US embassy cable - 04AMMAN5611

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