Indiana Resources Limited (ASX: IDA) stands at the forefront of the ongoing arbitration case with the United Republic of Tanzania, where the International Centre for Settlement of Investment Disputes (ICSID) has issued a pivotal ruling on Tanzania’s application to annul the award, which now stands at $120.2 million USD, marking a significant turn of events.
Grounds for Annulment
The recent decision by the ad hoc Committee, appointed by ICSID, deals a blow to Tanzania’s efforts to annul the award.
Indiana Resources is set to financially benefit when the reward is returned, as the majority shareholder in Ntaka Nickel Holdings Ltd.
The other claimants include Nachingwea UK Ltd and Nachingwea Nickel Ltd.
The Committee found that Tanzania’s application, which was based on claims of manifest excess of powers, failure to state reasons for the award, and serious departure from fundamental rules of procedure, lacked legal merit.
This ruling effectively bars Tanzania from pursuing these grounds further in the annulment proceedings.
Implications of the Decision
The Committee’s ruling signifies a significant setback for Tanzania’s efforts to annul the award.
By striking down the majority of Tanzania’s grounds for annulment, the Committee has reaffirmed the integrity of the original arbitration process and the validity of the award delivered to the Claimants.
This decision marks a significant victory for Indiana, which has been spearheading the arbitration efforts against Tanzania.
With the majority of Tanzania’s grounds for annulment dismissed, the focus of the annulment proceedings now shifts to the remaining complaint – that the Tribunal seriously departed from fundamental rules of procedure.
Tanzania’s Memorial on Annulment is due on March 15, 2024, marking the next phase in the arbitration process.
The Committee’s timeline for the annulment proceeding provides clarity on the upcoming milestones, ensuring a structured and timely resolution of the dispute.
The total amount payable by Tanzania under the award currently stands at US$120 million, comprising the initial award amount plus accrued interest and costs.
The escalating financial burden on Tanzania in the absence of resolution is apparent, with interest continuing to accrue at a rate of approximately US$1 million per month.
Table 1: Monthly Increase in Award Debt
Buoyed by ICSID’s decision, Indiana Resources shares surged 9.76% today to A$0.09, reaching their highest level since January 25, and its largest intraday percentage gain.
Indiana’s trading volume doubling the 30-day average volume, as more than 4 million shares changed hands.
Indian Resources Executive Chairman Bronwyn Barnes expressed satisfaction with the Committee’s decision, emphasising the vindication of the Claimants’ position.
“This is a very positive outcome for the Claimants,” she said.
“We have consistently maintained that the documents lodged by Tanzania do not demonstrate that Tanzania will be able to meet the high threshold necessary to annul the Award, and this latest ruling from ICSID reflects that position.”
“Tanzania’s request for annulment should be seen for what it is – an attempt to delay and deny compensation to the Claimants for the loss of their investment following the illegal expropriation of the Ntaka Hill Nickel Project in 2018.”
“We are pleased that the Committee has ruled that the majority of Tanzania’s grounds for seeking annulment are manifestly without legal merit. It is our hope that Tanzania will recognise the futility of their current approach to this matter and pay the compensation owed to the Claimants under the Award so that this matter can finally be resolved.”
IDA’s Australian Stock Exchange-listed share price has risen 6.10% and is currently trading at $0.087 (1.15pm UTC+ 8 hours).