Tan­za­nia cites bias as it changes laws gov­ern­ing ar­bi­tra­tion

The East African - - BUSINESS - By NJIRAINI MUCHIRA Spe­cial Cor­re­spon­dent

TAN­ZA­NIA HAS moved to en­sure that in­vestor dis­putes are re­solved lo­cally af­ter At­tor­ney Gen­eral Ade­lar­dus Ki­langi pushed through par­lia­ment the Pub­lic Pri­vate Part­ner­ship (Amend­ment) Bill, 2018. The key high­light of the bill is with­draw­ing the coun­try from in­ter­na­tional ar­bi­tra­tion bod­ies.

This means that in­vestors in Tan­za­nia can only seek re­course over dis­putes such as can­cel­la­tion of li­cences, breach of con­tract, con­fis­ca­tion, ex­pro­pri­a­tion, na­tion­al­i­sa­tion and/or de­pri­va­tion through local courts. This is de­signed to end suits by for­eign in­vestors be­fore in­ter­na­tional ar­bi­tra­tion bod­ies.

The move comes in the wake of Tan­za­nia’s re­cent loss of an ap­peal be­fore Washington-based In­ter­na­tional Cen­tre for Set­tle­ment of In­vest­ment Dis­putes (ICSID), where the Tan­za­nia Elec­tric Sup­ply Com­pany was or­dered to pay Stan­dard Char­tered Bank $148.4 mil­lion for a breach of a power con­tract.

Tighter con­trol

Mr Ki­langi told Par­lia­ment that in­ter­na­tional bod­ies are bi­ased, forc­ing the gov­ern­ment to use its own courts, which are fair.

Although some leg­is­la­tors op­posed the amend­ment on the ba­sis that it was im­ping­ing upon the rights and free­doms of in­vestors seek­ing re­dress for claims of con­trac­tual breaches by the gov­ern­ment in neu­tral courts out­side the coun­try, its pass­ing means that Tan­za­nia is de­ter­mined to push ahead with laws that give the gov­ern­ment tighter con­trol.

Tan­za­nia last year un­der­took wide­spread re­form of its min­ing laws, which sparked suits abroad.

Among the in­vestors that have sued the gov­ern­ment and its agen­cies in re­cent times are Aca­cia Min­ing, which in 2017 took the Tan­za­nian gov­ern­ment to the Lon­don in­ter­na­tional court of ar­bi­tra­tion at the height of its dis­pute over its gold­min­ing projects in the coun­try.

Sym­bion Power has also sued state power sup­plier Tanesco seek­ing $561 mil­lion in com­pen­sa­tion for breach of con­tract.

Sym­bion, which owns a 120MW ther­mal power plant, sued Tanesco at the In­ter­na­tional Cham­ber of Com­merce’s In­ter­na­tional Court of Ar­bi­tra­tion in Paris, ac­cus­ing the util­ity of fail­ing to hon­our a 15-year agree­ment.

Bi­wa­ter Gauff Ltd, a pri­vate wa­ter com­pany, also sued the gov­ern­ment at the In­ter­na­tional Cen­tre for Set­tle­ment of In­vest­ment Dis­putes over dis­agree­ments on the op­er­a­tion and man­age­ment of the Dar es Salaam wa­ter sys­tem.

In East Africa, Tan­za­nia is not the only coun­try con­fronting lit­i­ga­tion in in­ter­na­tional ar­bi­tra­tion bod­ies. Kenya is bat­tling a case filed by Cortec Min­ing at the ICSID in which the firm is seek­ing $5 bil­lion for can­cel­la­tion of its min­ing li­cence for development of min­er­als in the ti­ta­nium-rich Mrima Hills in Kwale County.

Cana­dian firm Walam has also sued Kenya af­ter the Min­istry of En­ergy can­celled its li­cence for ex­plor­ing and de­vel­op­ing the Suswa geo­ther­mal project.

Pic­ture: File

State power sup­plier Tanesco, which has been sued by Sym­bion Power for breach of con­tract.

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