The trustee liquidating MF Global's broker-dealer said on Wednesday a dispute with the broker's UK affiliate over the rights to about $700 million (437 million pounds) will have to be settled in court.

James Giddens, who is in charge of recovering as much money as possible for customers burned by MF Global's October collapse, said in a statement that ongoing resolution talks with administrators for MF's UK affiliate have come to loggerheads.

Giddens said he has asked KPMG, the administrator managing the UK unit's assets, to bring the matter to an English court.

Giddens had asserted claims to recover the money in question, which is associated with the accounts of U.S. customers who traded on UK exchanges. U.S. and UK laws are inconsistent on who has a right to those funds.

A lawyer for MF Global's UK unit did not immediately respond to a request for comment.

In all, Giddens has estimated that MF Global customers are missing about $1.6 billion of money that should have been segregated but was improperly commingled with MF Global's corporate funds as the firm sank.

Giddens' job is to try to get that money back, a process that is likely to involve litigation, potentially against banks, clearinghouses, MF Global affiliates and other parties who may have been on the receiving end of transfers composed of customer funds.

The legal issue in the dispute with the UK subsidiary is over whether the roughly $700 million currently with the UK unit was or should have been segregated under English law.

Giddens said he will press to have the lawsuit concluded as expeditiously as possible, but that it will require robust evidentiary disclosures and hearings.

Similar disputes remain ongoing in the three-year-old liquidation of Lehman Brothers' broker-dealer, which is also led by Giddens.

Earlier this month, Giddens announced he may also file civil lawsuits against some of the executives in charge of MF Global at the time it collapsed. The lawsuits would assert claims for breach of fiduciary duty and violation of rules governing the segregation of client funds.

Giddens' spokesman at the time declined name potential targets of the lawsuits, and would not say whether Jon Corzine, MF's former CEO, was one of them. The spokesman, Kent Jarrell, said Giddens would first try to resolve the claims out of court.

The liquidation of MF Global's broker-dealer is In re MF Global Inc, U.S. Bankruptcy Court, Southern District of New York, No. 11-2790.

MF Global's bankruptcy is In re MF Global Holdings Ltd, in the same court, No. 11-15059.

(Reporting By Nick Brown; Editing by Phil Berlowitz, Bernard Orr, Gunna Dickson)