AMMAN - The arbitration case between the government and US-based oil firm Trans Global Petroleum has been settled, after the company withdrew its claims that the government violated the 1997 US-Jordan Bilateral Investment Treaty.
The case had been at the International Centre for Settlement of Investment Disputes (ICSID) since early last year, and both sides had presented written and oral arguments before Trans Global recently moved to withdraw the case, according the Natural Resources Authority (NRA).
"We knew it from day one. Our procedures were right and we were sticking to the contract. We knew we were on the right track," NRA Director Maher Hijazin told The Jordan Times yesterday.
He stressed that there was no financial settlement or behind-the-door deals leading to Trans Global withdrawing the case, adding that each party will bear the cost of their respective lawyers.
"There was no deal; Trans Global is dropping the case without conditions," he said, noting that the settlement agreement is available in the public domain and has no "hidden items".
A statement from the company received by The Jordan Times yesterday confirmed the withdrawal of the case, adding that it was moved to settle outside the arbitration court "so as not to waste time and effort vital to paving the way to utilise oil prospects in the Dead Sea".
The government, in turn, approved settling the case provided that Trans Global drops all "direct or indirect" claims and cases against the government.
Had the case proceeded, World Bank arbitrators would have determined whether NRA actions and treatment of Trans Global's oil concession violated the US-Jordan agreement.
The government had previously requested to have all of Trans Global's claims made in an April hearing considered "manifestly without legal merit", under Rule 41 of ICSID Arbitration Rules.
According to Trans Global's legal representatives, two claims concerning discrimination and unfair treatment were considered legally sufficient by the ICSID to go forward.
The third claim upheld by ICSID, concerning the right to consultation among parties to the Bilateral Investment Treaty, was later withdrawn by the oil firm.
Sources at Trans Global previously told The Jordan Times that the company intended to place its claims at $700 million.
The dispute dates back to the 1996 Production Sharing Agreement (PSA) signed between the NRA and Trans Global to explore for oil in the Dead Sea area.
The agreement, which was ratified by Parliament in 1997, gave the company the concession to explore the area in three phases over several years.
Trans Global had claimed that in 2005, the firm informed the NRA of a technical oil discovery and that the authority declined to act.
The NRA, the company said, pressured the firm later into signing a deal giving 80 per cent of the oil concession in the Dead Sea area to Porosity Ltd.
The NRA has since dismissed the claims, stressing that the oil company's findings did not meet the PSA's definition of an oil discovery.
By Taylor Luck
© Jordan Times 2009
