Amended Complaint

Case 1:13-cv-02576-LGS Document 14 Filed 08/20/13 Page 1 of 28Case 1:13-cv-02576-LGS Document 14 Filed 08/20/13 Page 1 of 28

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CARDS COMPANY,LTD.,

Plaintiff,

-against-

MASTERCARD INTERNATIONAL INC.,

Defendant.

SECOND AMENDED COMPLAINT

No. 13 CIV 2576 (LGS)

Plaintiff International Cards Company, Ltd. ("ICC"), by its undersigned a

Hoguet Newman Regal & Kenney, LLP, for its Amended Complaint acjai^st Defendant

MasterCard International, Inc. ("MasterCard") alleges:

1. This is an action to recover damages suffered by ICC as a direct

consequence of MasterCard's wrongful termination of ICC's perpetual license to issue,

acquire and process credit cards and perform related financial services in Jordan.

ICC's perpetual license was granted in exchange for ICC's undertaking to develop

MasterCard's business in Jordan, where it was virtually unknown, and to build

MasterCard into a recognized and widely-accepted brand. For 13 years, ICC invested

its human and financial resources and the reputational capital of its principals in building

the MasterCard brand in Jordan with immense success.

2. However, on April 2, 2013, MasterCard terminated ICC's perpetual license

based upon on bogus, pretextual and false claims of ICC's nonperformance. For

example, the previous year MasterCard had forwarded four merchant complaints

involving the insignificant total amount of $5,278, just 0.00007 of ICC's 2011

MasterCard volume, none of which had merit in any event.

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3. Upon information and belief, as detailed below, MasterCards wrongful

actions were undertaken in coordination with Middle East Payment Services (MEPS),

a consortium of Jordanian banks and other investors, with the express purpose of

assisting MEPS to become the exclusive MasterCard issuer, processor and acquirer in

Jordan in violation of ICCs perpetual license and other rights, and to seriously cripple

ICC as a competitor of MEPS.

4. MasterCards actions favoring MEPS were designed to weaken ICC as a

long-term competitor of MEPS, and resulted in continuing and increasing damage to

ICCs business and reputation in the country. Specifically, for example, in addition to

MasterCards trumped up, phony and immaterial reasons for termination of ICCs

perpetual license: (a) MasterCard required ICC to increase its multi-million dollar letter

of credit held for security of ICCs performance before its expiration thus enabling

MasterCard to grab additional funds immediately upon the wrongful termination; (b)

MasterCard improperly withheld payments to ICC depriving it of funding to pay

legitimate third-party obligations while at the same time paying itself from ICCs

accounts; (c) MasterCard made untruthful statements and facilitated MEPS in making

untrue statements about ICC to merchants and banks with which ICC regularly dealt,

including statements to the effect that ICC was bankrupt; and (d) MasterCard harmed

ICCs reputation to such an extent that ICCs future business prospects have been put

in jeopardy threatening a reputation for reliability and excellent customer service which

ICC has spent the past 13 years developing.

Case 1:13-cv-02576-LGS Document 14 Filed 08/20/13 Page 2 of 28

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Jurisdiction and Venue

5. This Court has jurisdiction over this action pursuant to 28 U.S.C. 1332,

as this is a civil action between diverse parties and the amount in controversy exceeds

$75,000, exclusive of interest and costs.

6. Venue is proper in this District under 28 U.S.C. 1391(b) as Defendant

MasterCard has its principal place of business in this District. Also, the ICC-MasterCard

perpetual license requires the venue of ICCs action to be in this district.

The Parties

7. ICC is a Jordanian publicly listed financial services company with its

principal place of business in Amman, Jordan.

8. MasterCard is a Delaware corporation, with its principal place of business

at 2000 Purchase Street, Purchase, New York 10577.

ICCs History and Success Before the Wrongful Termination

9. ICC was established as a limited liability financial services company in

Amman, Jordan in 1999. It has been Jordans premier credit card issuer, acquirer and

third-party processer from the time it was established until present day. During 2006,

ICC became a publicly held company, and in 2008 it was listed on the Amman Stock

Exchange.

10. When it was established, ICC was the only financial services company in

Jordan with the right to engage in the full range of credit card services, including (a)

issuing, (b) acquiring and (c) third-party processing under the authorization of the

Central Bank of Jordan.


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(a) As an issuer, ICC issues MasterCard credit cards to customers and

settles charges made by the customer by paying MasterCard the

amounts charged by the customer, and then ICC collects those

amounts from the customer pursuant to their credit card agreement.

(b) As an acquirer, ICC recruits merchants to accept payment from a

customer using a MasterCard card and processes the payment on

behalf of the merchant by paying the merchant and acquiring the

debt owed to it which is paid to ICC by MasterCard.

(c) As a third-party processor, ICC acts similarly to its function as an

issuer, but will do so on the behalf of a third party, such as a bank.

