DAR ES SALAAM, 28 June 2023
PART 1: OBSERVATIONS ON ARTICLE 20 OF THE INTERGOVERNMENTAL
AGREEMENT (“IGA”) SIGNED BETWEEN THE UNITED REPUBLIC OF TANZANIA
AND EMIRATES OF DUBAI
- Madeline Kimei1
Although, I have read various comments circulated including the recently issued statement of the
Tanganyika Law Society (TLS), other reliable sources and listened to several legal analysis and
opinions in respect of the highly debated Intergovernmental Agreement (“IGA”) signed between
the United Republic of Tanzania and Emirates of Dubai concerning Economic and Social
Partnership for the Development and Improving Performance of Sea and Lake Ports in Tanzania,
I am yet to see tangible comments on Article 20 dealing with Dispute Settlement of which this
commentary shall focus on.
Article 20 of the IGA between Tanzania and the Emirate of Dubai provided for Dispute Settlement
as follows:
“1. Amicable Settlement: Disputes arising out of, or in connection with, this Agreement shall be referred
by a Party for amicable resolution through diplomatic channels or, if such Party so chooses, to the IGA
Consultative Committee, with any agreement recorded in writing. If a dispute is not amicably settled within
ninety (90) days from the date of presentment of the dispute through diplomatic channels or the IGA
Consultative Committee, any Party may notify the other Party that a declared dispute exists (a "Declared
Dispute").
2. Arbitration
(a)If a Declared Dispute exists, the Parties agree that any Party may, upon written notice to the other Party,
submit the matter to arbitration under the UNCITRAL Arbitration Rules.
(b) Each Party shall appoint one (1) member of the tribunal within thirty (30) Each Party shall appoint one
(1) member of the tribunal within thirty (30) Those two (2) members shall then select a national of a third
state who, on approval by the Parties, shall be appointed Chair of the tribunal.
(c) The Chair shall be appointed within thirty (30) days from the date of appointment of the second member.
(d) If within the periods specified in Article 20(2)(b) above, the necessary appointments have not been
made, either Party may, in the absence of any other agreement, invite the Secretary-General of the
1
Madeline C. Kimei, (LLB, LLM Law & Finance, MCIArb, FTIArb) – is an Arbitration Counsel, Independent Arbitrator,
Commercial Mediator, ADR/ODR Consultant at iResolve™ a boutique arbitration and corporate law studio established in 2014
(www.iresolve.co.tz). Ms. Kimei i She is an active member of the ICC International Court of Arbitration and serves on the ICC
Commission on Arbitration & ADR and is an ambassador of the ICC Africa Commission. Kimei is currently the President-Tanzania
Institute of Arbitrators (TIArb), Director at the Tanzania International Arbitration Centre (TIAC); Chairperson -Africa Asia
Mediation Association; member of the LACIAC Court of Arbitration; SIAC Africa User’s Council. She serves on the panel of
arbitrators of TIArb, SADC-AFSA, Shanghai International Arbitration Centre (SHIAC), Bali International Arbitration Mediation
Centre (BIMAC) and London Court of International Arbitration (LCIA) User’s Council. Ms Kimei has acted as arbitrator
(sole/presiding), commercial mediator, and arbitral secretary in both domestic & international arbitrations under the TIArb,
UNCITRAL, CRCICA and ICC Rules and also acts as an arbitral secretary in complex arbitrations. A faculty of the International
Law Institute (Washington; Faculty of the GAR Academy and Faculty member of the Bangladesh Int’Mediation Society.
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Permanent Court of Arbitration to make any necessary appointments within thirty (30) days of a request
being made.
(e) For the purpose of Arbitration Process:
(i)the seat of the arbitration shall be Johannesburg, Republic of South Africa;
(ii)the venue of the arbitration shall be Johannesburg, Republic of South Africa;
(iii) the language of the arbitration shall be English; and
(iv) the award shall be in writing and shall set forth the reasons for the tribunal's decision.
