The International Centre for Settlement of Investment Disputes (ICSID) has ordered Tanzania to pay $109.5 million to UK-registered mining companies, Ntaka Nickel Holdings Ltd and Nachingwea UK Ltd, following the Magufuli-era decision in 2018 to cancel their nickel mining Retention Licence
The companies successfully sued Tanzania at the World Bank tribunal for breaching its obligations under the UK-Tanzania Bilateral Investment Treaty (BIT) and international law by expropriating the licence
Tanzania has also been ordered to pay $3.859 million in legal costs to the claimants, plus fees and expenses of the ICSID tribunal
Australian-listed Indiana Resources Ltd, which is the majority shareholder of the Ntaka nickel project, has previously threatened to seize planes operated by Air Tanzania Company Limited (ATCL). Indiana says it will now swiftly move to enforce the court award
Swedish companies EcoDevelopment and EcoEnergy last year won a $165m decision against Tanzania at ICSID following the decision of the Magufuli government to expropriate the investors' land in Bagamoyo, contrary to the Sweden-Tanzania Bilateral Investment Treaty (BIT)
The companies seized an Airbus plane owned by the state-run Tanzania Government Flight Agency (TGFA) and operated by ATCL to enforce the ICSID ruling
The plane with registration number 5H-TCH recently returned to Tanzania after the government settled the lawsuit
It is unclear whether Tanzania will comply with the latest ruling, but if it does not, Indiana Resources may seize planes operated by ATCL. This would be a major blow to the airline, which is already struggling financially.
The ICSID rulings against Tanzania highlight the risks of investing in the country. Investors should carefully consider the country's legal and political environment before making any investment decisions.
Here are some of the implications of the ICSID ruling for Tanzania:
The ruling could damage Tanzania's reputation as an investment destination. It could make it more difficult for Tanzania to attract foreign investment in the future. The ruling could lead to further legal challenges from foreign investors.
Tanzania will need to take steps to address the concerns of foreign investors if it wants to maintain its attractiveness as an investment destination. This could include improving the country's legal and regulatory framework and ensuring that investors' rights are protected.
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