Gerry Walsh retired yesterday after the end of a seven-year term at the head of State-owned gas company Bord Gáis with the dispute over his severance terms unresolved. Sources said yesterday the dispute with the company and the Department of Communications, Energy and Natural Resources was likely to end up in court.

Lawyers for the parties involved are now dealing with the dispute. The department itself would not comment as a spokesman said the issue had "become a legal matter". He would not clarify if the parties were going through arbitration or were preparing to go to court. Other sources said the issue could end up in litigation.

The row blew up when the department queried some of the terms of Mr Walsh's retirement deal with the company. He issued a statement yesterday indicating he believed the department's action in querying his retirement deal was preventing the company from honouring the terms of its contract with him. "The contract of employment for the position of chief executive of Bord Gáis Éireann was agreed in 2000.

"The terms of the agreed contract are not exceptional and all that I have sought on my retirement is that the CEO contract agreed is honoured, nothing more and nothing less."

Earlier this week, the company confirmed that the department had queried some elements of his retirement deal, but would not say which terms were involved.

Its statement said the company's board was working to resolve these issues as quickly as possible.

Bord Gáis has operations in the Republic and the North. It supplies natural gas to almost 600,000 homes and a range of industries in the State. It also supplies some electricity and is planning to invest €400 million in a power plant at Whitegate, Co Cork.

Mr Walsh has worked for the company in various roles since 1985. He became chief executive in August 2000.