D.
The Court of Cassation Proceedings
48.
After the Court of Appeal decision, both ATA and APC filed recourses for
annulment before the Court of Cassation. ATA submitted to the Court:
(i)
that the Court of Appeal had substantially erred in annulling the
Final Award on the basis of Article 49(a)(4) of the Jordanian
Arbitration Law;
(ii)
that the Court of Appeal had substantially erred in purporting to re-
examine facts and evidence and in placing so much reliance on the
dissenting award as a basis for its findings;
(iii)
that the Court of Appeal had acted in a contradictory and unfair
manner by effectively barring the parties from addressing issues of
fact and evidence in their submissions, only subsequently to
reverse the FIDIC Tribunal’s findings of fact in its judgment;
(iv)
that the Court of Appeal had arbitrarily misapplied and
misinterpreted the Jordanian Civil Code in a way that contravened
the legislature’s intention, legal logic and applicable Court of
Cassation precedents.
49.
APC, on the other hand, requested that the Court of Cassation find that the Court
of Appeal had erred in upholding parts of the Final Award as final and not subject to
challenge before the Court of Cassation.
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50.
On 16 January 2007, the Court of Cassation delivered its decision. Firstly, the
Court of Cassation found that there was no “contradiction” in the decision of the Court of
Appeal:
[T]he Court [of Appeal] did not endorse / uphold any portion of the Arbitral
Award, but rather nullified it, and its pronouncement that its decision vis-à-vis
the aforementioned dismissed grounds is final has no basis in law and does not
affect the final Decision it has reached in quashing the Arbitral Award passed by
majority.
51.
The Court of Cassation therefore dismissed ATA’s recourse (and, in doing so,
also dismissed APC’s recourse in this regard), by declaring that the Court of Appeal’s
findings as regards the finality of the Final Award were not, in any event, dispositive and
had no effect on its ultimate decision.
52.
Secondly, in relation to the grounds of appeal advanced by ATA, the Court of
Cassation made the following findings:
With respect of the Second and Third reasons that the Court of Appeal has erred
when it exceeded its jurisdiction prescribed in Article 49(a)(4) of the Arbitration
Law, in that after finding that the arbitrators have applied provisions of Jordanian
Law, it nevertheless proceeded to examine issues that are essentially factual and
legal and relate to the case’s facts and evidence and others that are not included
in the Award but rather in the Dissenting Opinion.
In this regard, we find that pursuant to Article 67 of the Contract concluded
between the parties, both parties have agreed to refer any dispute arising between
them in connection with the Contract to a trilateral Arbitral Tribunal, whereby
each Party appoints an arbitrator while the third arbitrator is appointed by
agreement of both Parties. They have also agreed that the applicable law is
Jordanian law in addition to the Contract’s terms and conditions.
And whereas the Claimant “the Respondent” has submitted, in the course of
marshalling its grounds to nullify the Arbitral Award, amongst which the
arbitrators have excluded in their Award the application of the agreed upon
Jordanian Law, thus requiring the Court of Appeal to ascertain the extent of the
application of the provisions of the Jordanian Civil Code appertaining to
contracts for independent works. This could be achieved by examining the facts
and evidence and the deductions in order to determine the party with whom
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liability for the defects rests pursuant to the provisions of Article 785, 786, 788
and 789 of the Jordanian Civil Code.
And since the Court of Appeal in its capacity as a court of fact has concluded that
the Arbitral Tribunal, while it has apparently applied provisions of the Jordanian
Civil Code appertaining to contracts for independent works, it has nevertheless,
(in practice) excluded those provisions in light of the facts it has deduced and
which are gleaned from the file, which point out the Appellant’s joint liability
with the designer and supervisor for the construction of Dike 19.
And whereas the Court of Appeal’s Decision has its justifications in the case’s
file, the conclusion arrived at does not constitute an overreaching of the provision
of Article 49(a)(4) of the Arbitration Law no. 31 of 2001, but rather an
application thereof, which warrants that these two grounds be dismissed.
53.
In addition, the Court of Cassation concluded that ATA had been free to present
evidence to the Court of Appeal and must accept the consequences of having chosen not
to do so.
54.
