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Nachingwea U.K. Limited (UK), Ntaka Nickel Holdings Limited (UK) and Nachingwea Nickel Limited (Tanzania) v. Tanzania, ICSID Case No. ARB/20/38 

New
Short Name:

Nachingwea v. Tanzania

Case Type:
Investment Protection Disputes, International Investment Agreement (Investor–State)
Applicable Procedural Rules:
ICSID, ICSID Convention Arbitration Rules (2006)
Seat of Arbitration:
London (United Kingdom)
Applicable Treaty:
Tanzania-United Kingdom BIT (1994), United Kingdom-Tanzania BIT (1996)
Applicable Legal Instruments:
Tanzania - United Kingdom BIT (1994)
Economic Sector:
Mining and Quarrying, Including Hydrocarbons (oil and Gas)
Outcome:
In Favour of Claimant(s)
Amount of Damages:
US $76,704,462
Other Remedy:
The Tribunal ordered Respondent to pay Claimants USD 76.7M in damages, plus USD 4.1M in costs, and dismissed all other claims.
See case mapped on Investor-State LawGuide

Available documents

30 Sep 2020
Press Release
Document Details:
PARTICIPANTS
Press Release
Participants listed are for this document only and may not include all participants involved in the entire case. Always consult the original documents.
Claimant appointee
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Press Release
This summary note is machine-generated. Always consult the original materials.


14 Jul 2023
Award
Document provided by: IAReporter
Document Details:
PARTICIPANTS
Award
Participants listed are for this document only and may not include all participants involved in the entire case. Always consult the original documents.
Claimant appointee
Claimant appointee:
Robert Doak Bishop
Respondent appointee
Respondent appointee:
Sanji Mmasenono Monageng
Tribunal/Panel chair
Chair/President:
Cavinder Bull
Arbitrator(s)
Cavinder Bull, Robert Doak Bishop, Sanji Mmasenono Monageng
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Marc Daniel Veit, Robert Denison, Augustin Barrier, Timothy L. Foden
Respondent's counsel
Eliezer Mbuki Feleshi, Boniphace N. Luhende, Sarah D. Mwaipopo, George Nathaniel Mandepo, Salome S. Magesa, Ipyana Alinuswe Mlilo, Consesa Kahendaguza, Lydia Thomas, Angelina Ruhumbika, Neisha Shao, Andrew A. Rugarabamu, Hadija Hamisi Ramadhani
Other counsel
Claimant's expert
Travis Taylor
Respondent's expert
Claimant's witness
Bronwyn Barnes, Mathew Perrot, Robert Adam
Respondent's witness
Abdulkarim Hamisi Mruma, Edwin Simon Igenge, Andrew Abraham Mwangakala
Other witnesses
Tribunal secretary
Aurelia Antonietti, Patricia Rodríguez Martín
Tribunal assistant
Country
Print reporter
Entities
Nachingwea U.K. Limited, Ntaka Nickel Holdings Limited, Nachingwea Nickel Limited, Tanzania, LALIVE, Boies Schiller Flexner, LCM
Document Summary
Award
This summary note is machine-generated. Always consult the original materials.

Procedural Posture and Background

This document is the final Award in an ICSID arbitration brought by Nachingwea U.K. Limited, Ntaka Nickel Holdings Limited, and Nachingwea Nickel Limited (collectively, the "Claimants") against the United Republic of Tanzania ("Tanzania" or the "Respondent"). The dispute was submitted pursuant to the 1996 United Kingdom-Tanzania Bilateral Investment Treaty (the "BIT") and the ICSID Convention. The arbitration concerns the Claimants' investments in the Ntaka Hill Nickel Project (the "Project"), a nickel sulphide exploration and development enterprise in southeastern Tanzania. Following years of exploration and the discovery of commercially significant deposits, the Claimants' local subsidiary was granted a retention licence in 2015. However, in July 2017, Tanzania enacted sweeping legislative amendments under an emergency procedure that repealed the statutory basis for retention licences. Subsequently, the Mining (Mineral Rights) Regulations 2018 expressly cancelled all existing retention licences, reverting the underlying rights to the State. In December 2019, Tanzania issued a public invitation to tender the Project area to third parties.