ICC will settle the customers charges with MasterCard as it does

when it is an issuer, but in this structure, the third party will pay ICC

directly for settlement of the charges the next day and subsequently

collect the funds from the customer pursuant to an agreement

between those entities.

With all three functions, there is a clearing process when information concerning the

various transactions is exchanged electronically. No money is exchanged during

clearing. Clearing involves the exchange of data only. Then, each business day,

reconciliation is made of the amounts owed by ICC to MasterCard, and vice versa, and

settlement is made by crediting or debiting funds to ICCs bank account (maintained at

J.P. Morgan Chase in New York City). ICC collects fees for its services as issuer,

acquirer or third-party processor. Fees collected by ICC are calculated in different ways

based on the agreement with the respective entity.


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11. ICC and MasterCard settle all charges on a daily basis, netting the credits

due to the merchants with the debits by the customers.

12. ICC has distinguished itself from its competition through customer service

and reliability. For example, ICC established the first 24-hour customer service call

center in Jordan and will arrange visits to merchants to conduct business.

13. ICC has also maintained top technology and the best technical and

customer service along with the fastest payout in Jordan, if not the region; ICC issues

payments to merchants in as fast as 12 hours and cards are issued in as few as 4

hours. ICC has invested approximately $3 million in a state-of-the-art card processing

facility, which has become a major reference site in the industry regionally.

14. ICC is a leader in the credit card processing industry and serves all of the

key merchants in Jordan, as well as the Jordanian government through agreements

with the Finance Ministry to enable payment of all governmental fees through ICC credit

cards at all government locations throughout Jordan.

15. ICC was so well-received that its success led to a public offering on the

Amman Stock Exchange under the ticker CARD.

16. ICC also expanded its business through joint ventures with service

providers to enhance its product offerings and was highly appreciated by other credit

card brands, such as VISA, the JCB International Credit Card Company of Japan and

Chinas UnionPay.

17. Before the wrongful termination of its perpetual license, ICC served

approximately 9,000 merchants and over 30,000 card holders, with more than

approximately $65 million in annual acquiring volume and more than $27 Million in


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annual issuing volume, in addition to serving four affiliate banks in Jordan and

Palestine.

MasterCard Agreed to a Perpetual License with ICC

18. Prior to 2000, MasterCard was relatively unknown in Jordan. MasterCard

needed a local partner to build its brand and represent the MasterCard name in a way

that would instill confidence in MasterCards cardholders and merchants. ICCs

founders and major shareholder come from well-respected and influential backgrounds

especially in the financial services industry regionally, and they added credibility to

MasterCard as it started up in Jordan.

19. ICC and MasterCard negotiated an affiliation, and as of April 2, 2000, ICC

became a principal member of MasterCard with the rights to issue cards and acquire

merchants on behalf of MasterCard.

20. On April 20, 2000, to provide ICC with the incentive to invest in the

development of the MasterCard brand and business in Jordan, MasterCard offered ICC

a perpetual license, and the parties entered into the main agreement that is the subject

of this litigation (the Perpetual License Agreement). Attached hereto as Exhibit A.

21. In the Perpetual License Agreement, MasterCard expressly granted ICC a

perpetual license for ICCs use of the MasterCard trademark in combination with two

interlocking circles, and related variations, for use in Jordan.

22. The perpetual license could only be terminated for a limited number of

reasons, essentially if ICC acted in a pervasive and continued manner that materially

diminished the good will of the MasterCard trademark.


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23. Acknowledging MasterCards experience that its business involves

potentially millions of transactions and that perfection is impossible, accompanying the

Perpetual License Agreement is a set of Rules (operating procedures) that sets out the

day-to-day mechanics of operating a credit card business. The Rules set up various

procedures including those dealing with customer and merchant complaints, and, in

fact, infractions are classified and fines are associated with them depending upon their

severity.

24. In further recognition that the license was perpetual and only terminable

for behavior fundamentally destructive to the brand or the business, the Perpetual

License Agreement provided that it could only be terminated for ICCs failure reasonably

to comply with one or more established standards for the use of the trademarks and

provided further that MasterCard must provide ICC 90 days written notice of any

violation and the opportunity to cure. (Ex. A at 11)

ICC Performed Fabulously for MasterCard and Built the Brand in Jordan

25. Over the course of the five years following its licensing, ICC grew to

control more than 65% of the MasterCard acquiring market and serviced more than

5,000 merchants. In addition, ICC created many firsts for MasterCard: ICC issued the

first ever revolving MasterCard credit card in Jordan; it issued Jordans first co-branded

MasterCard cards; and the ICC MasterCard co-branded with the universities in Jordan

was the first credit card for students without collateral.

