Britain’s Pensions Regulator suffered an unexpected setback in Canadian and US courts that throw doubts on its ability to lay claim to part of the worldwide assets of Nortel, the collapsed telecoms equipment maker, whose UK pension scheme has a shortfall of £2.1bn.

The courts in Ontario and in Delaware ruled that the claim, which has yet to be formally made following a procedure of the Regulator’s Determinations Panel, could not be considered because no further claims could be made after a deadline of September 30, 2009. The Pension Protection Fund and the trustees to the UK scheme had filed a claim prior to that date but the legal process to formalising is not set until June.

Late on Monday, the regulator was awaiting details of the Canadian and US rulings and is likely to appeal. Nortel’s US business is pursuing protection from creditors under Chapter 11.

“We are surprised by this decision. We have yet to receive the court’s reasoned judgement, and will consider all the options when we do so, including the possibility of an appeal,” the regulator said.

The judgment raises significant issues about whether or not the regulator can appeal in international jurisdiction to present claims on subsidiaries of foreign companies for failure to pay pension debts.

In the UK, Nortel’s Canadian parent company also provided specific guarantees totalling close to £700m in respect of contributions to the scheme until 2012.

source:ft