A New York-based diamond trader is suing its insurers after a diamond shipment worth $US140 million ($170 million) went missing.

Lazare Kaplan International, one of the world’s largest diamond manufacturers, has taken Swiss Re, Marine Insurance and SR International Business to court to recover the cost of the diamonds plus an additional $US500 million ($739 million) in “consequential damages” including breach of contract and sue-and-labour submissions.

The sue-and-labour clause in most marine contracts requires a ship’s owner to make every attempt to reduce or save exposed interests from loss.

The action also targets half a dozen Lloyd’s syndicates.

The diamonds went missing after Lazare delivered them to companies in Dubai, Antwerp and Hong Kong, under the condition they would remain its property until full payment was made. Full payment was never made and the diamonds subsequently disappeared.

Lazare says its insurers made an interim payment of $US28 million ($34 million) before they “abruptly changed course” and refused to pay the remaining amount.

The insurers say Lazare has not shown how they are obligated to pay, and accuse Lazare of not seeking insurance to cover non-payment by third parties and associated credit risk.

The mystery of the missing diamonds extends back to 2006, when Lazare and a Dubai-based company, Gulfdiam, became business partners.

Gulfdiam delivered $US60 million ($72 million) in Lazare diamonds to Canadian jeweller Gemport, which allegedly never made payment. Gulfdiam lost another $US34 million ($41 million) diamond consignment to companies in the Middle East and Hong Kong.

Lazare says other diamonds were destroyed or damaged in cutting and polishing operations in a Namibian manufacturing facility and a Chinese trading house.