiction's law is used could be critical in deciding the case," he said.

However, attorney Mark Gately, who represents former Allfirst treasurer David Cronin, attempted to downplay the Court of Appeal ruling and stressed that the court has merely agreed to review the case.