26. During the first eight years of ICCs relationship with MasterCard, the

relationship was healthy and fruitful, with mutual success enjoyed by both parties. As

the leading MasterCard acquirer and the third largest credit card issuer in Jordan, ICC


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built up MasterCards brand, helping MasterCard gain wide acceptance by merchants

and successfully launching three new affiliate banks for MasterCard: Export and

Finance Bank (subsequently re-named Capital Bank of Jordan), Jordan Kuwait Bank,

and Egyptian Arab Land Bank. ICC invested heavily in its state-of-the-art card

processing facility in reliance upon its perpetual license with MasterCard.

27. MasterCard demonstrated its ongoing satisfaction with ICCs service by

granting ICC three additional licenses to use other MasterCard marks and extending

ICCs use of the MasterCard mark to another geographic region outside Jordan:

(a) On April 1, 2002, MasterCard granted ICC another perpetual

license, which was for the MasterCard Electronic mark in Jordan.

(b) The following year, on June 10, 2003, MasterCard granted ICC a

license to use the Maestro mark in Jordan.

(c) On November 2, 2010, MasterCard granted ICC a license to use

MasterCard marks in Palestine.

28. The MasterCard Electronic license was perpetual in duration.

29. The Maestro license and the Palestine license were evergreen licenses;

that is, they each had a 10 year term which automatically renewed unless MasterCard

took certain actions (which to date it has not).

30. The combination of the two perpetual licenses and the two evergreen

licenses assured ICC of a continuing and fruitful business relationship with MasterCard.

31. The three license agreements referred to in paragraph 27(a)-(c) are

collectively referred to as Additional License Agreements, and when referenced

together with the Perpetual License Agreement as the License Agreements.


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The New Country Manager and The Formation of MEPS

32. In 2009, a consortium of four Jordanian banks formed MEPS for the

purpose of processing and acquiring credit and debit cards, particularly under the

MasterCard brand.

33. In announcing the formation of MEPS, the banks stressed that the

unlimited support of MasterCard was a key driver in prompting the four banks to set up

this consortium.

34. Shortly before MEPS was formed to compete with ICC, MasterCard

installed a new Country Manager-Jordan, Basel El Tell, and the relationship between

ICC and MasterCard dramatically deteriorated.

35. During a telephone conversation between Mr. El Tell and Khalil Alami,

ICCs CEO, on January 19, 2009, Mr. El Tell advised Mr. Alami that MasterCard was

preparing to make ICCs newly formed competitor, MEPS, MasterCards exclusive

licensee in violation of the License Agreements. Shockingly, Mr. El Tell told Mr. Alami

that MasterCard was planning on taking an investment position in MEPS despite the

inherent conflict of interest that would result. Upon information and belief, Mr. El Tell

continuously repeated that information to others in the industry such that ICCs

customers and business partners, and banks and merchants, learned of that news. Mr.

El Tell also advised Mr. Alami that MasterCard intended to have only one acquirer in

Jordan, MEPS.

36. From that point forward, MasterCard began its quest to terminate ICCs

License Agreements and replace ICC with MEPS as the exclusive Licensee. Thus,

upon information and belief:


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(a) Since MEPSs establishment, MasterCard has been coordinating

with MEPS to terminate ICCs relationship with MasterCard so that

MEPS can be the sole MasterCard licensee in Jordan, including

sending Mr. El Tell to advise MEPS on how to organize its business

operations and having Mr. El Tell attend certain MEPS board

meetings.

(b) Mr. El Tell visited banks and merchants months before the ICC

termination and informed them of MasterCards plan to terminate

ICC in favor of MEPS.

(c) MasterCards preference for MEPS was demonstrated by the

concessions it received. For example, MEPS was permitted to use

the MasterCard logo and marks on its business cards, but the

MasterCard legal Department had abruptly prohibited ICC from

using the logo in a similar fashion.

(d) Additionally, MasterCard turned a blind eye when MEPS conducted

unlicensed MasterCard acquiring operations in Syria, apparently in

violation of United States law, by disguising those operations as

Jordanian transactions. Moreover, ICC formally advised

MasterCard of MEPSs violations several times, the most recent

being in December 2010, but MasterCard did not stop MEPS from

operating in Syria or require it to comply with internal MasterCard

Rules or relevant United States law, but instead, MasterCard

condoned those activities.


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(e) Mr. El Tell had also begun making visits to banks in Jordan

promising them MasterCards partnership in MEPS and de-

licensing of ICC in order that MEPS would become the sole

acquirer in Jordan for MasterCard.

(f) Mr. El Tell also started interfering with business relationships

between ICC and its merchants by denigrating ICC and by

suggesting that MEPS would offer lower fees.

Dirty Tricks By MEPS and MasterCard To Drive ICC Out of Business

37. Since Mr. El Tells appointment to country manager, MasterCard has twice

required ICC to increase the amounts of its letters of credit to MasterCard, securing

ICCs obligations, to cover MasterCards claimed risk exposure. While permissible,

there was no commercial need for an increase. The first increase, required in January,

2010 was more than double, from $800,000 to $1,720,000. The second increase,

required in May, 2012 was in the amount of $2,780,000, making the total unnecessary

security $4,500,000. These unnecessary increases in ICCs letters of credit required

ICC to post millions of dollars of collateral.

