YEMEN: 2009 REPORT ON INVESTMENT DISPUTES AND

UNCLAS SANAA 001086

SIPDIS

DEPT FOR EEB/IDF/OIA HEATHER GOETHERT AND KIMBERLY BUTLER

E.O. 12958: N/A
TAGS: CASC EINV KIDE OPIC PGOV FR YM
SUBJECT: YEMEN: 2009 REPORT ON INVESTMENT DISPUTES AND
EXPROPRIATIONS

REF: A. STATE 49477

B. 08 SANAA 1038


1. As per REF A request, Post is aware of one ongoing claim
(Claimant A) of United States persons against the Republic of
Yemen (ROYG). A separate claim (Claimant B) that was listed
in last year's report (REF B) was resolved in 2008.


2. Claimant A (2005) informed Post on 25 September 2005 of
his property claim against the Sanaa Governorate. Claimant A
contends that the Governorate seized 113 "libnas" of his land
(a libna is a local unit of land area equal to roughly 210
square meters). The seized portion of land is part of a
larger 250-libna block in the Beir Obeid zone of Sanaa where
the government is planning to build a new road. According to
Claimant A's lawyer and an official in the Sanaa Governorate
Capital Secretariat, compensation for the land seizure would
require the personal approval of Sanaa's mayor. To date,
Claimant A has received no decision on compensation in the
case, though local officials say the responsibility for
pursuing the compensation claim lies with Claimant A. Rather
than pushing for compensation, Claimant A maintains that the
entire seizure is inappropriate and that the property should
be returned. Claimant A has not contacted the Embassy about
this matter since September 2005.


3. Claimant B's (2005-2008) oil production sharing agreement
(PSA) with the ROYG expired on 14 November 2005. The PSA
covered an oil concession in Block 18 in the Marib region,
which was taken over by the Government-owned Safer
Exploration and Production Operations Company. Claimant B
had signed a five-year extension agreement with the Ministry
of Oil in January 2004, and believed that the agreement was
still binding. Claimant B argued that the ROYG required the
company to commit to additional investments based on the
extension agreement. The Yemeni Parliament overturned the
extension agreement, and the cabinet of then-Prime Minister
Bajammal terminated the new PSA and provided Block 18 to the
ROYG-owned Safer Company. The ROYG contends that the
agreement required, and failed to obtain, parliamentary
approval and is therefore not legally binding.


4. Claimant B filed arbitration procedures against the ROYG
on 21 November 2005 before the International Court of
Arbitration of the International Chamber of Commerce in
Paris, and sought damages of more than USD 1 billion.
Hearings took place on the case in September 2007 and, in
2008, the Paris court decided the case in favor of the ROYG.
Nonetheless, the court ordered the ROYG to pay Claimant B's
legal fees, amounting to USD 20 million. Both sides accepted
the result of the Paris court's decision.
SECHE