[Congressional Record Volume 140, Number 130 (Friday, September 16, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                E X T E N S I O N   O F   R E M A R K S


          UNITED STATES COMMERCIAL CLAIMS AGAINST SAUDI ARABIA

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Friday, September 16, 1994

  Mr. HAMILTON. Mr. Speaker, the Committee on Foreign Affairs, working 
with various Members of Congress, has been pursuing the commercial 
claims of United States firms against Saudia Arabia. Some of these 
disputes have been running for several years, but most have now been 
resolved. Only 3 of 17 claims remain unresolved.
  For the information of Members and the public, I am printing below a 
report from the Department of Commerce on the status of the claims. The 
Commerce Department and the administration are to be commended for 
helping to move these disputes to settlement.
                                      U.S. Department of Commerce,


                           International Trade Administration,

                                    Washington, DC, July 27, 1994.
     Hon. Lee H. Hamilton,
     Chairman, Committee on Foreign Affairs, U.S. House of 
         Representatives, Washington, DC.
       Dear Congressman Hamilton: Members of your staff recently 
     requested information regarding the status of the outstanding 
     U.S.-Saudi commercial disputes that we identified in our May 
     27, 1992 letter to you. Only three of the seventeen 
     commercial disputes that we identified in that letter have 
     not been resolved.
       In the claim of First Chicago National Bank against the 
     Ministry of Industry and Electricity, First Chicago has 
     received a partial payment of $3.9 million of the $6.7 
     million awarded to it by the Saudi Grievance Board. First 
     Chicago is working with the Saudi government at a senior 
     level to secure the outstanding payment, and has no plans to 
     request any U.S. Government assistance in this matter.
       Bill Harbert International Construction, Inc. (Harbert) 
     accepted a $6.8 million payment in satisfaction of a judgment 
     rendered in the firm's favor by the Saudi Grievance Board 
     against the Ministry of Agriculture and Water. The firm 
     contends that it is owed an additional $7 million because of 
     a flawed adjudication process. Ambassador Bandar has stated 
     on behalf of the government of Saudi Arabia that the Saudi 
     court judgment was fair, final and binding, and that the 
     government of Saudi Arabia considers the matter closed. 
     Because this case involves allegations about the fairness of 
     the Saudi judicial process, we can no longer consider it a 
     commercial dispute. We have advised Harbert to consider 
     raising this matter with the Department of State so that the 
     issue of the alleged unfair court process may properly be 
     addressed.
       The claim of Continental Illinois Bank against King Saud 
     University has been taken over by the Federal Deposit 
     Insurance Corporation (FDIC). Ambassador Bandar believes this 
     claim should be directed to the private Saudi contractor to 
     whom Continental Illinois provided financing. The FDIC has 
     taken no action to date on this claim.
       In addition, five of the eight disputes mentioned in the 
     Department of Defense June 30, 1993 report on U.S.-Saudi 
     Commercial Disputes have been resolved. Of the remaining 
     matters, we do not classify the claims of Science 
     Applications International against the Department of Zakat 
     and Income Tax and BMY Combat Systems against the Ministry of 
     Defense and Aviation as commercial disputes.
       Science Application's claim relates to a tax problem 
     arising from conflicting regulations of the Department of 
     Zakat and Income Tax and the Ministry of Defense and 
     Aviation. BMY's claim involves a payment delay on a debt 
     which Ambassador Bandar has acknowledged is owed to the firm. 
     The Saudi Embassy is working to secure final payment to BMY 
     and resolve the Science Applications tax issue.
       The claim of Gibbs & Hill, Inc. (G&H) against the Royal 
     Commission for Jubail and Yanbu remains unsettled. Ambassador 
     Bandar stated in a letter to Secretary Brown on April 15, 
     1994 that the dispute was adjudicated in the appropriate 
     Saudi trial court, and that G&H appealed the judgment 
     rendered by the trial court to the appropriate Saudi 
     appellate body. Saudi courts ruled against G&H in both 
     instances. The Saudi Government, therefore, considers this 
     case closed because G&H has had the opportunity to fully air 
     its claim in accordance with Saudi law. At the request of the 
     Commerce and State Departments, however, Ambassador Bandar 
     has agreed to meet with the CEO of G&H. He also has offered 
     to transmit to the appropriate Saudi court any new evidence 
     that G&H may have in support of its claim.
       Although it has taken a considerable length of time, we 
     believe that Ambassador Bandar has worked to resolve all the 
     long-standing disputes between U.S. firms and agencies and 
     instrumentalities of the Saudi Government that may be fairly 
     characterized as commercial in nature. We have worked closely 
     with the U.S. firms, Congress, and the State and Defense 
     Departments throughout the process to promote amicable 
     settlement of these claims. Specifically, we have facilitated 
     communications between the parties, advised claimants on 
     assembling claims documentation, and provided similar 
     process-related support.
       We are well aware of Congress' continued interest in the 
     Harbert and G&H claims. Because they involve allegations 
     about the functioning of the Saudi judicial system and the 
     propriety of the legal process in their specific cases, we do 
     not believe they should continue to be viewed as unsettled 
     commercial disputes. Rather, the issues raised by these 
     claimants refer to whether the firms were afforded fair and 
     just treatment in a sovereign state's legal system. 
     Consequently, we consider these claims to be of a political, 
     and not commercial, nature. We have recommended to both 
     Harbert and G&H that they consider raising formally their 
     claims against the Saudi Government with the Department of 
     State, and understand that the firms are currently working 
     with State toward a resolution of their claims.
       Thank you for your continued interest in this issue. Should 
     you have further questions concerning this matter, do not 
     hesitate to contact Norma Krayem, Acting Director of the 
     International Trade Administration's Legislative and 
     Intergovernmental Affairs, at 482-3015. I may be reached at 
     482-1860.
           Sincerely,

