US embassy cable - 03AMMAN3549

UNCLAS AMMAN 003549 
 
SIPDIS 
 
SENSITIVE 
 
TREASURY FOR DO/CHRISTOPOULOS 
USDOC FOR ITA/TAYLOR 
USTR FOR FHUEGEL 
OPIC FOR O'SULLIVAN 
L/CID/GLEHNER 
EB/IFD/OIA/NEFIRD 
 
E.O. 12958: N/A 
TAGS: EINV, EFIN, PGOV, KIDE, JO 
SUBJECT: EMBASSY AMMAN INPUT: 2003 REPORT ON INVESTMENT 
DISPUTES AND EXPROPRIATION CLAIMS 
 
REF: STATE 83098 
 
SENSITIVE, BUT UNCLASSIFIED; PLEASE HANDLE ACCORDINGLY 
 
1.  (SBU)  SUMMARY: Embassy Amman submits the following case 
for bureau consideration.  Per instructions REFTEL, post 
notes that the case involves a U.S. company that purchased a 
non-U.S. company with an outstanding claim.  END SUMMARY 
 
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CASE DESCRIPTION 
---------------- 
 
2.  (SBU) 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 (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 unacceptably 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 ($55000) from Claimant B for the remedial work. 
Claimant B asserted that any payment to Claimant A was offset 
by damages of JD37 million ($26 million) for the collapse of 
Dike B. 
 
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STATUS OF DISPUTE 
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3.  (SBU) Claimant A, citing the British-Jordanian Bilateral 
Investment Treaty, registered its dispute with 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 will decide whether it has jurisdiction after a 
hearing set for February 3, 2004. 
 
4.  (SBU) Claimant B initiated proceedings against Claimant A 
in the Jordanian Court of First Instance in November, 2002, 
claiming the damages cited above.  Claimant A challenged the 
jurisdiction of Jordanian courts in the dispute and said 
that, given ICSID acceptance of the case, current Jordanian 
court proceedings should be discontinued.  The Jordanian 
Court is expected to issue a ruling o/a June 12. 
 
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IDENTITY OF CLAIMANTS 
--------------------- 
 
5.  (SBU) Claimant A is U.S.-based Jacobs Engineering. 
Claimant B is the Arab Potash Corporation (APC). 
GNEHM