Lalive and Boies Schiller Flexner Secures Victory over $109 Million Award for Mining Companies Against Tanzania

Lalive and Boies Schiller Flexner Secures Victory over $109 Million Award for Mining Companies Against Tanzania

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

International Centre for Settlement of Investment Disputes (ICSID) in New York was adjudicating the suit.

The two firms acted and represented 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.

The Lalive team was led by the Zurich-based partner Marc Veit alongside counsel Augustin Barrier and associate Robert Denison while BSF was led by partner Timothy Foden based in London.

U.S. 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 arose with respect to the Ntaka Hill Nickel Project, a pre-development stage nickel sulphide project in southeast Tanzania which was held by the claimants under a retention license.

However, in January 2018, Tanzania enacted regulations which unilaterally cancelled the license and reverted the rights to the government, then led by former President John Magufuli.

A Tribunal present at the World Bank, 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. Pertinently, Tanzania had not contested the Tribunal’s jurisdiction.

The arbitrators ruled that the measures amounted to unlawful expropriation under the UK-Tanzania bilateral investment treaty and awarded the claimants $76.7 million in damages, which, after compound interest, amounted to $109 million.

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

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.”

Barnes noted that under the ICSID convention, ratified by Tanzania and 157 other countries, hence, the award is enforceable in any member state as if it were a judgment of the local courts. Further, in case of annulment of the order, Tanzania has 120 days to apply for the same.

Barnes further expressed, “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.”

CEO Patrick Moloney said, “Subject to any challenge to the very favorable 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.”