Finally, the Court of Cassation concluded as follows:
[W]e find that if the Arbitral Award was upheld by the Court of Appeal, it would
have been duty bound to order its enforcement, and said decision would have
been final pursuant to Article 51 of the Arbitration Law no. 31 of 2001.
However, if the Court’s decision was to nullify the Award, said decision is
subject to challenge within thirty days following the date of notification of the
Decision. The final decision nullifying the Award results in extinguishing the
arbitration agreement.
In the case before us, the Court of Appeal has determined that the Arbitral Award
was in contravention of the provisions of Article 49(1) (4) sic of the Arbitration
Law, and accordingly, quashed it and pronounced the extinguishment of the
arbitration agreement. This, in effect, amounts to accepting the challenge.
[…]
Accordingly, we decide to dismiss the Appeal submitted by ATA and endorse /
uphold the appealed Decision appertaining to nullifying the Arbitral Award and
extinguishing the arbitration agreement. […]
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
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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.
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].
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].
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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.
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.
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:
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.
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- 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.
56.
On 10 November 2009, the Claimant declined the Respondent’s above-quoted
offer as follows:
By way of your letter, the Respondent proposes to “remove” the issue of
extinguishment of the arbitration agreement between the Claimant and APC from
the present ICSID proceedings. Your letter indicates that the Respondent
considers the extinguishment of the Claimant’s arbitration agreement an
“unnecessary distraction” in this proceeding.
The extinguishment of the Claimant’s arbitration agreement with APC is
anything but an “unnecessary distraction”. Alongside the unlawful annulment of
the Claimant’s Final Award, the extinguishment of the Claimant’s arbitration
agreement sits at the very heart of the Respondent’s violations of the Turkey-
Jordan BIT. Each of these issues forms a fundamental part of the factual matrix
that has given rise to the Claimant’s treaty complaint. As the Claimant observed
at the very outset of its Reply on the Merits and Counter-Memorial on
Jurisdiction, “the Final Award was annulled, and the Claimant’s arbitration
agreement was terminated, in a way that was clearly improper and discreditable
by international standards”.
As a responsible litigant, the Claimant would welcome any genuine good faith
proposal by the Respondent to resolve the present dispute. However, the
proposal set out in your letter is plainly nothing of the kind. All of the
surrounding circumstances indicate that the proposal constitutes a cynical attempt
by the Respondent (and its alter ego in this proceeding, APC) to manipulate the
outcome of this proceeding so as to achieve what the Respondent and APC have
wanted to achieve all along: namely, the unlawful expropriation of the
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Claimant’s Final Award and arbitration agreement and the substitution of the
Final Award with a new decision upholding APC’s substantial unfounded claims
against ATA in connection with the collapse of Dike 19.
[…]
Perhaps most revealing of all, your letter sets out a proposal that ATA could not
possibly accept without undermining the basic rationale of its treaty complaint.
To put such a proposal forward under the disguise of tidying up a minor
distraction for the present arbitration defies credibility. The issue and the
underlying facts are anything but a minor distraction and, if they were, the
Respondent would obviously not be seeking to remove them from the Tribunal’s
consideration.
ATA’s treaty complaint relates to, inter alia, the unlawful taking by the
Respondent of both an arbitral award and an arbitration agreement. The
Respondent’s proposal would not compensate the Claimant for either of these
harms. The Respondent’s proposal would not restore the Claimant’s Final
Award (which awarded it compensation and rejected APC’s claim for
compensation). Nor would it reinstate the Claimant’s fundamental right to have
its dispute with APC fully and finally determined by way of arbitration. Rather,
the Respondent’s proposal would leave the Claimant without its Final Award
and, in addition, facing a rigged arbitration proceeding by the terms of which it
could not possibly prevail. But, even if it could prevail, that would not
compensate the Claimant for damage that it has suffered.
[…]
The Claimant accordingly rejects the proposal set out in your letter.
57.
It is against this background that, in the present proceeding, the Respondent
maintains that the Tribunal does not have jurisdiction over the Claimant’s claims.
58.
Before addressing the parties’ respective contentions regarding jurisdiction, the
Tribunal has decided to provide citations to certain articles of the Treaty, the Jordanian
Civil Code, the Contract and the Jordanian Arbitration Law which recur and are often
referred to in the present Award to facilitate the reading and the understanding of its
Award.
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