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(Ecofin Agency) – In September 2020, Indiana Resources initiated an arbitration process against the Tanzanian government for the “illegal” expropriation of the Ntaka Hill nickel project. Nearly three years later, the International Centre for Settlement of Investment Disputes (ICSID), a World Bank arbitration tribunal, has made its ruling.
The ICSID has condemned the Tanzanian government to pay $76.7 million in damages to Indiana Resources for the unlawful expropriation of the Ntaka Hill nickel project. The ASX-listed mining company announced on July 18, with the final compensation now surpassed $100 million and continuing to increase until Tanzania fulfills the payment.
In addition to the damages, the Tanzanian government has been ordered to pay compounded interest at a rate of 2% above the US dollar’s preferred rate from January 10, 2018, until the date of payment. This interest amounts to $109.5 million as of the arbitration ruling on July 14. Moreover, the tribunal has directed Tanzania to cover the arbitration costs and pay Indiana $3,859,161 as legal expenses.
“We now move to the enforcement phase. The ICSID Convention has been ratified by 158 Member States of the World Bank – including Tanzania. This means that any award issued by an ICSID tribunal is enforceable in any one of those 158 member States as if it were a judgment of one of their courts,” commented Bronwyn Barnes, the company’s Executive Chairman.
It is worth noting that ICSID rulings are final and cannot be appealed in local courts. Nevertheless, Tanzania has the option to seek recourse within ICSID by requesting corrections for material or calculation errors or additional decisions on matters it believes the tribunal did not address.
Recall that the legal dispute between the two parties started in 2020 when Indiana Resources initiated the arbitration process against the Tanzanian government. The root of this conflict lies in the revision of the mining code, which was abolished in 2017, particularly concerning the retention license. This license allows the holder of an exploration or exploitation permit to defer activities in the permit area due to various constraints.
Indiana Resources held this retention license for the Ntaka Hill project since 2015, a duration of five years. However, the government launched a tender in 2019 to award the license to another company without providing compensation to Indiana.
Emiliano Tossou
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