Lalive and Boies Schiller secure $109m arbitration award against Tanzania

Tanzania loses ICSID minining arbitration as tribunal finds expropriation claims proven
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The case was heard at the International Centre for Settlement of Investment Disputes in New York Shutterstock

Disputes firms Lalive and Boies Schiller Flexner (BSF) have secured a victory for three mining companies in a $109m investor-state arbitration proceedings against Tanzania.

The case was heard at the International Centre for Settlement of Investment Disputes (ICSID) in Washington DC. The two firms acted as co-counsel for three companies that are majority owned by ASX-listed Indiana Resources – the UK’s Nachingwea UK and Ntaka Nickel Holdings and Tanzania-based Nachingwea Nickel.

Zurich-based partner Marc Veit led the Lalive team alongside counsel Augustin Barrier and associate Robert Denison while BSF was led by London-based partner Timothy Foden. US consulting firm Secretariat offered expert advice on quantum through Travis Taylor and Abigail Harris. Tanzania was represented by a team of lawyers from its Attorney General’s Office.

The dispute concerned the Ntaka Hill Nickel Project, a pre-development stage nickel sulphide project in southeast Tanzania, held by the claimants under a retention licence. However, in January 2018, Tanzania enacted regulations that unilaterally cancelled the licence and reverted the rights to the government, then led by former president John Magufuli.

tribunal at the World Bank, to which Tanzania contested jurisdiction, heard the case, consisting of Cavinder Bull SC of Drew & Napier, and wing arbitrators Doak Bishop, senior partner at King & Spalding and former ICC judge, Botswana’s Sanji Mmasenono Monageng.

The arbitrators held the measures amounted to unlawful expropriation under the UK-Tanzania bilateral investment treaty, with the tribunal awarding the claimants $76.7m in damages, which, after compound interest, amounts to $109m.

“The amount of the award reflects the substantial investment that shareholders have lost through Tanzania’s unlawful expropriation,” said Indiana Resources executive chairman Bronwyn Barnes.

She added: “We had a clear and compelling position to support our compensation claim and have worked tirelessly for five years to ensure that we maintained our position with strength and determination.”

While Tanzania did not contest jurisdiction, a further challenge is possible, with both sets of lawyers and the funder, Litigation Capital Management (LCM), saying that if the award were not satisfied, the dispute would move to enforcement. 

Barnes noted that under the ICSID convention, ratified by Tanzania and 157 other countries, the award is enforceable in any member state as if it were a judgment of the local courts. Tanzania has 120 days to apply for annulment of the order. The Republic did not make public comment on the award. 

Barnes said: “We have consistently said that we would look to enforce an award against Tanzania and that work will commence now.”

Veit added: “The tribunal’s decision should give further confidence to other companies involved in extracting natural resources, even at the exploration and development stage, in the protection provided by investment treaties. Resource nationalism has a price tag.”

Foden called the result "remarkably satisfying", saying he viewed it as a bittersweet but complete victory, “as this project could have had a built-up regional infrastructure including roads, schools and medical clinics had it been able to proceed without unlawful expropriation.”

Australia-based funder LCM offered a facility of $4.65m, with the total amount expected to top $15m. It has issued an upbeat trading outlook for the 2023 financial year, hailed as its most robust performance to date by a significant margin.

CEO Patrick Moloney said: “Subject to any challenge to the very favourable award, we now move to an enforcement stage, after which we will see the benefit of the leveraged returns available from our fund management strategy.”

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