The frosty relationship between AIG and its former CEO Maurice “Hank” Greenberg could be set to thaw, with the two parties launching binding arbitration procedures to settle various legal disputes.

Last week a US judge affirmed an earlier jury verdict in the legal battle between AIG and Greenberg-controlled Starr International, ruling the subsidiary owes no liability to AIG.

AIG had alleged the former subsidiary improperly seized $US4.3 billion ($5.1 billion) in stock meant for an AIG executive compensation plan.

The insurer sued Starr International and Mr Greenberg, alleging he had a fiduciary duty to use the acquired stock to fund the compensation plan, in line with an historic oral agreement. Instead Starr retained the shares and sold many of them.

Mr Greenberg and six other executives took control of Starr International following his departure from AIG four years ago.

US District Judge Jed Rakoff last week upheld an earlier advisory jury decision that the law does not recognise oral trusts in the absence of unequivocal evidence.

In a separate development, the two parties have launched binding arbitration procedures that are expected to conclude by March 31 next year.

They include a 2007 derivative suit led by AIG against Mr Greenberg and former CFO Howard Smith, which prompted a counter-claim from the two executives.

Mr Greenberg, 84, has signalled his desire to finalise ongoing legal action, having last month agreed a $US15 million ($17.9 million) payment to settle civil charges brought by the US Securities and Exchange Commission, without an admission of liability. Mr Smith agreed to pay $US1.5 million ($1.8 million) on the same basis.

The two were also among a group of former AIG executives to agree to settle a lawsuit brought by a group of Ohio pension funds for $US115 million ($137 million).