ATA Construction, Industrial and Trading Company v. The Hashemite Kingdom of Jordan
ICSID · Investment (ICSID and treaty) · Jordan · 18 May 2010
Why it matters
This case is a landmark for the principle that a state's retroactive application of its arbitration law can violate a bilateral investment treaty. It established that the right to arbitration is an asset protected under the BIT, and that extinguishing that right retroactively constitutes a breach of fair and equitable treatment. The award also reaffirmed the Chorzów standard of reparation, ordering restitution in kind by restoring the arbitration agreement.
Summary
ATA Construction, a Turkish company, built a dike for the Arab Potash Company (APC) in Jordan under a FIDIC contract. The dike collapsed, and APC initiated arbitration against ATA. In 2003, the FIDIC tribunal issued a final award exonerating ATA and awarding it over USD 5.9 million. APC then sought annulment in Jordanian courts. The Court of Appeal annulled the award and, applying Article 51 of the 2001 Jordanian Arbitration Law, extinguished the arbitration agreement. The Court of Cassation upheld this decision in 2007. ATA then brought an ICSID claim under the Turkey-Jordan BIT, arguing that the annulment and extinguishment violated the BIT's protections. The ICSID tribunal found that the annulment claim was inadmissible because the BIT only entered into force in 2006, after the annulment. However, the extinguishment of the arbitration agreement occurred in 2007, after the BIT's entry into force, so it was admissible. The tribunal held that the right to arbitration is an asset protected under the BIT, and its retroactive extinguishment by the Jordanian courts violated the fair and equitable treatment standard. The tribunal ordered Jordan to terminate the ongoing court proceedings and restore ATA's right to arbitrate the dispute. The award is significant for its application of the Chorzów standard to order restitution in kind, rather than monetary compensation.
The detail
Parties: ATA Construction, Industrial and Trading Company v. The Hashemite Kingdom of Jordan
Case number: ICSID Case No. ARB/08/2
Outcome: Claimant partially succeeded: Tribunal found Jordan breached the Turkey-Jordan BIT by extinguishing the arbitration agreement, ordered termination of Jordanian court proceedings and restoration of Claimant's right to arbitrate.
Applicable law: Turkey-Jordan BIT (1993), ICSID Convention, Jordanian Civil Code, Jordanian Arbitration Law (2001), FIDIC Contract governed by Jordanian law
Issues in play: The retroactive application of Article 51 of the Jordanian Arbitration Law (extinguishing arbitration agreements upon annulment of an award) conflicted with the BIT's protection of investments, including the right to arbitration as an asset.
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