International Arbitration on Investment Disputes in Natural Wealth and Resources Sector in Tanzania

Abstract

This article analyses rules relating to international arbitration in natural wealth and resources sector under the newly enacted Arbitration Act of 2020 of Tanzania. The Act is enacted to facilitate amicable settlement of disputes outside the court system as well as enforceability of arbitration agreements. In a broader framework, the Act responds to the challenges faced by Tanzania in managing and addressing many issues emerging in arbitration cases especially investor-state arbitration. Such reforms are not uniquely Tanzanian but form part of the larger emerging reforms in investment regime in key strategic economic sectors in most of the developing world. This is reflected within the ongoing UN Commission on International Trade Law (UNCITRAL) working group on reforming the investor-state dispute settlement system. Under the new law, all disputes involving natural resources can only be arbitrated in Tanzania, as a seat of arbitration, whether under the auspices of the bodies established in Tanzania or otherwise. Likewise, all disputes arising from extraction, exploitation or acquisition and use of natural wealth and resources can only be adjudicated in accordance with the laws of Tanzania. To this end, the Act complements similar relevant provisions under the Natural Wealth and Resources (Permanent Sovereignty) Act and the Natural Wealth and the Resources Contracts (Review and ReNegotiation of Unconscionable Terms) Act of 2017. The Arbitration Act 2020 is aimed at creating a viable regime which will encourage alternative dispute resolution and establish a conducive framework for the enforcement of arbitral award. This paper analyses the Arbitration Act 2020 whether it complies with the best international practices in arbitration regime. It also argues that limiting seat of arbitration and the governing law of international arbitrations on disputes in natural wealth and resources sector are significant reforms to the existing investments landscape in the sector in Tanzania. They form a part of the larger picture of emerging reforms in investment regime in key strategic economic sectors in most of the developing world. As a capital importing state, Tanzania, like other developing nations, seek to avoid the perceived frustrations of international arbitrations to obtain a fair deal on investment agreements on her natural resources through an effective arbitration regime and foreign investments. Indeed, these reforms are likely going to bring back many Tanzanian cases from abroad to Tanzania as a safe seat of arbitration. Keywords: International arbitration, seat of arbitration, governing laws, natural wealth and resources sector, Bilateral Investment Treaties (BITs).