38. Moreover, on February 20, 2013, MasterCard unilaterally and prematurely

renewed the $2.78 million letter of credit which would have expired by its terms on April

16, 2013. Such an early renewal was not commercially necessary, as the letter of credit

had two months remaining, and was not consistent with MasterCards past practice.

Upon information and belief, MasterCard unilaterally renewed the letter of credit so that

it had a bigger pot to grab when it terminated ICCs perpetual license in favor of MEPS.


12

39. In addition to raising ICCs letter of credit requirements, MasterCard

continued to harass ICC by forwarding complaints to ICC, many of which were baseless

or made against the wrong company (i.e., should have been directed at MEPS). Still,

ICC addressed each and every complaint that it received in a prompt and effective

fashion and completely within the guidelines of the MasterCard Rules.

40. ICC received very few complaints until MasterCard and MEPS began their

coordinated attack.

41. It was ICCs practice, in the rare instances when a complaint was levied

by a merchant or MasterCard customer, to respond immediately and resolve whatever

the issue may have been, and in nearly every instance the issue was not the fault of

ICC, but instead of the merchant or ICCs competitor.

42. For example, on April 22, 2012, MasterCard advised ICC of four

complaints allegedly from ICC merchants by phone, emails, letter, and MasterCards

website. The complaints concerned a total of $5,278 in transaction value compared to

the more than $76 million that ICC handled, equaling 0.00007 of the total volume of

transactions. Upon investigation, however: (a) two complaints alleging payment delay

were the result of the merchants outstanding balances to ICC; (b) another complaint

was just untrue and the merchant agreed and later apologized to ICC for the

misunderstanding; and (c) the final complaint was sent to MasterCard from MEPS,

purportedly on behalf of a merchant and, not surprisingly, there was no substance to it.

43. Thus, on April 25, 2012, ICC wrote to MasterCard and stated that it had

not received any complaints beyond the four that it addressed promptly and without


13

issue. ICC further put MasterCard on notice that it believed that the complaints were

the design and execution of MEPS.

44. Moreover, on information and belief, MEPS and MasterCard have met

with merchants to encourage them through improper incentives to file false complaints

against ICC to taint its reputation with MasterCard and others and provide false grounds

upon which MasterCard could terminate ICCs license.

45. MasterCard also unreasonably, mysteriously and without any business

justification delayed its approval of ICCs application to use the Jordan Commercial

Bank, a relationship that had been preliminarily authorized in 2009 (to the extent that a

joint press release announcing the agreement had been prepared and was with

MasterCard awaiting approval for distribution). Despite numerous communications from

ICC for activation of the bank, MasterCard never responded.

46. Another example of MasterCards misbehavior is its sudden demand that

ICC change its business cards and stationery by removing the MasterCard mark, even

though MasterCard had previously approved ICCs materials, while it allowed MEPS to

use the MasterCard mark in the very same fashion without objection.

47. MasterCards approach to its dealings with ICC changed dramatically after

MasterCard apparently decided to replace ICC with MEPS, by not answering ICC

correspondence or addressing ICC complaints about MEPS (e.g. the MEPS unlicensed

activities in Syria), such lack of responsiveness being a violation of MasterCards own

rules and procedures as well as an attempt to further compromise ICC in the

marketplace.


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MasterCards Trumped-up, Bogus Excuse for Termination

48. As alleged above, ICCs Perpetual License Agreement was protected by

the express requirement that it be given 90 days written notice of material violations

with sufficient detail to identify each alleged failure. (Ex. A, 11). The Additional

License Agreements contain similar notice provisions, except the perpetual license

agreement for the MasterCard Electronic mark contains a shorter notice provision.

49. On November 22, 2012, MasterCard sent ICC two letters imposing

assessments on ICC under the MasterCard Rules. ICC had never received an

assessment in its entire 12 year history up to that point. As part of the MasterCard

program there is a 362 page compliance manual called the MasterCard Rules, which

addresses everything from the rights to use the marks to currency conversion. Because

of the complexity of the system and the enormous volume of transaction, the Rules

contain a penalty system with a range of penalties for standards infractions.

50. Each letter dated November 22, 2012 was titled Notice of Assessment.

51. One Notice of Assessment was with regard to ICCs use of the

MasterCard mark. That letter laid out a number of provisions from the MasterCard

Rules and claimed that ICC was in violation of those Rules. MasterCard did not provide

the required sufficient detail to identify each alleged failure.

52. Similarly, the other Notice of Assessment was with regard to MasterCards

determination that ICC had failed to pay a number of Merchants for transactions ICC

acquired from those Merchants. Like the first Notice of Assessment, there were no

details sufficient to identify the transactions.


