UPDATE 1-China Sunergy sues Norway's REC over supply agreement

* China Sunergy starts legal action Norway's REC * Legal process related to bank guarantees for supply deal * Chinese court suspends payment of bank guarantees to REC * Norwegian court also grants injunction

Sept 11 (Reuters) - Solar cell products maker China Sunergy Co Ltd (CSUN.O) said it started legal proceedings against Norwegian solar company Renewable Energy Corp (REC) (REC.OL) in connection with bank guarantees related to a silicon and wafer supply agreement signed last year. China Sunergy said a court in China has issued a ruling suspending the payment of $50 million in bank guarantees to REC. A court in Norway has also granted an injunction with respect to the payment of $50 million in bank guarantees, China Sunergy said.

REC Sitech AS, with whom the original agreement was signed, was legally dissolved in January 2009, and the Chinese court ruled that the bank guarantees cannot be transferred to another entity, China Sunergy said.

China Sunergy noted that, until very recently, REC continued to claim that REC Wafer Norway was a change of name of REC Sitech AS.

Additionally, China Sunergy said REC had not made any shipments of wafer under the agreement that was signed in June last year, and that REC had unilaterally terminated the agreement.

Shares of China Sunergy closed at $4.70 Thursday on Nasdaq. (Reporting by Hezron Selvi in Bangalore; Editing by Anne Pallivathuckal)