3. Disputes under the Project Agreements and HGAs will also be subject to resolution through international
arbitration in a neutral venue and seat.”
1. General Observations
The IGA in my view works in similar ways as a Bilateral Agreement. It is a legally enforceable
agreement. The IGA can be designed to be used in respect of any specific activities (in our case
performance of sea and port) and works to promote greater investment flows between two
signatory countries and sets out standards of protection for investments made in one country by
investors from the other country (as we see labour rights; security; environmental concerns are all
captured in the IGA). I can also see a stabilization provision intended to protect the stability
(profitability) of long-term, capital-intensive, foreign investments against subsequent, noncommercial changes to the investment environment.
I have an urge to delve into other parts of the IGA however, I will focus this commentary on Article
20 reproduced above.
(i)
No model IGA/BITs
Tanzania has no model IGA or BIT and so my concern would be the missed opportunity to ensure
we cover risk factors in light of our context. Tanzania is yet to have a robust model agreement
/treaty that those responsible for review of the international investment agreements entered can
rely on and leverage from in terms of previous negotiations which the government has entered into
and or tried and tested provisions which work well in the interest of the United Republic of
Tanzania. This is a critical issue which I have reiterated in this commentary to urge the responsible
government arm to ensure that model IGA’s and Bilateral Investment Treaties [See the Africa
Arbitration Academy Model BIT] or Multilateral Treaties are put in place.
(ii)
Restricted Subject Matters /Curve-outs
Notably, there is still ambiguity as to the subject matters that are restricted to local adjudication
and are prohibited access to international arbitration to claims concerning, i.e. Nattural Wealth or
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Permanent Sovereignty hence there should be recognized terms of the IGA which specifically
provide for how such disputes will be resolved.
The IGA does not contain a carve-out which restricts investors from pursuing a claim relating to
measures that are designed and implemented to protect or promote natural wealth or permanent
sovereignty. A general exceptions clause further provides that claims cannot be made with respect
to measures taken by the state parties to protect the public interest in sensitive sectors, such as
education, indigenous rights, the promotion of essential security and certain taxation measures,
provided that such measures are not arbitrary, discriminatory or a disguised restriction on
investment.
(iii)
Amicable Settlement and the Cooling off period
It is widely accepted that prior to initiating any arbitration process, investors and/or their
investments should have a general obligation to resolve the dispute amicably -Article 20 (1) of the
IGA. This paragraph sets out such a requirement.
The first issue is that the clause lacks details as to the place of amicable resolution or consultations
will be held through diplomatic channels or, if such Party so chooses, to the IGA Consultative
Committee. A simple wording outlining this will avoid ambiguities which may derail any efforts
to resolve amicably: The place of consultation would be [Dar es Salaam], if Tanzania is the
respondent Party, and Dubai, if UAE is the respondent Party, unless the disputing parties
otherwise agree.
The TLS Committee charged with the review of the IGA raised concern over the 90-day period
for amicable settlement.
Article 20(1) provides for amicable settlement efforts to be held and in as such, when negotiating
IGA’s the definitions of the length of cooling off periods that such Agreements reserve for attempts
of amicable settlement include “3 months” and “90 days”, “6 months” and “180 days”, and 4
months and 5 months. The TLS Committee observed that 90 days is too long however, provided
for no recommendations as to the length of the cooling off periods most amenable for the
arrangement. TLS observed further that “If the dispute isn't resolved within 90 days, the aggrieved
party may declare a dispute, after which the process of appointing arbitrators and a chair begins.
The appointment process alone could take up to 90 days if the two arbitrators fail to agree on a
third arbitrator, who would act as chair, necessitating referral to the Secretary General of the
Permanent Court of Arbitration seated in the Hague.”