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53. Instead of providing sufficient detail to identify each alleged failure,

MasterCard imposed two fines of $5,000 for each assessment. The assessments were

levied as Category B violations of the MasterCard Rules relating to conduct visible to

customers, which provided for fines of up to $20,000 per violation in the first tier of that

category. It is worth noting that the fine in the upper tier of Category B is $100,000.

Tellingly, the assessments were for a fraction of the total amount possible under that

first tier of the violations provided for by the Rules.

54. MasterCard paid itself the two $5,000 assessments by debiting ICCs bank

account, over which MasterCard has direct debit authority.

55. The November 22, 2012 Notices of Assessment were surprising because

just two days earlier, ICC had made a presentation to Raghu Malhotra, Division

President Middle East and North Africa for MasterCard. During the meeting with Mr.

Malhotra, ICC described its plan to prevent delayed payments to merchants as ICC

increased its MasterCard transaction volume. That plan included a series of significant

capital injections into ICC and the introduction of strategic investors who would inject

further funds into ICC for the purpose of preventing any delays in payments due to cash

flow constraints. As of December 31, 2012, ICC had executed significant parts of the

plan and most payments to merchants were being paid promptly. At no time before or

after receiving the letter from MasterCard has ICC ever failed to pay a merchant. ICC

memorialized the meeting by letter to MasterCard dated December 31, 2012.

56. Moreover, and as part of its proposed plan, the Board of Directors of ICC

resolved on March 30, 2013 to increase its capital through a rights issue to existing

shareholders in the amount of approximately $5.65 Million. In parallel, ICC was


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negotiating with a strategic investor for the purpose of allowing such investor to come

into ICC by doubling its then existing capital through a private placement. That would

have increased ICCs capital by approximately $23 Million within less than one year and

would eliminate the possibility of payment delays in the future as transaction volumes

increased with ICCs further expansion.

57. Further, the December 31, 2012 letter also responded to MasterCards

allegations concerning ICCs misuse of the MasterCard mark. ICC noted that it used

the mark in ways approved by the MasterCard marketing team and otherwise used in

compliance with MasterCards standards. ICC further noted that MEPS, on the other

hand, was misusing the MasterCard mark by including it on its business cards, among

other uses.

58. As the December 31, 2012 letter made clear, ICC had cured whatever

issues led to the Notices of Assessment.

MasterCard Nevertheless Improperly Terminated ICCs Perpetual License and Additional Licenses

59. On April 2, 2013 MasterCard and MEPS announced in various

newspapers and other media that they had signed an alliance agreement.

60. MasterCards Country Manager Mr. El Tell said, "MEPS is our key

acquirer partner in Jordan.

61. That same day, MasterCard terminated its relationship with ICC on the

pretense that ICC had continued to delay payments to Merchants for transactions

acquired from those Merchants when, in fact, there were no continued delays in

payments.


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62. MasterCard immediately distributed a letter to all of ICCs merchants

advising them of the termination; upon information and belief, MEPS also distributed the

MasterCard letter in some cases before the termination had been effected by hand,

email and fax.

63. Furthermore, in its April 2, 2013 termination letter, MasterCard referred to

its November 22, 2012 Notices of Assessments as providing notice of ICCs breach of

MasterCard Rule 5.2.4 regarding delayed payments; however, nowhere in either

November 22, 2012 Notice of Assessment does MasterCard provide notice regarding

delayed payments.

64. MasterCard utterly failed to provide notice of a termination for alleged

delayed payment or to provide ICC with the requisite opportunity to cure. MasterCards

termination smacks of impropriety and collusion with MEPS.

65. In addition, upon information and belief, the day before MasterCard

purported to terminate ICCs licenses, Mr. El Tell had met with several Jordanian banks

and informed them of the termination prior to the notification of ICC.

66. What is more, the day before MasterCard purported to terminate ICCs

perpetual license and additional licenses, without any right to do so, MasterCard drew

down the full amount of ICCs letter of credit for the benefit of MasterCard in the amount

of $2,780,000. Ian Webb, Senior Business Leader, Customer Risk Management of

MasterCard, sent the Drawing Statement of Letter of Credit to Jordan Commercial

Bank.

67. In its presentment of the letter of credit to the issuing bank on April 1,

2013, MasterCard misrepresented the basis for the draw down to the issuing bank. To


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trigger payment under the letter of credit, MasterCard wrongly represented that ICC had

failed to pay MasterCard, Cirrus or Maestro merchants (the required conditions for draw

down and payment) when, in fact, there were no amounts due and payable to

MasterCard, Cirrus or Maestro merchants.

