By Bob Karashani, DAR ES
SALAAM Tanzania
The recent award of $109.5 million to an Australian company by the International Centre for Settlement of Investment Disputes (ICSID) in a case involving revocation of their mining licence in Tanzania has raised hopes for three other multinationals pursuing similar compensation against the country.
Two Canadian mining firms,
Winshear Gold and Montero Mining, are pursuing arbitration awards by the
tribunal for licence expropriations during the John Magufuli era.
A third company, British real
estate developer Pennyroyal Ltd, also filed a billion-dollar claim on July 20 –
less than a week after the ICSID awarded the Australian firm, Indiana Resources
Ltd – seeking to conclude a dispute dating back to 2018.
The British firm is seeking
compensation for a terminated land lease for a luxury resort project in
Zanzibar.
Vancouver-based Winshear is
seeking at least $96 million compensation for the expropriation of its SMP Gold
Project licence in Tanzania. Its managers said the Indiana award has boosted
its chances of success ahead of a ruling before the end of the year.
“It is reassuring that the
ICSID tribunal in the Indiana case recognised the damage done to the company,
its shareholders and investors, when the Tanzanian government decided to
abolish retention licenses without consulting the investor community,” Winshear
CEO Richard Williams said in a statement.
The other firm, Montero, is
claiming $67 million in damages for a licence revocation for its Wigu Hill Rare
Earth Element project in Morogoro. A hearing is scheduled for December.
Both companies have based
their cases on a Bilateral Investment Treaty (BIT) signed between Tanzania and
Canada in 2013.
Pennyroyal invested in a
prospective luxury leisure and residential housing scheme in Matemwe on the
northeastern coast of Unguja, but the Zanzibar government terminated the title
deed for the project land in July 2022.
The company argues that it had
already spent $55 million in construction costs for the $1.6 billion Blue Amber
project and that the deed revocation was in breach of Tanzania’s BITs with both
the UK and Mauritius. The exact claim amount has not been disclosed and the
case remains pending on ICSID’s cause list.
Now concerns are mounting
about the threat of Air Tanzania aircraft on international routes becoming easy
targets for attachment as part of enforcement measures in the event of more
ICSID rulings against Tanzania.
The method has been used by
other beneficiaries of international arbitration proceedings against Tanzania,
and Indiana Resources has previously threatened to pursue it.
As recently as July 6,
authorities managed to rescue an Air Tanzania Airbus A220-300 that was being
held by Dutch authorities at Maastricht Airport over a $165 million claim by
Swedish firm EcoDevelopment for a contentious land title revocation in 2016.
The Swedish firm alleged that Tanzania reneged on a deal for it to develop a
sugarcane project in Bagamoyo.
But Dodoma on July 28
challenged the award. While the ICSID has yet to announce the appointment of a
new ad hoc committee to hear the application for annulment by Tanzania, the
respondents are facing an uphill battle to avoid coughing up the money unless
they reach an out-of-court settlement.
Indiana says it remains
“extremely confident” of eventual success at the appeal.
The award was issued on July
14 after four years of arbitration proceedings. Indiana Resources has since
submitted a letter of demand for $113.6 million to the Tanzanian government,
which includes interest accrued and legal costs. The losing party is also
required to pay the ICSID’s own costs related to the case.
An ICSID ad hoc tribunal
sitting in Washington DC ruled that Tanzania breached the UK-Tanzania BIT when
it seized the Ntaka Hill Nickel Project in southern Tanzania and cancelled the
mining retention license for the project held by three smaller companies
fronted by Indiana Resources.
The licence was revoked in
January 2018 under new mining laws during the tenure of the late John Magufuli,
who argued for sovereign control of the country’s mineral resources.
While government officials
have chosen not to go public with details of the application for annulment,
Article 52 of the ICSID Convention cites five acceptable grounds for annulment:
If the tribunal was not properly constituted; if the tribunal manifestly
exceeded its powers; If there was corruption on the part of one or more of its
members; if there was serious departure from fundamental rules of procedure;,
and if the award failed to state the reasons on which it was based.
According to Indiana
Resources, “an initial review by our legal representation suggests Tanzania
will not be able to meet the requirements for the annulment.”
Executive Chairperson Bronwyn
Barnes added in the company’s statement that “Indiana remains extremely
confident of its position.”
But fears remain, mainly due
to Tanzania’s history of troubles with plane seizures in this context.
The ICSID had ordered Tanzania
to pay up in April 2022, but later granted a stay of execution pending
annulment proceedings launched by Dodoma. Still, EcoDevelopment successfully
convinced a Dutch district court to impound the plane.
The ICSID committee hearing
the case issued a procedural order on May 16, 2023 which “took note of the
discontinuance of the proceeding pursuant to ICSID Arbitration Rules 53 and
43(1).” No further explanation of how the case was resolved has been offered by
either party so far.
Another Air Tanzania Airbus
A220-300 was seized at Johannesburg’s OR Tambo Airport in August 2019 over a
$33 million claim by a Namibian farmer, Hermanus Steyn, against Tanzania in
delayed compensation after his farm was expropriated in 1982.
In December the same year, Mr
Steyn also tried to have another Air Tanzania plane, a DHC-8-Q400, attached by
a Canadian court in pursuit of his compensation. Both attempts came to naught
after Tanzania used diplomatic channels to settle matters with both countries
and recover the planes.
No comments:
Post a Comment