Will Tanzania end ‘unfriendly’ pact with Netherlands?

Saturday September 29 2018

A street in Dar es Salaam.

A street in Dar es Salaam. The Netherlands has interests in oil and gas in Tanzania. FILE PHOTO | NMG 

CHRISTOPHER KIDANKA
By CHRISTOPHER KIDANKA
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Tanzania was on Friday racing against time as the deadline for terminating its 17-year-old Bilateral Investment Treaty with the Netherlands, which has been viewed as oppressive, drew close.

The BIT, signed in 2001 and effected in 2004, has been opposed by civil society lobbies in both Tanzania and the Netherlands as biased towards the Dutch and not people-centred.

If Tanzania misses the October 1 deadline to apply for termination, it could be exposed to legal challenge at international tribunals if it enters into other investment agreements with other parties, as the pact prohibits Tanzania from entering into other agreements that may be considered better by the Dutch and would not change or amend any law or policy that may affect Dutch investments.

Under this BIT, Dutch investors are allowed to take the Tanzanian government to the International Centre for Settlement of Investment Disputes.

Tanzania was expected to file for termination of the BIT by September 28, the last working day before October 1.

“Tanzania will have to notify The Netherlands by Friday, 28th September 2018, because it is the last working day,” said Amani Mhinda, executive director of HakiMadini, one of 10 lobbies that have been pushing for termination or renegotiation of the BIT.

“If both sides miss the October 1 deadline, we will be stuck with this treaty until April 1, 2044,” said Dr Burghard Ilge, a senior policy officer at Both ENDS, a Dutch lobby.

Unlike other BITs, the Tanzania-Dutch one renews automatically if neither party issues a notice of intention to terminate or renegotiate at least six months after its expiry.

While the John Magufuli administration has been inking bilateral agreements with China and other economic blocs, it has also reviewed and enacted new laws covering mining and oil and gas.

These could expose the country to legal challenges, considering Article 1 of the treaty, which defines investments as every kind of asset, movable and immovable, property or claims to money, and any performance having an economic value.

This means that Dutch investors could even sue Tanzania if they can show that a measure taken by the country has caused a loss of their brand value or any other "intangible assets",” said Dr Ilge, adding that not only does this apply to Dutch companies but also any companies that have a legal presence in the Netherlands, from where they invest in Tanzania.

In July this year, eight civil society lobbies and two from the Netherlands met in Dar es Salaam to review the BIT and started a campaign for Dar es Salaam to exit.

Mr Mhinda and Tanzania Law Society programmes manager Stephen Msechu said they communicated with the government to file a notice before the deadline, termination of the BIT, but by Friday nothing had been done.

“We know from the Netherlands embassy that Tanzania is yet to send any communication with regard to this,” said Mr Mhinda.

Contacted, Attorney General Dr Adelardus Kilangi only said, “the government is aware about this, don’t worry.”

Research shows that in case a country loses such a dispute settlement, it will have to foot the cost which is usually not less than $8 million, and the remedy paid is not less than $522 million; which is unbearable, said Mr Mhinda.

The Netherlands has interests in oil and gas in Tanzania. Shell runs a fully-fledged integrated gas business in Tanzania. Shell Tanzania’s main assets are two offshore deep-water blocks (Block 1 & 4) held in partnership with Ophir Energy and Pavilion Energy. The blocks hold some 16 Trillion Cubic Feet of recoverable gas. Shell Oil Company is a subsidiary of Royal Dutch Shell.

Another area of Dutch interest is poultry production. The Netherlands is a leader in advanced technology in poultry production especially in hatcheries and control in avian disease.

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