2004 REPORT ON INVESTMENT DISPUTES AND

UNCLAS AMMAN 005611 SIPDIS SENSITIVE STATE FOR EB/IFD/OIA - A.T. BRYAN STATE ALSO FOR NEA/ARN AND FOR L/CID - J. NICOL E.O. 12958: N/A TAGS: EINV EFIN PGOV KIDE CASC JO OPIC SUBJECT: 2004 REPORT ON INVESTMENT DISPUTES AND EXPROPRIATION CLAIMS: JORDAN REF: STATE 78697 SENSITIVE BUT UNCLASSIFIED. PROTECT ACCORDINGLY. ¶1. (SBU) Per reftel request, post updates an outstanding investment dispute by a "U.S. person" against the Government of Jordan (GOJ). Claimant A refers to Jacobs Engineering Group of Pasadena, California. Claimant B refers to Arab Potash Co., Ltd., which at the time the dispute arose was 52 percent owned by the GOJ. (In 2003, the GOJ sold half of its 52 percent stake in APC to the Potash Corporation of Saskatchewan.) Post continues to report this case in accordance with instructions to report on any disputes against foreign governments based on the facts at the time the claim arose. Post is also sending to designated recipients in the Department an email submission with all edits highlighted. ¶2. (U) Post is not aware of any other investment disputes or expropriation claims against the GOJ, as defined reftel. ¶3. (U) BEGIN UPDATE OF INVESTMENT DISPUTE: JORDAN The United States Government is aware of one (1) claim by U.S. persons which may be outstanding against the Government of Jordan. ¶1. a. Claimant A b. 2001 c. Claimant A is an American company that acquired a UK-based engineering and design company in 2001. The UK company had been hired by Claimant B (then 52% owned by the GOJ) in 1995 and in 1997 to design and supervise the construction of three earthen dikes, designated Dike A, Dike B, and Dike C, for Claimant B. In March, 2000, a large portion of Dike B collapsed, a collapse that Claimant A attributed to factors unrelated to the dike's design. As a consequence of the collapse, Claimant B asked Claimant A to investigate the safety of Dike A in March, 2001. In the course of its investigation, Claimant A discovered unacceptable strains on the dike and put in place urgent remedial measures to keep the dike safe pending a longer-term strategy for restoring the dike to normal operation. Claimant A requested payment of GBP90,000 (USD55000) from Claimant B for the remedial work. Claimant B asserted that payment to Claimant A was offset by damages of JD37 million (USD26 million) for the collapse of Dike B. Claimant A, citing the British-Jordanian Bilateral Investment Treaty, registered its dispute against the Jordanian Government (as majority owner of Claimant B) with the International Centre for Settlement of Investment Disputes (ICSID) in September, 2002 for arbitration. The Jordanian Government said that Claimant B is a commercial business rather than a government entity and that, as such, the dispute does not involve the GOJ and thus is not a matter for ICSID consideration. An ICSID tribunal has been constituted, and ICSID held a hearing in early 2004, but has not yet issued a decision on its jurisdiction over the case. Claimant B initiated proceedings against Claimant A in the Jordanian Court of the First Instance in November, 2002, claiming the damages cited above. Claimant A unsuccessfully challenged the jurisdiction of Jordanian courts in the dispute (citing the ICSID acceptance of the case),and had exhausted all appeals in the first half of 2004. Although the case is proceeding in the court, both sides have mutually agreed to seek adjournments as out-of-court settlement discussions continue. GNEHM