Jurisdiction and Admissibility

Tanzania raised several jurisdictional objections, principally arguing that the Claimants lacked standing because their investment was not "actively made" and that the dispute should be heard by domestic courts. Relying heavily on the prior award in Standard Chartered Bank v. Tanzania, the Respondent contended that the BIT implicitly required an active relationship between the investor and the investment, precluding passive holding companies from treaty protection. The Tribunal unanimously dismissed these objections. Engaging in a rigorous treaty interpretation under Article 31 of the Vienna Convention on the Law of Treaties, the Tribunal expressly departed from the Standard Chartered Bank tribunal's reasoning. The Tribunal held that the plain language of Article 8(1) and the broad definition of "investment" in Article 1(a) of the BIT did not impose any requirement that an investment be "actively made." The Tribunal further noted that even if such a standard applied, the Claimants had demonstrated active capital contributions and operational control. The Tribunal also dismissed the forum objection, confirming that the BIT provides an independent international forum without requiring the exhaustion of local remedies.

Liability and Unlawful Expropriation

On the merits, the Tribunal concluded that Tanzania's regulatory measures amounted to an unlawful expropriation in breach of Article 5 of the BIT. The Tribunal determined that the 2018 Regulations effected a substantial and permanent deprivation of the Claimants' investment by cancelling the retention licence and extinguishing their legal and economic rights. Tanzania invoked the police powers doctrine, arguing the measures were regulatory actions taken in the public interest to ensure the productive use of mineral resources. The Tribunal rejected this defense, emphasizing the absence of contemporaneous evidence demonstrating a genuine public purpose or a reasonable nexus between the cancellation of the licences and the stated regulatory goals. Furthermore, the Tribunal found the expropriation to be unlawful because it failed to satisfy the cumulative conditions of Article 5: it was executed without due process (given the rushed legislative process and lack of meaningful stakeholder consultation), it was discriminatory (targeting foreign mining companies), and it was executed without any offer of prompt, adequate, and effective compensation.

Damages, Valuation, and Costs

Having established liability, the Tribunal turned to the quantification of damages, adopting the fair market value standard. Both parties agreed on the cost approach as the appropriate valuation methodology. The Tribunal endorsed the Claimants' use of the Multiple of Exploration Expenditure (MEE) method, which applies a multiplier to historical exploration costs to reflect the value added by successful exploration outcomes. After analyzing comparable historical transactions involving the Project, the Tribunal applied a Prospectivity Enhancement Multiplier (PEM) of 1.6 to the Claimants' substantiated historical costs, which included both direct exploration expenditures and management overheads. The Tribunal determined the proper valuation date to be January 10, 2018, the date the expropriatory regulations were published, as this best aligned with the principle of full reparation under customary international law. Consequently, the Tribunal awarded the Claimants USD 76,704,461.76 in damages, plus compound interest at the rate of USD Prime + 2%. Applying the "costs follow the event" principle, the Tribunal ordered Tanzania to bear the entirety of the arbitration costs and the Claimants' legal representation expenses, totaling over USD 4.1 million. However, the Tribunal declined to award the Claimants their third-party funding costs, finding insufficient justification to shift the burden of the funding arrangement to the Respondent.
31 Oct 2023
Decision on the Stay of Enforcement of the Award
Document Details:
PARTICIPANTS
Decision on the Stay of Enforcement of the Award
Participants listed are for this document only and may not include all participants involved in the entire case. Always consult the original documents.
Claimant appointee
Respondent appointee
Respondent appointee:
Sanji Mmasenono Monageng
Tribunal/Panel chair
Chair/President:
Cavinder Bull
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Decision on the Stay of Enforcement of the Award
This summary note is machine-generated. Always consult the original materials.


18 Dec 2023
Claimant's Press Release on Stay of Enforcement
Document Details:
PARTICIPANTS
Claimant's Press Release on Stay of Enforcement
Participants listed are for this document only and may not include all participants involved in the entire case. Always consult the original documents.
Claimant appointee
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Claimant's Press Release on Stay of Enforcement
This summary note is machine-generated. Always consult the original materials.


27 Dec 2023
Claimant's Press Release on Award Payment
Document Details:
PARTICIPANTS
Claimant's Press Release on Award Payment
Participants listed are for this document only and may not include all participants involved in the entire case. Always consult the original documents.
Claimant appointee
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Claimant's Press Release on Award Payment
This summary note is machine-generated. Always consult the original materials.


