Water ministry wins Disi-related arbitration case worth $460m

AMMAN — Jordan on Thursday won an international arbitration case vs the Disi Water Company (Diwaco) over financial claims by the later, worth $460 million, according to government officials.

The Permanent Court of Arbitration (PCA), an inter-governmental organisation established in 1899 to provide dispute resolution services to the international community, issued a ruling on Thursday dismissing Diwaco’s financial claims.

Diwaco is a subsidiary of the Turkish construction company GAMA Energy, which signed with the Ministry of Water and Irrigation a concession agreement to implement the Disi Water Conveyance Project on a build, operate and transfer basis.

In addition to dismissing Diwaco’s claims, the PCA obliged the company to pay the Ministry of Water and Irrigation $10 million in damage compensations and $12 million in attorneys’ fees, according to a ministry’s statement issued on Thursday.

In turn, the ministry will pay Diwaco $2.5 million in costs of oil price increase, as well as $112,000 for altering the route of the water pipeline near Al Karak Bridge, around 130km south of Amman.

The Disi project, which started pumping water at full capacity in 2014, entailed the construction of a 325-kilometre pipeline to convey water from the ancient Disi aquifer in southern Jordan to the capital. The water is being transferred to Amman via a pipeline that passes through several water stations in Maan, Tafileh, Karak and Madaba.

In its statement, the ministry said that Diwaco made the financial claims based on allegations that it had faced multiple security and technical hardships during the construction of the project, which started in 2010.

Minister of Water and Irrigation Hazim El Naser said that the arbitration process started in 2015 in Paris, noting that documents were submitted and sessions were held over the past three years to finally reach the “just ruling”.

El Nasser thanked the ministry’s team of local and foreign attorneys, saying that they exerted every effort in defending the ministry.

Meanwhile, an official source indicated that company is scheduled to pay the ministry the compensations soon.

“It is expected for the compensations to be paid for the ministry actually very soon, which could be in less than a month,” the official source, who spoke on a condition of anonymity, told The Jordan Times.

The source, which has been involved in the details of the case since its beginnings, underlined that the government offered Diwaco $90 million in compensations to “end the matter in a friendly way”, noting that the company refused and sent the ministry a notice for arbitration in April 2015.