What you need to know:
- The ICSID has now struck down two of the three grounds that Tanzania raised in its application to annul the granted award.
Dar es Salaam. Despite the government’s declining to comment on the recent decision made by the International Centre for Settlement of Investment Disputes (ICSID), Indiana Resources is said to be closer to recovering its historical sunk investment for unlawful expropriation of the Ntaka Hill nickel sulphide project in Tanzania.
The new development comes after ICSID struck out most of Tanzania’s grounds for requesting the annulment of the award.
Contacted yesterday to shed light on the country’s next move of action, the Attorney General of the United Republic of Tanzania, Dr Eliezer Feleshi, said: “We are not ready to comment on a matter that is at the arbitration table whose final decisions haven’t been made.”
The basis of the dispute says that before it was suddenly taken out of the company’s hands more than five years ago by the Tanzanian Government, Ntaka Hill was an advanced, development-ready asset with an estimated Joint Ore Reserve Committee (JORC) resource of 56.2Mt @ 0.63pc nickel, 0.14pc copper and 0.02pc cobalt for 356,380t of nickel.
The project has since been developed by other parties.
Arbitration brought about by Indiana Resources (ASX:IDA), as the major shareholder and representative of investors in the project, sought compensation relating to the loss of its sunk costs over time spent exploring the project, which was ultimately successful, with ICSID ruling Tanzania unlawfully expropriated the Ntaka Hill licences.
It also ruled the claimants were entitled to compensation of $112.9 million, which equals Sh282.25 billion plus additional costs of $4.2 million (Sh10.5 billion).
Interest at the rate of S$1 million will also accrue each month until Tanzania pays the amount or Indiana seizes Tanzania’s assets to the value of the award, bringing the total amount owned by Tanzania to the claimants to approximately $120 million (Sh300 billion).
In December 2023, the Tanzanian Attorney General provided a letter of confirmation to ICSID that Tanzania would unconditionally and irrevocably pay the full amount of the award within 45 days of the final decision on annulment.
Two down, one to go
The ICSID has now struck down two of the three grounds that Tanzania raised in its application to annul the granted award.
It found that the grounds of manifest excess of powers and failure to state the reasons on which the award is based were manifestly without legal merit, adding that its ruling is not open to challenge, meaning that Tanzania cannot raise them in submissions at the hearing of its annulment application.
As such, Tanzania’s annulment application can now only proceed on its remaining complaint, namely that the Tribunal seriously departed from fundamental rules of procedure.
The ad hoc committee deciding on Tanzania’s grounds acknowledged that questions about the conduct of the tribunal could not be answered by an analysis of the award on its face and that it should be given the opportunity to present its case and that the claimants will be given the opportunity to rebut the same.
IDA executive chair Bronwyn Barnes declared the ruling to be “a very positive outcome for the claimants.”
“We have consistently maintained that the documents lodged by Tanzania do not demonstrate that Tanzania will be able to meet the high threshold necessary to annul the award, and this latest ruling from ICSID reflects that position,” Barnes said.
“Tanzania’s request for annulment should be seen for what it is: an attempt to delay and deny compensation to the claimants for the loss of their investment following the illegal expropriation of the Ntaka Hill nickel project in 2018. “We are pleased that the committee has ruled that the majority of Tanzania’s grounds for seeking annulment are manifestly without legal merit.
“It is our hope that Tanzania will recognise the futility of their current approach to this matter and pay the compensation owed to the claimants under the award so that this matter can finally be resolved.”
Tanzania’s memorial to the annulment will be made on March 15, 2024, with the claimant’s counter-memorial on April 26, 2024. Each side will then have their respective replies on May 24 and 21, 2024, respectively, followed by a pre-hearing organisational meeting within three weeks of the last date—the claimants’ rejoinder on annulment—before a hearing is decided on by both parties.
It is worth noting that each month the process extends, another $1 million is added to the award in the event that the annulment fails.