Indiana Resources (ASX:IDA) has revealed that the ICSID ad hoc Committee has reached a decision regarding the Stay of Enforcement of the Tanzanian Award, obliging the Tanzanian government to pay the rightful amount to the Claimants after a hearing in October.
History of the Dispute
In July, Indiana initiated arbitration proceedings against Tanzania with the International Centre for Settlement of Investment Disputes (ICSID). Following the tribunal’s decision in favour of Indiana, the Tanzanian government is now required to compensate the involved Claimants with an amount exceeding $109.5 million USD, in addition to accrued interest and costs.
The group of Claimants consists of Ntaka Nickel Holdings Ltd, Nachingwea UK Ltd, and Nachingwea Nickel Ltd, where Indiana holds a 62.4% majority stake, putting the Company in line to receive significant financial compensation.
This legal dispute revolves around allegations that the Tanzanian government engaged in an unlawful expropriation of the Ntaka Hill Nickel Project on January 10, 2018, which constitutes a breach of the UK-Tanzania Bilateral Investment Treaty (BIT).
You can read more about the background and timeline of the dispute here.
The initial Award amounted to $76,706,461 USD in damages and additional losses, with an interest rate set at 2% above the USD Prime rate, and legal costs for the Claimants totaling $4,113,581.07 USD, resulting in a total of $113,603,591.83 USD as of August 17.
Following the Tanzanian Government’s appeal on the Award, the costs have risen to $117,180,000 USD, which Tanzania is required to pay to the Claimants within 45 days.
Findings of the ICSID ad hoc Committee
The ICSID ad hoc Committee has issued a decision to extend the stay of enforcement of the Award provisionally, with specific conditions attached.
Within 45 days, Tanzania must furnish a written undertaking from authorised government officials committing to the following:
- Adherence to the annulment decision once delivered by the committee.
- Acknowledgment that the Award is final and binding, with compliance to the agreed terms, including the payment of the full amount plus interest to the Claimants within 45 days of the final decision on annulment.
- Assurance that the payment of the Award will not be subject to any enforcement proceedings in domestic
If Tanzania fails to provide the written undertaking as outlined above within 45 days, the stay on enforcement will be lifted
You can read more about the committees findings and annulment here.
Bronwyn Barnes, the Executive Chairman of Indiana Resources, expressed the Company’s anticipation for Tanzania to either adhere to the conditions set by the ICSID ad hoc committee within the 45-day period or not.
“In either circumstance, the Claimants have comfort that ICSID is requiring Tanzania to comply with the Award through providing sufficient comfort through a legally binding commitment that if the Award is not annulled, the Claimants will promptly receive the full amount of the Award to which they are entitled,” she said.
“Indiana shareholders should take comfort in the disciplined legal process that is being followed by the ad hoc Committee, and that Tanzania is clearly engaging in this process to the best of their ability. Put simply, we consider this a victory.”
“Indiana, as the majority shareholder of the Claimants, is comfortable providing a guarantee that if enforcement commences and assets are seized to the value of the Award, and Tanzania’s request for annulment is granted, then the Claimants will return the funds corresponding to the annulled portion of the Award to Tanzania.”
“Indiana is also encouraged by Tanzania’s submission that it has assets both inside and outside Tanzania sufficient to satisfy the Award, and that Tanzania is ready, willing and able to honour the Award if it is not annulled, and that it has sufficient means to pay the amounts due to the Claimants under the Award. Indiana has led the ICSID proceedings on behalf of all of the Claimants’ shareholders and is comfortable to provide this guarantee.”
IDA’s Australian Stock Exchange-listed share price has risen 4.0% today and is currently trading at $0.052 (10:30am UTC+ 8 hours).