68. Since terminating the ICC perpetual license and additional licenses,

MasterCard has continued to settle the pending charges and debits made prior to the

termination. However, MasterCard has refused to provide credits to ICC where the

daily amounts net to ICCs favor while MasterCard continues to debit ICC where the

daily amounts net to MasterCards favor. As of July 10, 2013, MasterCard owes ICC

$29,370.28.

69. MasterCard is in control of the reconciliation account, and ICC is helpless

to prevent MasterCard from continuing to this one-sided practice, in effect converting

ICCs funds. It has also caused ICCs bank account to become overdrawn.

70. Because of MasterCards termination of the ICC licenses and

MasterCards decision to stop ICC card holders from being able to use their cards,

many ICC cardholders have refused to pay down their balances owing to ICC, currently

approximately $25 million, a reasonably foreseeable consequence.

71. Additionally, ICC has received complaints from merchants due to MEPSs

delay in providing payment. These delays are related to transactions that occurred after

MasterCards termination of the ICC license.

72. Finally, MEPSs representatives have been contacting ICC employees and

stating that ICC is going bankrupt and will shut down in an attempt to entice the ICC

employees to leave their current positions, further damaging ICC.


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MasterCard Interferes With ICCs Other Businesses

73. MasterCards coordinated effort with MEPS to terminate ICCs perpetual

license and additional licenses extended beyond ICCs relationship with MasterCard.

Employees of MasterCard discussed its desire to terminate ICCs licenses with banks

and merchants, undermining ICCs ability to do business effectively and jeopardizing

ICCs ability to develop its ongoing business ventures and hurting its relationship with

banks.

74. On numerous occasions, ICC was made aware that MasterCard had

discussions with banks, during which it told the banks that it was seeking to terminate

ICCs licenses and relationship with MasterCard and claiming that ICC would be unable

to timely make payments due and have a more limited cash flow. These discussions

occurred during April and May 2012 as ICC was seeking the second letter of credit that

MasterCard suddenly required. Such discussions caused the bank requirements for the

letter of credit to change; previously ICC had only been required to provide 30% of the

value of a letter of credit as cash collateral, but as a result of MasterCards comments,

ICC was required to provide 100% collateral for its second letter of credit (though ICC

was able to reduce this amount to 70% through negotiation).

75. On information and belief, MasterCard had numerous discussions with

merchants that had agreements with ICC, many of which were exclusive acquirer

agreements, hoping to undermine those relationships so the merchant would terminate

its agreement with ICC in favor of MEPS. To accomplish this, MasterCard made untrue

statements to the merchants that ICC would be unable to make prompt payments to

merchants or provide effective customer service.


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76. On information and belief, during his visits to Jordans banks before the

illegal termination of ICCs perpetual license and additional licenses, Mr. El Tell

encouraged them to work with MEPS instead of ICC; he did not even present both

MEPS and ICC as equal business options.

77. On the same day as MasterCards termination of the ICC licenses, MEPS

contacted ICCs merchants directly to solicit their business in light of MasterCards

termination of the ICC license. On information and belief, MasterCard provided the

contact information for ICCs merchants to MEPS in violation of its agreement to

maintain the confidential information of ICC as required under Section 3.6.2 of

MasterCards Rules.

78. MasterCard was aware of ICCs agreements with various merchants

because such agreements were required under section 5.1 of MasterCards Rules.

79. Aware of ICCs agreements with its merchants, MasterCard induced the

breach of those agreements that provided for ICC to be the merchants exclusive

acquirer. Those merchants included a number of Movenpick Hotels and Kempinski

Hotels, as well as Ace Hardware Jordan, Safeway Superstores (17 branches),

Spinneys, Le Royal Hotel Amman, Miles Supermarket and the Atico Group (a hotel and

restaurant group) among others.

80. MasterCards illegal termination of the ICC licenses not only procured the

breach of the exclusive agreements with merchants, but it also prevented ICC from

continuing to serve those merchants as an acquirer for other credit card companies.

81. Further, ICC and EMP Jordan (the exclusive and sole acquirer of VISA

International in Jordan) were parties to an agreement since 2002 under which EMP


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Jordan allowed ICC to rent electronic space on EMP Jordans Point of Sale terminals

(POS) (the EMP-ICC Agreement). As a result of the EMP-ICC Agreement, ICC

installed its application on approximately 4,000 EMP Jordan POS terminals in Jordan in

order to enable its merchants to accept MasterCard cards as a method of payment, thus

ensuring the rapid growth of MasterCards acceptance in Jordan.

82. On information and belief, on April 1, 2013, one day prior to the

termination of ICCs licenses by MasterCard, MasterCard held a meeting at MEPSs

offices among MasterCard, MEPS, and EMP Jordan to arrange and coordinate the roles

of those parties in the execution of ICCs termination that took place the next morning.

On April 3, 2013 (i.e., one day after ICCs perpetual license with MasterCard was

terminated), EMP Jordan terminated the EMP-ICC Agreement, effective immediately

and without notice, despite a 90-day notice period in the EMP-ICC Agreement.

