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