To avoid the issue, there should be inserted a limitation of access (period) provided for one to refer
a “Declared Dispute” to arbitration. Without such timeline, the concern raised by the TLS
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Committee may creep in. Nonetheless, it should be understood that post-arbitration procedures
included in a tiered dispute resolution clause such as the one contained in the IGA should be
exhausted prior to the institution of any arbitral proceedings as some Tribunals depending on the
circumstances of the case before them have held to have no jurisdiction on the basis that the Party
failed to exhaust all pre-steps mechanisms There is also a provision such as “The SecretaryGeneral shall use best efforts to comply with the request within 60 days of its receipt” to avoid
elongation of the time periods of appointment process.
Furthermore, the appointment procedure under the UNCITRAL Rules adopted are airtight in
avoiding delays in the appointment of the Arbitral Tribunal, with a default provision resulting to
the Secretary General of the PCA.
(iii)
Innovation in Resolution of Disputes – “Investor-State Mediation”
Consider provisions on mediation. There is a lot of interest in investor-state mediation at the
moment, especially since the entry into force of the Singapore Convention. See for example the
interest in mediation from states, including African states, in the UNCITRAL WG III reform
process.
The introduction of a clear mediation clause as a first step prior to arbitration proceedings can
significantly expedite the settlement of investor-state disputes while preserving the investor’s
business interests and the host country’s reputation as an investment-friendly destination. A
workable example is the wording from the SADC BIT Model 2012 “If a dispute between the State
Parties cannot thus be settled within 90 days of the initiation of consultations to resolve the dispute,
either State Party may request mediation of the dispute, including through recognized institutions or
the use of good offices for such purposes. Both State Parties shall cooperate in good faith when one
State Party has made such a request.” The clause may be expounded on by agreeing to a set of
institutional mediation rules and administering authority.
Mediation and arbitration are different processes and not alternatives to each other. Mediation is a
non-binding process; hence a solution to the potential dispute cannot be imposed during mediation
without the consent of both State Parties. In order to support the advancement of investor-state or
international commercial mediation in the Country, Tanzania further needs to sign and ratify the
Singapore Convention on Mediation (also known as United Nations Convention on International
Settlement Agreements Resulting from Mediation was adopted through General Assembly
resolution 73/198 dated 20th December, 2018) . If the Singapore Convention receives substantial
support internationally (and a number of major jurisdictions have begun the process by signing the
Convention) then it will enhance the use of ADR internationally.
(iv)
UNCITRAL Arbitration Rules
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(a) Arbitration rules evolve to keep step with practice and need. So, they are flexible enough to be
amended every two or three years. IIAs will have a longer life, usually ten or more years and
they are difficult to amend during their lifetime. It would be to the Parties’ advantage to
maintain some flexibility in arbitral procedure through rules that are easier to amend.The
version of the applicable UNCITRAL Arbitration Rules is not mentioned or a statement on the
need to use the latest version at the time of dispute. The latest version are the 2021 UNCITRAL
Arbitration Rules which are recommended for purposes of ensuring the procedural rules
applicable are innovative and up to international standards of arbitral procedure. The default
appointing authority in light of Article of the UNCITRAL Arbitration Rules is the Permanent
Court of Arbitration (PCA).
(b) The PCA was originally conceived for the settlement of inter-State disputes, the PCA has,
since 1935, extended its facilities also to cases involving State and non-State parties. The PCA
as established consisted of a panel of jurists designated by each country acceding to the
Convention with each country being entitled to designate up to four from among whom the
members of each arbitral tribunal might be chosen. There is no requirement that a State
agreeing to PCA dispute resolution be a party to the Convention as such the PCA has been an
administering institution to only 1 notable pending case involving Sunlodges Ltd (BVI)
(Private entity) Sunlodges (T) Limited (Tanzania) (Private entity) vs The United Republic of
Tanzania under the UNCITRAL Arbitration rules of 1976. The latest matter was filed in June
2022 whereby the PCA provides administrative support in this arbitration, which is being
conducted under the UNCITRAL Arbitration Rules (as adopted in 1976) Mr. Finn Von
Würden Petersen (Private entity) vs Govt of URT.