Immediately thereafter, EMP started to offload ICCs application from its POS network

and replaced it with MEPSs application while both EMP Jordan and MEPS staff were

making false statements about ICC to the merchants, including that ICC would be in

bankruptcy and would be shutting down to assure ICCs diminishing ability to reinvent

its services and launch new ones to ICCs merchants.

83. Furthermore, as a result of MasterCards wrongful termination, ICCs

relationships with other credit card companies have been jeopardized. ICCs ongoing

agreement with the JCB Credit Card Company of Japan has been suspended, as has

the agreement with Chinas UnionPay.


22

84. Also, ICCs 2012 application with Visa International, Inc. to allow ICC to

issue Visa branded cards, and which had been given initial and preliminary approval,

was suspended as a result of MasterCards termination.

85. MasterCards illegal termination of ICCs licenses and the related activities

with MEPS heretofore alleged directly resulted in the termination of ICCs recently

launched MasterCard agreement with Quds Bank, pursuant to which more than 1,300

MasterCard-branded Quds Bank credit cards had already been issued and were being

used, along with an ongoing project involving a total of 30,000 proprietary ATM cards

and 50 ATMs. Upon termination, Quds Bank initiated litigation against ICC.

86. Also, on information and belief, MasterCards country manager, Mr. El

Tell, met with the newly appointed CEO of Investbank, with whom he has a personal

relationship, after which Investbank cancelled the launch of the ICC Investbank

MasterCard Credit Card Issuance project, even though ICC was in the final stages of

issuing the cards.

87. It was plainly foreseeable that MasterCards sudden and illegal termination

of ICC would result in service interruptions to thousands of ICCs customers,

undermining ICCs legitimacy and ability to provide the service for which ICC has

become known.

88. MasterCard was aware of the business relationships described above,

and conducted the termination of ICCs licenses and induced the breach of ICCs

agreements with merchants and EMP to harm those relationships.


23

First Claim for Relief Breach of Contract

89. ICC adopts and incorporates the allegations contained in paragraphs 1

through 88.

90. ICC and MasterCard entered into the Perpetual License Agreement, a

valid contract between the parties, which provided a perpetual license to ICC for

MasterCards mark.

91. ICC and MasterCard also entered into the Additional License Agreements,

valid contracts between the parties, which provided licenses to ICC for the MasterCard

Electronic mark and Maestro mark in Jordan, and the MasterCard mark in Palestine.

92. At all times relevant to this Complaint, ICC satisfactorily performed its

obligations under the License Agreements.

93. At all times relevant to this Complaint, ICC was ready, willing and able to

continue its mutually beneficial relationship with MasterCard and had every intention of

doing so.

94. MasterCard willfully violated the License Agreements by terminating the

License Agreements improperly, without proper cause under the License Agreements.

95. MasterCard also breached the License Agreements requirement to

provide ICC with notice of any alleged failure in sufficient detail to afford ICC the

opportunity to cure.

96. MasterCard also breached the License Agreements by failing to provide

detail sufficient to show ICCs alleged failures to permit ICC to cure any failures which,

had proper notice been provided, ICC would have done.

97. MasterCards termination of its relationship with ICC as an issuer, acquirer


24

and third-party processor without proper cause and without notice and opportunity to

cure were breaches of the License Agreements.

98. ICC was harmed by MasterCard to the extent that it was no longer able to

issue MasterCard credit cards, acquire merchants and act as a third-party processor.

99. MasterCard has further breached its agreement with ICC, and continues

to breach it daily, by not properly crediting to ICCs bank account amounts owing to it as

a result of daily positive settlement amounts while continuing to debit it when the net

settlement amounts are negative.

100. MasterCards further failure to properly credit ICCs account of amounts

owing as a result of daily settlements while continuing to debit ICCs account has

harmed ICC as to not only the more than $97,000 owing to ICC net of any debits, but

also in the amount of any fees assessed against it by MasterCard or any other entity.

101. ICC was harmed in an amount to be determined at trial, but in no event

less than $75 Million.

Second Claim for Relief Breach of the Implied Covenant of Good Faith and Fair Dealing


through 101.

103. ICC and MasterCard entered into the Perpetual License Agreement, a

valid contract between the parties and which provided a perpetual license to ICC for use

of MasterCards marks.

104. ICC and MasterCard also entered into the Additional License Agreements,

valid contracts between the parties, which provided licenses to ICC for the MasterCard

Electronic mark and Maestro mark in Jordan, and the MasterCard mark in Palestine.


25

105. Implied in all contracts, including the License Agreements, is a covenant

of good faith and fair dealing which is breached when a party to the contract acts in a

manner that, although not constituting a breach of contract, deprived the other party to

the contract of the right to receive the benefits of the agreement.

106. At all times relevant to this complaint, ICC performed satisfactorily its

obligations under the License Agreements.

