Identifier
Created
Classification
Origin
06KUWAIT3601
2006-09-06 14:04:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kuwait
Cable title:  

KUWAIT INPUT FOR 2006 REPORT OF INVESTMENT

Tags:  EINV CASC KIDE OPIC PGOV KU 
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VZCZCXRO2457
PP RUEHDE
DE RUEHKU #3601 2491404
ZNR UUUUU ZZH
P 061404Z SEP 06
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 6597
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS KUWAIT 003601 

SIPDIS

SIPDIS
SENSITIVE

STATE FOR EB/IFD/OIA/HGOETHERT

E.O. 12958: N/A
TAGS: EINV CASC KIDE OPIC PGOV KU
SUBJECT: KUWAIT INPUT FOR 2006 REPORT OF INVESTMENT
DISPUTES AND EXPROPRIATION CLAIMS

REF: STATE 60294

This cable is sensitive but unclassified; please protect
accordingly. Not for internet distribution.

UNCLAS KUWAIT 003601

SIPDIS

SIPDIS
SENSITIVE

STATE FOR EB/IFD/OIA/HGOETHERT

E.O. 12958: N/A
TAGS: EINV CASC KIDE OPIC PGOV KU
SUBJECT: KUWAIT INPUT FOR 2006 REPORT OF INVESTMENT
DISPUTES AND EXPROPRIATION CLAIMS

REF: STATE 60294

This cable is sensitive but unclassified; please protect
accordingly. Not for internet distribution.


1. (U) As requested Reftel, post is submitting the following
update for inclusion in the 2006 Report on Investment
Disputes and Expropriations Claims.


2. (U) A. Claimant Designation: Claimant A vs. Kuwait
Ministry of Finance, Offset Department.


3. (U) B. Year When Dispute Arose: The dispute arose on
October 5, 1997 and is now resolved.


4. (U) C. Case History: Claimant A acted as the third
partybroker for various offset obligors under the Ministry of
Finance's Offset Program. Claimant A's business plan for an
offset project was approved by the Ministry of Finance's
Offset Department (formerly known as the Program Executive
Office) in a letter dated January 24, 1996. As a condition
of the approval letter, Claimant A had to fulfill certain
requirements as instructed by the Offset Department, such as
providing the names of offset obligors within a four-month
period, completing feasibility studies, establishing a local
project company and obtaining approval for its project from
the Ministry of Electricity and the Ministry of Water and
Public Works. Claimant A fulfilled all of its obligations,
but in an October 5, 1997 letter from the Undersecretary of
the Ministry of Finance, Claimant A's business plan was
revoked due to a "technical default" and the Ministry
threatened to apply penalties under the Offset Program. The
Offset Department claimed that Claimant A failed to meet the
four-month deadline for naming the committed obligors.


5. (U) Case History, Continued: After several attempts at
an amicable resolution to this issue, Claimant A filed a case
in the Kuwaiti Court of First Instance against the Ministry
of Finance's Offset Department. The claim amount was
approximately USD ten million. The court ruled against
Claimant A on October 31, 1999. Claimant A appealed on
January 22, 2000, and the Court of Appeals overturned the
lower court's ruling on June 17, 2001. The Court of Appeals
returned the case to the Court of First Instance, which in
turn referred the case to the Ministry of Finance's Experts
Department in May 2002, to calculate the damages owed to
Claimant A. The Experts Department set damages at 1,386,609
Kuwaiti dinar (about US$4.6 million). However, the Court of
First Instance refused to enter the case for final judgment,
saying it disagreed with the Experts Department's
recommendation. On October 31, 2004, the Court of Appeals
reversed the Court of First Instance's refusal to enter the
case for final judgment, ruling in favor of Claimant A and
supporting the Experts Department's recommendation. The
Ministry of Finance appealed the Court of Appeals' decision
to the Court of Cassation, Kuwait's highest court. In April
2006, the Court of Cassation ruled in favor of the Ministry
of Finance, citing Claimant A's failure to name obligors
within the required four month time-frame.


6. (U) To Post's knowledge, the case appears to be resolved
as Claimant A has accepted the Court of Cassation's decision.


7. (SBU) Separate List of Claimants Names: Claimant A --
Middle East Networks, Ltd. Claimant A is not an American
company, but rather the Kuwaiti agent of Hughes Aircraft, now
part of Lockheed Martin.

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********************************************
Tueller