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Doing business in Jordan: The importance of homework

Contracting in Jordan. By Raid Abu-Manneh

Jordan is recognised as a country which welcomes foreign investment, but contractors should still carry out a proper review of contract terms and assess the impact of Jordanian law on their contracts.

Contract terms

FIDIC contracts are extensively used in Jordan but contractors should note that the FIDIC terms are often changed significantly in the employer’s favour.  A comparison with the original FIDIC form is therefore sensible.

FIDIC contract terms are also subject to Jordanian mandatory laws. For example, contractors and engineers are subject to decennial liability, which means that they will be jointly liable for a period of 10 years to compensate the employer for any partial or total collapse of the works and for any defect which threatens the stability or safety of a building. A court or tribunal also has the right to adjust liquidated damages to reflect actual loss suffered.

The Jordanian Civil Code is similar to other Arab codes but while these mandatory laws may look familiar, contractors should not assume that Jordanian law is identical to, for example, UAE law. Specific Jordanian legal advice is recommended.

Enforcing entitlements

The Jordanian courts generally have a good reputation but they are unlikely to be able to cope with a large and complex project dispute.

Effective contract management may, of course, avoid disputes but, as a deterrent it is important to ensure that contracts include reference to international arbitration in an established venue such as London and Paris. This is particularly effective where the employer has assets outside Jordan against which the contractor could execute an award.

Raid Abu-Manneh is a partner in the Construction & Engineering Group at Mayer Brown, London

The Port of Aqaba

By John Kjorstad

Unlike some of the wealthier Gulf States, Jordan does not readily have the cash needed for infrastructure development. Therefore, an opportunity for international private investment is both welcome and needed.

In mid-2008, the Aqaba Development Corporation (ADC) announced the international tender for the relocation and privatization of the Port of Aqaba – Jordan’s only commercial sea port and gateway to the Red Sea.

The winning consortium will become part of a 30-year public private partnership arrangement to design, build, finance and operate the New Port of Aqaba, a total expected investment of £306m.

In addition to serving Jordan’s growing needs, the developers said the New Port will service the ongoing reconstruction and growing markets in Iraq.

The existing Main Port and surrounding lands will be transformed into a modern waterfront district by the Abu Dhabi-based investment group Al Ma’abar International.

The scope of the tender for the New Port includes relocating the existing main port facilities 20 km to the south to consolidate port function and facilities in a common area.

The New Port is expected to have an initial capacity of 1.2 million tonnes per annum (tpa) of general cargo (break bulk), 300,000 vehicles, and one million livestock, with future potential expansion of up to 1.8 million tpa of break bulk, 400,000 vehicles and 1.5 million livestock. The new Grain terminal will handle the imports for both government and private importers and trans-shipment to regional markets, with an initial capacity of 2.1 million tpa and expansion capacity of 2.7m tpa.

The existing ferry terminal, which handles 1.3 million passengers per year as well as 110,000 trucks and vehicles crossing between North Africa and West Asia, will soon reach its maximum capacity. The new ferry terminal will have an initial annual capacity of 1.6 million passengers, 10,000 buses, 80,000 trucks and 200,000 cars. The expected added value of the project will reach £2.6bn and attract 32,000 direct and indirect job opportunities.

A preferred bidder for the project will be announced at the end of July.

John Kjorstad is features editor of CN’s sister title Infrastructure Journal.

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