                                               Karl S. Reiner,

                                 Acting Deputy Assistant Secretary
                                 Africa, Near East and South Asia.
       Enclosure.

 Resolved U.S.-Saudi Commercial Disputes (Mentioned in Commerce's May 
                              1992 Letter)

       Case: Blount International vs. King Saud University.
       Case: Bucheit International vs. Prince Mishaal.
       Case: Casey & Glass, Inc. vs Saudi Arabian National Guard.
       Case: Westinghouse vs. Saudi Electricity Corporation
       Case: Leo A. Daly vs. Ministry of Health, Pension Fund 
     Directorate of the Ministry of Finance & National Economy, 
     Ministry of Industry & Electricity, Royal Commission for 
     Jubail & Yanbu, and Ifta's Organization.
       Case: RHS International vs. Ministry of Municipal and Rural 
     Affairs, Deputy Minister of Town Planning.
       Case: Sanderson & Porter vs. Saline Water Conversion 
     Corporation.
       Case: First National Bank of Chicago vs. Ministry of Public 
     Works and Housing.
       Case: Aydin Systems Division vs. Royal Saudi Air Force.
       Case: National Medical Enterprises vs. Ministry of 
     Interior, Ministry of Defense & Aviation, and Ministry of 
     Health.
       Case: Square D Ltd. vs. Ministry of Defense and Aviation.
       Case: Texscan Corporation vs. Royal Commission for Jubail & 
     Yanbu.
       Case: Ashland Technology vs. Saudi Public Transportation 
     Company.
       Case: L. Michael Milbrath & Plaza Hotel vs. HRH Prince 
     Abdullah bin Jalawi.
                                  ____


Resolved U.S.-Saudi Commercial Disputes (Mentioned in June 1993 Defense 
                           Department Report)

       Case: H.B. Zachary International vs. Ministry of Municipal 
     and Rural Affairs.
       Case: The Hartford Graduate Center.
       Case: Computer Sciences Corporation.
       Case: AECOM.
       Case: Lockheed Sanders vs. Ministry of Interior.
                                  ____


               Unresolved U.S.-Saudi Commercial Disputes

       Case: Bill Harbert International Construction, Inc. vs. 
     Ministry of Agriculture & Water.
       Status: Harbert accepted payment of $6.8 million in 
     satisfaction of a judgment rendered in the firm's favor by 
     the Saudi Grievance Board, yet still contends that it is owed 
     an additional $7 million. The Saudi government believes the 
     case is closed. The Commerce Department has indicated to 
     Harbert that it may wish to consider requesting State 
     Department involvement since the matter involves issues 
     relating to the judicial process of Saudi Arabia. New U.S. 
     Ambassador to Saudi Arabia, Raymond Mabus, met with Mr. Bill 
     Harbert on July 14, 1994 to discuss the claim.
       Case: Gibbs & Hill, Inc. vs. Royal Commission for Jubail 
     and Yanbu.
       Status: Saudi government considers the case closed because 
     Gibbs & Hill had the opportunity to fully air its claim in 
     accordance with Saudi law. The firm plans to meet with 
     Ambassador Bandar. The State Department has agreed to assist 
     in organizing the meeting.
       Case: First Chicago National Bank vs. Ministry of Industry 
     & Electricity.
       Status: First Chicago is working to secure the remainder of 
     a partial payment made by the Ministry, and has no plans to 
     request U.S. Government assistance.
       Case: Continental Illinois Bank vs. King Saud University.
       Status: This claim has been taken over by the Federal 
     Deposit Insurance Corporation which has taken no action to 
     date.
       Case: Science Applications International vs. Department of 
     Zakat and Income Tax.
       Status: Tax problem not a commercial dispute. The Saudi 
     Embassy is working to resolve this tax problem.
       Case: BMY Combat Systems vs. Ministry of Defense and 
     Aviation.
       Status: Payment problem not a commercial dispute. The Saudi 
     Embassy is working to secure final payment to BMY.

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