Nachingwea U.K. Limited (UK), Ntaka Nickel Holdings Limited (UK) and Nachingwea Nickel Limited (Tanzania) v. Tanzania
ICSID · Investment (ICSID and treaty) · Tanzania · 14 Jul 2023
Why it matters
This award is significant for its detailed analysis of expropriation in the mining sector, particularly the application of the 'substantial deprivation' test and the police powers doctrine. It also addresses the requirement for an investment to be 'actively made' and clarifies that a state's regulatory measures can amount to expropriation even if the investment is in an exploration phase. The decision on damages, using a cost-based approach with a multiple, provides guidance on valuing early-stage mining projects.
Summary
The case concerns a dispute under the UK-Tanzania BIT regarding the Ntaka Hill Nickel Project in Tanzania. The Claimants, UK and Tanzanian companies, held prospecting and retention licenses for nickel exploration. In 2017, Tanzania enacted legislation that significantly altered the mining regulatory framework, including renegotiation of contracts and increased state ownership. Subsequently, in 2019, Tanzania invited tenders for the project area, effectively revoking the Claimants' rights. The Claimants initiated ICSID arbitration, alleging expropriation. The Tribunal upheld jurisdiction, rejecting Tanzania's objections that the investment was not 'actively made' and that local courts should be the forum. On liability, the Tribunal found that Tanzania's measures constituted a substantial and permanent deprivation of the Claimants' investment, not justified by the police powers doctrine. The expropriation was unlawful as it lacked due process, public purpose, non-discrimination, and compensation. The Tribunal awarded damages based on the cost approach, including exploration expenditures and a multiple of 2.5, totaling USD 76,704,461.76, plus compound interest and costs. The award is notable for its treatment of early-stage mining investments and the application of the 'substantial deprivation' test.
The detail
Parties: Nachingwea U.K. Limited (UK), Ntaka Nickel Holdings Limited (UK) and Nachingwea Nickel Limited (Tanzania) v. Tanzania
Case number: ICSID Case No. ARB/20/38
Outcome: The Tribunal found Tanzania unlawfully expropriated the Claimants' investment and ordered Tanzania to pay USD 76,704,461.76 in damages plus compound interest and costs.
Quantum: USD 76,704,461.76
Applicable law: UK-Tanzania BIT (1996), ICSID Convention
Issues in play: The BIT's expropriation provision (Article 5) and the police powers doctrine were central. The Tribunal assessed whether Tanzania's mining law amendments and tender process constituted a substantial, permanent deprivation without justification.
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