ISTANBUL--(BUSINESS WIRE)--ATA Construction, Industrial and Trading Company has won a landmark decision in its international arbitration case against the Hashemite Kingdom of Jordan. In an Award dated 18 May 2010, an arbitration tribunal at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) upheld ATA’s claim against Jordan. The tribunal confirmed that Jordan had violated the Turkey-Jordan Bilateral Investment Treaty, as well as ATA’s legal rights under a contract with a Jordanian State-owned company, and awarded ATA restitution. This groundbreaking decision constitutes the first time that an international tribunal has ordered national courts to terminate ongoing national proceedings.

The background of the dispute relates to a contract between ATA and Jordan to build a dike at a site on the Dead Sea. In 1998, ATA had been engaged by the Arab Potash Company (APC), owned and controlled at the time by the Government of Jordan, to construct a dike for $30 million. After completion of the dike, due to reasons beyond ATA’s responsibility, a section of the dike collapsed. APC, disregarding the fact that ATA was not responsible for the collapse, commenced an arbitration against ATA in Jordan under their contract, claiming over US$50 million in damages. ATA responded by submitting a counterclaim against APC. In 2003, this commercial arbitration tribunal dismissed APC’s claim and upheld ATA’s counterclaim.

Dissatisfied with losing, APC sought the assistance of the courts of Jordan, hoping to strip ATA of its victory. In a case brought before its own courts, the Government managed to achieve its objective when, in 2006, the Jordanian Court of Appeal annulled ATA’s arbitration award. This judgment was confirmed by Jordan’s Court of Cassation in 2007. In the course of annulling the arbitral award, the Jordanian courts also ruled that the arbitration agreement in the contract between ATA and APC was now extinguished.

Following the Jordanian Court of Cassation decision, APC re-launched its contract claim against ATA. Relying on the Jordanian courts’ annulment decision and extinguishment of ATA’s right to arbitrate the dispute, this time APC brought its claim before those same courts. This prompted ATA to instigate ICSID proceedings against Jordan for violation of the Turkey-Jordan Bilateral Investment Treaty. The Jordanian court proceedings have been ongoing until the decision in the ICSID tribunal of 18 May 2010.

The May 2010 Award of the ICSID tribunal held that the Jordanian State, through its courts, has violated ATA’s basic rights to have its dispute with APC decided by way of arbitration. Specifically, the ICSID tribunal found that the Jordanian courts’ arbitrary extinguishment of the arbitration agreement in the contract between ATA and APC constituted a clear violation of international law and the Turkey-Jordan Bilateral Investment Treaty. The ground-breaking award upheld ATA’s claim and ordered the Jordanian courts to cease “immediately and unconditionally” their long-standing interference with ATA’s rights. It ordered that: (i) the ongoing Jordanian court proceedings brought by APC be immediately and unconditionally terminated, with no possibility to conduct further judicial proceedings in Jordan or elsewhere on the substance of the dispute; and (ii) ATA is entitled, if it wishes to bring its claim once more against APC in accordance with the arbitration provisions in its 1998 contract with APC. The ICSID award provides ATA with the right to re-instigate its contractual arbitration claim against APC and to seek an award in its favour in relation to the original dike dispute.

ATA’s spokesman, Nurhan Motugan, says that “ATA is delighted with the outcome and is gratified that in light of the ICSID Award, the Jordanian courts will never again be able to interfere with the substance of ATA’s dispute with APC.”

Latham & Watkins’ London Public International Law Practice partners Stephen Fietta and Robert Volterra led the representation of ATA Construction. Leading Turkish arbitration expert Dr. Ziya Akinci served as co-counsel with the Latham team.