Dar es Salaam. British real estate company Pennyroyal Ltd, the developers of Blue Amber Resort has filed a claim against Tanzania for alleged breaches of bilateral investment treaties that Tanzania entered into with both the United Kingdom and Mauritius, The Citizen has learnt.
According to Steptoe the law firm
representing Pennyroyal, the breach concerns the revoking of the title deed on
which the Blue Amber Resort was being constructed.
The firm has also confirmed that the
case no ARB/23/26 had been filed at the International Center for Settlement of
Investment Disputes (ICSID)- which is a world bank tribunal.
Though the real value of the claim
has not been revealed, it could well run into hundreds of millions of dollars.
By the time of the
termination, audited reports that had been presented at the Zanzibar Investment
Promotions Authority (ZIPA) showed that some $55 million had been invested by
then.
Early in 2022, the Revolutionary
Government of Zanzibar (SMZ) through the ministry of lands terminated a land
lease held by British property developer Pennyroyal Limited in Matemwe, after
it was claimed that an area of 20 hectares out of the 411 hectares inside the
project was owned by another third party
The Blue Amber Resort project was
under construction with first phase delivery of units initially set for
December 2022.
The termination was followed by a
letter on July 25, 2022, from the Zanzibar Investment Promotion Authority
(ZIPA) informing Pennyroyal Limited that it will not renew its construction
permit following the termination of leasehold by the Ministry of Lands.
In an earlier press release, Mr
Brian Thomson, owner of Pennyroyal, exclusively confirmed that the company
intent to file for arbitration under the Convention on the Settlement of
Investment Disputes between States and Nationals of Other States (the ICSID
Convention).
He said that they were left with no
choice but to seek international arbitration.
“We have followed the requisite
process, We wrote to the government of the United Republic of Tanzania
regarding our intent to file a case following the termination of our land
lease, but to date we have not gotten any response,” Mr Thomson said then.
It was further confirmed by
Tanzania’s Attorney General Dr Eliezer Feleshi that he was aware of the claims
and they were preparing to meet with the developer, however, it was never
confirmed whether the meeting ever took place.
Why the United Republic of Tanzania
But why has the developer chosen to
sue the United Republic of Tanzania instead of the Revolutionary Government of
Zanzibar which terminated the land lease?
According to international and local
law, Zanzibar, where the investment is located, is part of the United Republic
of Tanzania.
Therefore any acts of the Revolutionary
Government Zanzibar in respect of British investments, fall under the purview
of the 1994 agreement and makes the United Republic of Tanzania Government
(which includes Zanzibar) responsible for such decisions.
Tanzania and Britain bilateral treaty
The governments of Tanzania and the
United Kingdom of Great Britain and Northern Ireland on January 7, 1994 in Dar
es Salaam, signed a promotion and protection of investments agreement which
came into force in August 1996.
It is this agreement that protects
British investments in Tanzania and likewise Tanzanian investments in the
United Kingdom.
The agreement states that it
recognises that the encouragement and reciprocal protection under international
agreement of such investments will be conducive to the stimulation of
individual business initiative and will increase prosperity in both states.
It also states that investments of
nationals or companies of either Contracting Party shall not be nationalised,
expropriated or subjected to measures having effect equivalent to
nationalisation or expropriation in the territory of the other country except
for a public purpose related to the internal needs of the country on a
non-discriminatory basis and against prompt, adequate and effective
compensation.
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