Tanzania rejects ISDS in favour of Local Courts

20 September 2018: Yet another country has rejected the undemocratic and non-transparent practices of international arbitration as a method for resolving investor-state disputes (ISDS). There is growing rejection of the inclusion of ISDS in trade agreements like the TPP.

As reported in The East African, Tanzania’s National Assembly on September 17 passed the Public Private Partnership (Amendment) Bill (2018), put forward by Attorney General Adelardus Kilangi.

The legislation provides that Local Courts shall be used to resolve disputes arising out of contracts with investors in public-private projects (PPPs), instead of international arbitration.

There is a global trend of countries becoming more cautious about binding themselves to international arbitration methods, which often trump domestic courts, follow no set of precedent, appoint arbitrators from pools of corporate lawyers rather than independent judges, and have limited appeal mechanisms.

Kilangi is reported as explaining there is “no neutral ground” in international arbitration, as it favours international companies over countries; “as confidence and trust wane, many developing countries are considering using their own legal systems.”

The decision comes in the wake of community pressure and several cases which have proven damaging to Tanzania’s economy and civil society. These include three cases of the Tanzanian public power company Tanesco defending itself against the UK’s Hong Kong branch of Standard Chartered Bank. An ad hoc international committee awarded the bank US$148 million for breach of a power contract.

A case against the state is also being heard over alleged re-nationalisation of a farm owned by a company registered in the British Virgin Islands. There are also various claims against Tanzania from international companies like Barrick Gold who claim profit loss from law reforms in the country’s mining sector.