107. At all times relevant to this Complaint, ICC was ready, willing and able to

continue its mutually beneficial relationship with MasterCard and had every intention of

doing so.

108. MasterCard continuously acted in bad faith by undermining ICCs ability to

maintain its status as a licensee of MasterCard.

109. As alleged above, while MasterCard breached its duties with respect to

ICC, it was simultaneously scheming with MEPS to form an exclusive agreement.

110. In effect, MasterCard took active steps to drive ICC out of business while

treating a direct competitor, MEPS, preferentially. For each action that MasterCard

prohibited ICC from taking, it allowed MEPS to take the same act. For example,

MasterCard and MEPS encouraged and improperly incentivized merchants to file false

complaints against ICC and terminate their relationships with ICC so that MEPS could

operate exclusively with those merchants, to the detriment of ICC.

111. Furthermore, MasterCard provided ICC the November 22 Notices of

Assessment in bad faith. MEPS engaged in the same activities and never received

discipline.

112. Just as MasterCard, without notice, terminated its partnership with ICC


26

based on frivolous allegations of delayed payment, it announced a partnership

agreement with MEPS.

113. Even if MasterCard may be deemed to have provided adequate notice for

its termination of the ICC licenses, MasterCard breached the implied covenant of good

faith and fair dealing by failing to acknowledge ICCs cure of any breach of the

agreement within the 90 day cure period.

114. Additionally, MasterCard knowingly required ICC to expose itself to

greater risk while planning to terminate its agreement with ICC. MasterCard required

ICC to increase the amounts of its letters of credit in 2012. In February 2013,

MasterCard unilaterally and prematurely renewed the $2.78 million letter of credit when

it would have expired in April 2013.

115. This increase and premature renewal allowed MasterCard to wrongfully

present and drawn down the amount on the letter of credit in April 2013.

116. Furthermore, MasterCard knowingly allowed ICC to develop, invest in and

begin to implement its plan to prevent delayed payments to merchants as ICC

increased its MasterCard transaction volume. While ICC acted under the belief that its

business with MasterCard would not only continue, but grow, MasterCard was working

to terminate the ICC licenses and commence its exclusive agreement with MEPS.

117. MasterCards breach of the covenant of good faith and fair dealing was

the proximate cause of ICCs inability to continue its business with regard to

MasterCard.

118. ICC was harmed in an amount to be determined at trial, but in no event

less than $75 Million.


27

Third Claim for Relief Conversion


through 118.

120. As MasterCard requested, ICC provided a letter of credit to MasterCard in

the amount of $2,780,000 to be drawn down for certain reasons specified in the letter of

credit.

121. MasterCard unilaterally and prematurely renewed the $2,780,000 letter of

credit, not because it was going to increase business with ICC, but in order to have the

ability to draw down the amount of the letter of credit when it terminated its contract with

ICC, even though ICC had a history of diligently settling its outstanding payments with

MasterCard.

122. The letter of credit stated that MasterCard could not draw down the

amount, $2,780,000, unless ICC owed money to MasterCard, Cirrus or Maestro

merchants.

123. On April 1, 2013, MasterCard unlawfully asserted domination and control

over the funds pledged by the letter of credit through Ian Webbs wrongful presentment

to Jordan Commercial Bank, the bank that issued the letter of credit, that ICC had

outstanding amounts due and payable to MasterCard, Cirrus or Maestro.

124. After MasterCards unlawful presentment, it received $2,780,000, the full

amount represented by the letter of credit, which prior to MasterCards unlawful

presentment was the property of ICC.

125. As a result of this wrongful act, MasterCard converted $2,780,000 that is

the property of ICC, property which must be returned to ICC.


Case 1:13-cv-02576-LGS Document 14 Filed 08/20/13 Page 28 of 28Case 1:13-cv-02576-LGS Document 14 Filed 08/20/13 Page 28 of 28

126. ICC was harmed in the amount of $2,780,000 plus interest accruing from

the date of the conversion.

WHEREFORE, Plaintiff ICC requests judgment as follows:

A. On the First Claim for Relief, awarding damages in favor of ICC against

MasterCard in an amount to be determined at trial, but in no event less than

$75 Million together with interest as permitted by law.

B. On the Second Claim for Relief, awarding damages in favor of ICC against


$75 Million together with interest as permitted by law.

C. On the Third Claim for Relief, awarding damages in favor of ICC against


$2,780,000 together with interest as permitted by law.

D. Granting ICC such other and further relief as the Court deems just and

proper.

Dated: August 19, 2013

HOGUET NEWMANREGAL & KENNEY, LLP

Fredric S. Newman (FN-3174)Damian R. Cavaleri (DC-2558)10 East 40th Street, 35th FloorNew York, NY 10016Phone: 212-689-8808

Attorneys for PlaintiffInternational Cards Company, Ltd.

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