Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania
ICSID · Investment (ICSID and treaty) · Tanzania · 24 Jul 2008
Why it matters
This case is a landmark for its detailed analysis of causation in investment treaty claims, establishing that a breach of treaty does not automatically entitle the investor to damages if the loss is attributable to other factors. It also set a precedent for amicus curiae participation in ICSID arbitration, as the tribunal allowed submissions from NGOs on public interest issues. The decision is frequently cited for its discussion of the 'investment' definition and the standard for fair and equitable treatment.
Summary
Biwater Gauff (Tanzania) Ltd. (BGT), a UK company, invested in a water and sewerage lease contract with Tanzania's Dar es Salaam Water and Sewerage Authority (DAWASA) in 2003. The project faced operational difficulties, including non-payment by government agencies and tariff disputes. In 2005, Tanzania terminated the lease, took over City Water's assets, and deported its managers. BGT initiated ICSID arbitration under the UK-Tanzania BIT, claiming expropriation, unfair treatment, and other violations. The tribunal found that Tanzania's actions, including the public announcement of termination, withdrawal of VAT exemption, and seizure of assets, violated the BIT's fair and equitable treatment, unreasonable measures, expropriation, and full protection and security standards. However, the tribunal dismissed all damages claims because BGT failed to prove that the violations caused its financial losses; the losses were due to the project's inherent unprofitability and BGT's own conduct. The tribunal issued only declaratory relief. The case is notable for its detailed causation analysis and for allowing amicus curiae briefs from NGOs.
The detail
Parties: Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania
Case number: ICSID Case No. ARB/05/22
Outcome: Tribunal found Tanzania violated fair and equitable treatment, unreasonable/discriminatory measures, expropriation, and full protection and security under the UK-Tanzania BIT, but dismissed all claims for damages because the violations did not cause compensable loss. Each party bears its own costs; arbitration costs shared equally.
Quantum: 0
Applicable law: UK-Tanzania BIT (1994); ICSID Convention; Tanzania's EWURA Act, DAWASA Act; Lease Contract, SIPE, POG
Issues in play: The BIT's fair and equitable treatment, expropriation, and full protection and security standards collided with Tanzania's sovereign right to regulate water services and terminate a failing lease contract. The tribunal distinguished between wrongful conduct and causation of damages.
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