Standard Chartered Bank (Hong Kong) Limited v. United Republic of Tanzania
ICSID · Investment (ICSID and treaty) · Tanzania · 11 Oct 2019
Why it matters
This award is significant because it confirms that a bank as an assignee of an investment agreement can bring an ICSID claim for expropriation and discrimination. It also clarifies the scope of expropriation under a contractual investment agreement and the requirement of a comparator for discrimination claims. The case demonstrates that states may be held liable for actions that deprive investors of their rights under investment contracts.
Summary
Standard Chartered Bank (Hong Kong) Limited (SCB HK) brought an ICSID claim against the United Republic of Tanzania under the Implementation Agreement (IMA) for the Tegeta power project. SCB HK was the assignee of a loan facility originally granted by Malaysian banks to Independent Power Tanzania Limited (IPTL). The IMA contained an ICSID arbitration clause. SCB HK alleged that Tanzania expropriated its investment by, among other things, directing the payment of escrow funds to a third party (Pan Africa Power Solutions) instead of to SCB HK, and by taking discriminatory actions against SCB HK. Tanzania objected to jurisdiction, arguing that SCB HK was not a lawful assignee and that the dispute did not arise out of an investment. The Tribunal rejected these objections, finding that SCB HK was a lawful assignee under Article 15.2 of the IMA and that the dispute arose out of an investment under Article 25 of the ICSID Convention. On the merits, the Tribunal found that Tanzania had breached Article 16.2 (expropriation) by taking measures that deprived SCB HK of its rights under the IMA, including the payment of escrow funds to a third party. It also found that Tanzania had breached Article 16.1 (discrimination) by treating SCB HK less favorably than other creditors. The Tribunal further found that Tanzania had breached Article 15.3 (failure to provide security) and that SCB HK had validly terminated the IMA. The Tribunal awarded SCB HK USD 185,449,440.04 in damages and compensation, plus interest, and ordered Tanzania to bear its own costs and the costs of the arbitration.
The detail
Parties: Standard Chartered Bank (Hong Kong) Limited v. United Republic of Tanzania
Case number: ICSID Case No. ARB/15/41
Outcome: The Tribunal found that Tanzania breached the Implementation Agreement by expropriating the Claimant's investment and discriminating against it, and awarded USD 185,449,440.04 plus interest.
Quantum: USD 185,449,440.04
Applicable law: Implementation Agreement between Tanzania and Independent Power Tanzania Limited (IPTL) dated 8 June 1995; ICSID Convention
Issues in play: The case involved the interpretation of the Implementation Agreement's expropriation (Article 16.2) and discrimination (Article 16.1) provisions, and whether the Claimant was a lawful assignee under Article 15.2.
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