1 Feb 2024
Decision Under Rule 41(5)
Document provided by: IAReporter
Document Details:
PARTICIPANTS
Decision Under Rule 41(5)
Participants listed are for this document only and may not include all participants involved in the entire case. Always consult the original documents.
Claimant appointee
Claimant appointee:
Bertha Cooper-Rousseau
Respondent appointee
Respondent appointee:
Githu Muigai
Tribunal/Panel chair
Chair/President:
Rolf Knieper
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Decision Under Rule 41(5)
This summary note is machine-generated. Always consult the original materials.


7 Feb 2024
Claimant's Press Release on Tanzania’s Annulment Request
Document Details:
PARTICIPANTS
Claimant's Press Release on Tanzania’s Annulment Request
Participants listed are for this document only and may not include all participants involved in the entire case. Always consult the original documents.
Claimant appointee
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Claimant's Press Release on Tanzania’s Annulment Request
This summary note is machine-generated. Always consult the original materials.


29 Jul 2024
Claimant's Press Release on Settlement
Document Details:
PARTICIPANTS
Claimant's Press Release on Settlement
Participants listed are for this document only and may not include all participants involved in the entire case. Always consult the original documents.
Claimant appointee
Respondent appointee
Tribunal/Panel chair
Arbitrator(s)
Sole Arbitrator
ICSID Annulment Committee president
ICSID Annulment Committee members
WTO Appellate Body members
WTO Appellate Body chair
Judges
Claimant's counsel
Respondent's counsel
Other counsel
Claimant's expert
Respondent's expert
Claimant's witness
Respondent's witness
Other witnesses
Tribunal secretary
Tribunal assistant
Country
Print reporter
Entities
Document Summary
Claimant's Press Release on Settlement
This summary note is machine-generated. Always consult the original materials.


Case Summary
This summary note is machine-generated. Always consult the original materials.

Case Overview

In Nachingwea v. Tanzania, the dispute arose from the revocation of the Claimants' retention licence for the Ntaka Hill Nickel Project. The Claimants, Nachingwea U.K. Limited, Ntaka Nickel Holdings Limited, and Nachingwea Nickel Limited, initiated ICSID arbitration against the United Republic of Tanzania under the 1996 UK-Tanzania BIT. The Claimants alleged that Tanzania's 2017 and 2018 legislative amendments unlawfully expropriated their investment.

Procedural History

The Claimants filed their Request for Arbitration on September 25, 2020, which was registered by ICSID on October 5, 2020. The Tribunal was constituted on February 23, 2021. A hearing on jurisdiction and merits took place in Washington, D.C., from January 30 to February 2, 2023. The Tribunal issued its final Award on July 14, 2023. On July 25, 2023, Tanzania filed an Application for Annulment of the Award and requested a stay of enforcement. The ad hoc Committee was constituted on August 24, 2023.

Key Issues and Positions

The primary issues concerned jurisdiction, expropriation, and quantum. Tanzania objected to jurisdiction, arguing that the Claimants' claims did not arise directly out of an investment, that the investment was not "actively made," and that the proper forum was the Tanzanian courts. On the merits, the Claimants argued that Tanzania's 2017 Amending Legislation and 2018 Regulations, which cancelled retention licences and reverted the underlying areas to the State, constituted an unlawful expropriation. Tanzania contended that its actions were justified under the police powers doctrine and were taken for a public purpose. Regarding quantum, the Parties debated the appropriate valuation date, the inclusion of certain exploration and management costs, and the application of a Prospectivity Enhancement Multiplier (PEM) under the cost approach.

Tribunal/Court Reasoning and Holdings

Jurisdiction

The Tribunal dismissed all of Tanzania's jurisdictional objections. It found that the Claimants satisfied the nationality requirements under the BIT and the ICSID Convention. The Tribunal rejected the argument that an investment must be "actively made," departing from the reasoning in the Standard Chartered Bank v. Tanzania case, and held that the BIT's broad definition of investment did not impose such a requirement. Furthermore, the Tribunal confirmed that the dispute concerned questions of international law under the BIT, making arbitration the proper forum, and noted that the BIT did not require the exhaustion of local remedies.

