EcoDevelopment in Europe AB and EcoEnergy Africa AB v. United Republic of Tanzania
ICSID · Investment (ICSID and treaty) · Tanzania · 13 Apr 2022
Why it matters
This case is significant for its detailed analysis of indirect expropriation in the context of a renewable energy project in Tanzania. It clarifies the standard for establishing expropriation when a host state takes actions that substantially deprive an investor of the value of its investment, even without a formal transfer of title. The award also addresses estoppel and the relevance of an investor's statements about winding up a project.
Summary
The case concerns a dispute under the Sweden-Tanzania Bilateral Investment Treaty (BIT). The Claimants, two Swedish companies, invested in a sugar and ethanol production project in Tanzania through local subsidiaries. The project involved a large tract of land for which a Certificate of Occupancy (CO) was granted to one subsidiary. After years of delays and disputes over financing and performance obligations, Tanzania revoked the CO and reallocated the land. The Claimants initiated ICSID arbitration, alleging expropriation and violation of fair and equitable treatment. Tanzania raised jurisdictional objections, argued that the Claimants had not made a qualifying investment, and asserted that the Claimants had abandoned the project. The Tribunal rejected Tanzania's jurisdictional objections and found that the Claimants had made an investment under the BIT. On the merits, the Tribunal held that Tanzania's revocation of the CO and other measures constituted indirect expropriation, as they substantially deprived the Claimants of the value of their investment. The Tribunal also found that Tanzania's conduct violated fair and equitable treatment due to lack of consistency and transparency. However, since the expropriation claim was upheld, the Tribunal did not need to separately award damages for the FET breach. The Tribunal dismissed Tanzania's counter-claim and estoppel defense. The award on quantum was not fully detailed in the excerpts, but the Tribunal ordered compensation. The case underscores the importance of stable legal frameworks for foreign investors and the limits of state regulatory power.
The detail
Parties: EcoDevelopment in Europe AB and EcoEnergy Africa AB v. United Republic of Tanzania
Case number: ICSID Case No. ARB/17/33
Outcome: The Tribunal upheld the Claimants' expropriation claim and awarded compensation; the Respondent's counter-claim was dismissed.
Applicable law: Sweden-Tanzania BIT (1999); ICSID Convention; international law on expropriation and fair and equitable treatment
Issues in play: The case involved the collision between Tanzania's sovereign right to regulate land use and the investor's right to protection against expropriation under the BIT. The Tribunal assessed whether Tanzania's revocation of a certificate of occupancy and other measures amounted to indirect expropriation.
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