UPDATE 1-Some AIG claims dismissed in Starr court battle

(Adds detail, comment from Starr and AIG, byline)

By Lilla Zuill

NEW YORK, June 23 (Reuters) - A judge has dismissed several claims made by American International Group Inc (AIG.N) in its three-year battle to regain control of a block of its shares held by an investment fund once used mainly to compensate AIG executives.

The ruling, made in Manhattan court by U.S. District Judge Barbara Jones, dismissed four of the claims, paving the way for several others to be heard in court.

AIG, the world's largest insurer, filed its claims in 2005 to counter Starr International Co Inc, a company that once funded a lucrative compensation plan for AIG executives, in seeking possession of an art collection owned by Starr but housed by AIG.

AIG has contended that the shares held by Starr, the company's largest shareholder, should continue to be used to fund employee compensation.

Starr, controlled by former AIG Chief Executive Maurice "Hank" Greenberg, maintains it is under no binding agreement to use the shares it holds to compensate AIG executives, as in years past.

"We are pleased that Judge Jones dismissed most of AIG's claims in this case, and we look forward to trial on the remaining claims and the opportunity to demonstrate that the facts clearly support (Starr)," spokesman Glen Rochkind said.

Dismissed were AIG claims that Starr's retention of the block of shares was in breach of the deferred compensation program, and in breach of a contract to both manage that program and to have AIG executives make up Starr's board. Also thrown out were claims for unjust enrichment and constructive trust, essentially that Starr unfairly holds these shares.

However, Judge Jones ruled that a claim that Starr breached its fiduciary duty, and a conversion claim, essentially that Starr was unauthorized in its assumption of the shares, can proceed to trial.

"We are pleased that the court will allow our breach of trust claim and related claims to go to trial," an AIG spokesman said. "These claims are at the heart of our case." (Editing by Richard Chang and Braden Reddall)