Merits

The Tribunal concluded that Tanzania unlawfully expropriated the Claimants' investment in breach of Article 5 of the BIT. It determined that the 2018 Regulations, which cancelled the retention licence and reverted the project area to the State, resulted in a substantial and permanent deprivation of the Claimants' investment. The Tribunal rejected Tanzania's reliance on the police powers doctrine, finding no contemporaneous evidence that the measures were taken for a legitimate public purpose or to enforce regulations against investor wrongdoing. The Tribunal also found that the expropriation lacked due process, as the legislative changes were enacted hurriedly without reasonable advance notice or meaningful consultation. Additionally, the expropriation was discriminatory and unaccompanied by prompt, adequate, and effective compensation.

Quantum/Damages

The Tribunal determined that the appropriate valuation date was January 10, 2018, the date the 2018 Regulations were published. Applying the fair market value standard and the cost approach, the Tribunal accepted the Claimants' inclusion of historical exploration costs and management overheads. The Tribunal also endorsed the Multiple of Exploration Expenditure (MEE) method, applying a Prospectivity Enhancement Multiplier (PEM) of 1.6 based on comparable historical transactions involving the project.

Costs

Applying the "costs follow the event" principle, the Tribunal ordered Tanzania to bear the full costs of the arbitration. The Tribunal found the Claimants' legal fees reasonable but declined to award additional third-party funding costs, concluding that the Claimants had not sufficiently established that such costs were reasonable or compensable.

Annulment/Set-Aside

In the annulment proceedings, Tanzania requested a continuation of the provisional stay of enforcement of the Award. Tanzania argued that it would suffer irreparable harm if the Award were enforced prior to a decision on annulment, citing its status as a sovereign State and the risk of non-recovery. The Claimants opposed the stay, arguing that Tanzania had a track record of non-compliance and requesting that any stay be conditioned on the provision of financial security. The ad hoc Committee determined that a conditional stay was appropriate to balance the Parties' interests. It ordered the continuation of the stay on the condition that Tanzania provide a formal, binding written undertaking within 45 days to voluntarily and unconditionally comply with the Award if the annulment application is dismissed. On December 13, 2023, Tanzania provided an initial undertaking, which the Committee deemed non-compliant on December 14, 2023, setting a strict deadline of December 19, 2023, for a compliant undertaking or financial security to avoid immediate termination of the stay. Tanzania subsequently provided a formal undertaking from its Attorney General to the ad hoc Committee and the Claimants, committing to unconditionally pay the full amount of the Award plus interest within 45 days of a final decision rejecting the annulment. Additionally, a hearing on the Claimants' preliminary objection to Tanzania's annulment application took place on December 20, 2023. Following this hearing, the ad hoc Committee issued a decision granting in part the Claimants' preliminary objections under ICSID Arbitration Rule 41(5). The Committee found that Tanzania's annulment grounds based on a manifest excess of powers and a failure to state reasons, as well as an objection regarding the Tribunal's cost allocation, were manifestly without legal merit and struck them out. The annulment proceedings will continue solely on Tanzania's remaining claim that the Tribunal seriously departed from a fundamental rule of procedure. The final annulment hearing took place in Washington D.C. on July 26, 2024. Following this, the Parties reached a settlement and agreed to request that the ad hoc Committee suspend the annulment proceedings pending completion of the settlement payments.

Disposition / Relief

The Tribunal ordered Tanzania to pay the Claimants USD 76,704,461.76 in damages and additional losses, plus compound interest at the rate of USD Prime plus 2% from January 10, 2018, until the date of payment. Tanzania was also ordered to reimburse the Claimants USD 254,420.07 for their share of the arbitration costs and USD 3,859,161 for legal costs and expenses. All other claims were dismissed. Subsequently, on October 31, 2023, the ad hoc Committee issued its Decision on the Stay of Enforcement of the Award, continuing the stay provisionally, subject to Tanzania providing the required written undertaking within 45 days, failing which the stay would be terminated. On July 29, 2024, it was announced that Tanzania agreed to pay a total of USD 90 million in settlement of the dispute, payable in three installments. This settlement represents approximately 82.5% of the original Award amount and, upon completion, will conclude the annulment and enforcement proceedings.