Indiana Resources Claims Landmark US$109.5M Arbitration Win Against Tanzania in Mineral Rights Dispute (ASX:IDA)

18th July 2023 | Mining News | StockHound

Indiana Resources Limited (ASX: IDA), a dominant shareholder in a consortium of companies, has emerged victorious from a major arbitration proceeding against the United Republic of Tanzania, highlighting the ongoing battle between international mining companies and host nations over mineral rights.

The dispute, presided over by the International Centre for Settlement of Investment Disputes (ICSID), a branch of the World Bank, centred on Tanzania’s 2018 decision to unlawfully expropriate the Ntaka Hill Nickel Project from the consortium, in breach of the UK-Tanzania Bilateral Investment Treaty.

The consortium, known collectively as the “Claimants”, includes Ntaka Nickel Holdings Ltd (NNHL), Nachingwea UK Ltd (NUK) (both UK-incorporated), and Nachingwea Nickel Ltd (NNL, incorporated in Tanzania). Indiana Resources, holding a 62.4% share of the combined holdings of the Claimants, acted as the manager of the joint venture and directed activities relating to the arbitration against Tanzania.

Following the closure of arbitration proceedings, the Tribunal has ordered Tanzania to pay over $109.5 million in compensation for the unlawful expropriation of Ntaka Hill, a sum that includes accrued interest. This verdict marks a significant win for Indiana and its partners, and underlines the potency of international arbitration in resolving complex investment disputes.

“My message to shareholders has been consistent – we had a clear and compelling position to support our claim for compensation and have worked tirelessly for five years to ensure that we maintained our position with strength and determination. The conclusion of arbitration proceedings brings me great satisfaction, and I would like to sincerely thank those shareholders who have supported the Company during that time.”

“We now move to the enforcement phase” remarked Bronwyn Barnes, Executive Chairman of Indiana Resources.

Under ICSID Rules, Tanzania has the right to file for an annulment within 120 days of the award, although the grounds for such an application are extremely limited. The Claimants maintain strong confidence in the robustness of the ruling.

Indiana Resources has now shifted its focus to enforcing the ICSID award, buoyed by the fact that Tanzania is one of 158 member states of the World Bank that have ratified the ICSID Convention. This ratification means that any award issued by an ICSID tribunal is enforceable in any one of those 158 member states, just like a judgment from their domestic courts.

The Ntaka Hill case represents a milestone in the ongoing friction between global mining companies and governments over resource ownership and profit sharing. As more mining companies turn to international arbitration to assert their rights, countries like Tanzania could face growing pressure to honour international investment agreements.

The victory is also a significant win for the law firms representing the Claimants, LALIVE and Boies Schiller Flexner LLP, who have demonstrated their capability in navigating the intricacies of international arbitration.

The case presents a warning for other governments who might be considering similar measures, and a potential boon for foreign investors, who will be reassured by this ruling that their rights can be upheld even when they appear to be at risk.