55.
Following the Court of Cassation's decision, APC commenced an action against ATA before the Jordanian Court of First Instance, re-asserting its original claims against ATA in relation to the collapse of Dike No. 19. The Tribunal further notes that after the evidentiary phase of this ICSID proceeding, the Respondent extended an offer to the Claimant to submit the ongoing Dike No. 19 dispute to a new commercial arbitration in lieu of proceeding in the Jordanian courts. The Tribunal considers that it is pertinent to its decision to quote the following extracts from the Respondent's offer as described in its letter to the Claimant of 3 November 2009:
In some of its submissions in this matter, Claimant has taken issue with the fact that the Court of Cassation of Jordan extinguished the arbitration agreement between ATA Construction, Industrial & Trading Co. ("ATA") and Arab Potash Company ("APC") in the course of nullifying the majority arbitral award issued on 30 September 2003. By this letter, the Government of Jordan proposes to remove this issue from these proceedings. The Government is confident that any judicial or arbitral tribunal observes fair procedures and does not exclude governing Jordanian law or violate Jordanian public order will issue a valid award in the dispute over Dike No. 19.
The Issue. The contract between APC and ATA provides, in relevant part, that any dispute not otherwise resolved thereunder "shall be finally settled by arbitration conducted in accordance with Jordanian Arbitration Law by a Board of Arbitrators composed of three Arbitrations." Contract No. APC/37/97 ("Contract"), Appendix I, § 67.3 [Ex. R-13]. The Jordanian Arbitration Law provides, in regard to all valid annulments and irrespective of the identity or nationality of the prevailing party in an annulment challenge, that "[t]he final decision nullifying the award results in extinguishing the arbitration agreement." Jordan Arbitration Law, art. 51 [Ex. C-10]. Accordingly, the extinguishment of the APC-ATA arbitration agreement was a legally automatic consequence of the annulment that represents the straightforward recognition of an explicit and transparent statutory provision of general applicability, which involved no exercise of judicial discretion and which (because such extinguishment can only arise in the context of a valid annulment) complies with the terms of the New York Convention. [Ex. C-29].
When parties to a contract select an arbitration law to govern any future dispute, they select such law as it may exist at the time any such disputes arise, at least in regard to the non-derogable provisions of such law. Further, Claimant did not establish, in the course of presenting its case in the present proceedings, that it relied on a "BIT-protected" absence of this "extinguishment" provision when ATA and APC agreed to Jordanian Arbitration Law in their Contract. On the contrary, Claimant expressly argued, during the course of the annulment proceedings, that the current Jordanian Arbitration Law must control and be applied here, including Article 51 explicitly. See ATA Pleading in Case No. 71/2003 (16 Dec. 2003) at 9, 12 [Ex. R-102]; ATA Pleading in Case No. 71/2003 (Sept. 2005) at 144-45, 173 [Ex. R-105].
Because the arbitration agreement between APC and ATA has been extinguished by operation of law, APC has not re-commenced arbitration but has filed suit in the Jordanian courts against ATA for the relief to which it claims it is entitled with respect to Dike No. 19. ATA has appeared and answered that suit; has filed a counterclaim within it; and has not objected (and has waived any objection) to jurisdiction on account of any arbitration agreement. That suit remains pending today.
The Proposal. Notwithstanding the foregoing, APC has communicated the following proposal to the Government, in regard to this "extinguishment" issue and the ongoing suit regarding Dike No. 19 between ATA and APC, and the Government has authorized us to extend this proposal to Claimant:
1. APC is prepared to refer its pending court case against ATA in regard to Dike No. 19, without prejudice and pursuant to Article 10(c) of the Jordanian Arbitration Law, including its contractual claims and any counterclaims that ATA already has asserted in that case, to a new three-member arbitral tribunal, appointed and convened in accordance with an arbitration agreement worded in exactly the same language as Article 67.3 of the Contract. This proposal reflects the result that would obtain, if the final sentence of Article 51 of the Jordan Arbitration Law were not a part of the Jordanian law.
2. In connection with any such new arbitration, ATA and APC would be free, in any commercial arbitration, to present their respective evidentiary showings, to argue their respective views of the facts, and to advance their respective interpretations of controlling Jordanian law, subject in all respects to any apposite or controlling provisions of Jordanian law or decisions of the Jordanian courts, including, without limitation, the judgments of the Court of Appeal and Court of Cassation in APC's annulment action (Case No. 71/2003 and Case No. 1352/2006, respectively). The entire record of the ATA-APC proceedings to date would be submitted, jointly by the parties, to the new arbitral tribunal for consideration.
3. As ATA and APC have agreed, Jordanian law, including the Civil Code and Arbitration Law, would still apply and would govern the new arbitration, just as they have governed the ATA-APC proceedings to date. See Contract, §§ 5.1, 67.3 [Ex. R-13]. Thus, neither ATA nor APC would forego, as part of this proposal, any of its respective rights under Jordanian law, including, for example, the limited rights to redress provided by Article 49 of the Arbitration Law.
We want to be clear about the purpose and effect of this proposal by APC, insofar as the Government is concerned:
- This proposal is not a settlement proposal by the Government. Rather its purpose is to address and eliminate as a ground of dispute the statutory mandated extinguishment of the ATA-APC arbitration agreement so that the present ICSID Tribunal may focus on the issues that, Respondent believes, properly lie at the heart of the current dispute.
- This proposal is intended to (and would, if accepted) have no effect on any other aspects of the present dispute between Claimant and Respondent that are at issue in this ICSID proceeding.
- This proposal is intended to (and would, if accepted) have no effect on any other matter or dispute involving ATA and APC including, for example, the dispute pending between those two parties over Dike No. 18.
The Government asks that Claimant communicate its position in respect to this proposal, in writing, by no later than November 10, 2009 (5:00 p.m. Washington time). Thereafter, if this proposal has not been accepted, it shall be deemed to have been withdrawn.
The Government conveys this proposal by APC without prejudice to the Government's position that Claimant's challenges to the extinguishment are invalid.
We appreciate your consideration and are hopeful that we may limit the scope of the dispute currently pending for decision, as indicated herein, and thus, resolve this "extinguishment" issue, which Respondent considers an unnecessary distraction.