(c) Tanzania has also not acceded to the Convention. We have only had 2 matters before the PCA
and hence in my opinion unfamiliar with the institution. As a party to the Convention, Tanzania
may designate up to four persons “of known competency in questions of international law”, to
act as “Members of the Court”. Parties to a dispute resolution may but are not required to select
arbitrators or other adjudicators from among them. In addition to their role as arbitrators,
Members of the Court, acting as “national groups” are entitled to nominate candidates for
election to both the International Court of Justice and the International Criminal Court.
(d) It is hence right time to call for the Government to consider acceding to the PCA Convention
if it is to enter dispute resolution provisions which identify such forums for purposes of
resolving investor-state and or international investment disputes. As reflected in Article 20 (2)
(d), (d) If within the periods specified in Article 20(2)(b) above, the necessary appointments
have not been made, either Party may, in the absence of any other agreement, invite the
Secretary-General of the Permanent Court of Arbitration to make any necessary appointments
within thirty (30) days of a request being made.
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(e) Considering that under the PCA an individual member can be called upon to perform this role
of arbitrator by the State party to a dispute. This will be a missed opportunity to have Tanzanian
arbitrators to be considered, and so I call upon us to see the need to advance our resources into
these international arbitration platforms and advance capable arbitrators for consideration in
such matters. This same issue was with the ICSID Convention the case which I made to the
attention of the government so as we may see our obligations to appoint neutrals to the Panels
held by ICSID is maintained. The current list is without a doubt outdated.
(v)
Transparency and Amici Curiae submissions
There are provisions seek to increase the transparency of arbitral proceedings and enhance
the quality of decisions. In some IGAs you will note provisions that deal with (a.) public
access to procedures and decisions; (b.) involvement of experts, amici curiae, and nondisputing parties; and (c.) obligations to motivate arbitral awards.
At the outset, to protect the public interest in the subject matter of the IGA there is need to
have provisions set out that requires the tribunal hearings to be open to the public. In a
climate of increasing transparency, nations such as Tanzania will need to ensure that its
citizens are privy to the proceedings of such nature and this can be set out with its
limitations and accordingly can be aligned to our national policy on confidentiality.
There should be a provision that allows for the participation of amicus curiae, either
organizations or individuals, with an interest in the case. This is now common in investorState arbitration and is carried over into the State-State process here as well.
(vi)
Article 23 – “Sunset clause”
There is a high risk of legal uncertainty under the IGA which currently permits claims to
be brought by investors over an undeterminable period of time following the termination
of the IGA.
There should a consideration of inclusion of solutions such as a Sunset clause
(controversial but may cure the issue of the uncertainty as to the duration of the IGA)
provide that a treaty lapses automatically erga omnes (or for certain subjects) on (i) a fixed
and precise date or (ii) after the specified, determined period of time. Sunset clauses refer
to the end of the life of the treaty, and their exact contrasting clause is the commencement
clauses, which define the start of the life of the treaty. By including a sunset clause in a
provision of a treaty, such treaty is rendered of temporary nature with a limited lifespan,
opposed to the permanent provision, which aim to stay in force perpetually.
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2. Conclusion
In concluding, Article 20 of the IGA clearly needs a keen eye and innovative approach to
resolving potential disputes that may arise in the future. The dispute settlement article
needs to consider the risk factors associated with the nature of the IGA, sea and ports, and
hence maybe we may need to even consider technical disputes being resolved by an expert
(Expert Determination) which I will cover at length in Part 2. Along with this, the
government should spearhead work towards putting together a model BIT or IGA in this
case that can be the foundation for usages in future negotiations. And finally, a major
turning point would be to see this government put in place an ADR policy that reflects the
countries policies and ambitions in achieving effective and efficient dispute resolution
processes aimed at attracting foreign investment.
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