Standard Chartered v TANESCO and the related ICSID cases against Tanzania

Background: IPTL and the 1995 power purchase agreement

The disputes trace back to a May 1995 power purchase agreement between TANESCO and Independent Power Tanzania Ltd (IPTL), under which IPTL was to supply 100MW, as reported by Allan Olingo in The EastAfrican ⁷. TANESCO had earlier brought its own ICSID case against IPTL, ARB/98/8, in which an award was issued on 12 July 2001 ⁸.

According to the ARB/15/41 award, the government of Tanzania signed an Implementation Agreement with IPTL on 8 June 1995 and agreed to a guarantee to pay IPTL sums TANESCO owed under the power purchase agreement if TANESCO failed to pay ⁶. Standard Chartered Bank (Hong Kong) says it holds IPTL's rights as assignee through a 1997 Security Deed, a 2005 sale by Danaharta and statutory assignment ⁶.

As reported by Olingo, IPTL went into liquidation in December 2008 after disputes among its shareholders ⁷. TANESCO said it had paid IPTL, and Standard Chartered said the payments should have gone to the bank ⁷.

ARB/10/12: Standard Chartered Bank v. Tanzania

Standard Chartered Bank, the British parent, filed a claim against Tanzania under the 1994 United Kingdom and Tanzania bilateral investment treaty ³. ICSID registered it on 11 June 2010 ³. The tribunal was William W. Park (President), Barton Legum and Michael C. Pryles ³.

The award of 2 November 2012 concluded that the tribunal lacked jurisdiction ⁴. The tribunal held that jurisdiction depended on a finding that the loans were investments "of" the claimant, and found that the parent took no investing action such as making a contribution or directing its Hong Kong subsidiary on the loans ⁴. italaw records the outcome as in favour of the respondent and lists an English Commercial Court judgment, EWHC 1640 (Comm) (2015), dated 9 June 2015 ⁹.

The claimant applied for annulment, registered on 11 February 2013 ³. The parties agreed to suspend that proceeding on 12 March 2013, and on 2 July 2025 the Secretary-General took note of its discontinuance ³.

ARB/10/20: the contract claim against TANESCO

ICSID registered the contract claim on 1 October 2010 ¹. The tribunal was Donald M. McRae (President), Zachary Douglas and Brigitte Stern ¹. It issued a Decision on Jurisdiction and Liability on 12 February 2014 and its award on 12 September 2016 ¹.

italaw records the outcome as in favour of the claimant, with damages of US$148,400,000 and interest on the amount owing under the power purchase agreement at simple three-month LIBOR plus 4% ². As reported by Olingo, the interest runs from 30 September 2015 until the date of the award ⁷.

Annulment of the ARB/10/20 award

TANESCO's application for annulment was registered on 13 January 2017 with a provisional stay of enforcement ¹. The ad hoc committee was Claus von Wobeser (President), Bertha Cooper-Rousseau and Christoph H. Schreuer ¹. It ruled on continuing the stay on 12 April 2017 and on terminating the stay on 25 May 2017 ¹. A hearing took place in London on 27 and 28 November 2017 ¹.

The committee issued its Decision on Annulment on 22 August 2018 ¹. As reported by Alison Ross of Global Arbitration Review on 24 August 2018, the committee upheld the award and rejected several grounds of annulment ¹⁰. Ross put the award at US$150 million. italaw records US$148,400,000 and Olingo reported US$148.4 million ^2,7. As reported by Olingo on 1 September 2018, the committee rejected several grounds submitted by TANESCO ⁷. The same report said TANESCO had paid more than US$600,000 in tribunal costs and that Tanzania would bear more than US$5.3 million in legal costs ⁷. No source opened for this page says the US$148.4 million award has been paid ^{1,2 7}.

ARB/15/41: the claim under the government guarantee

Standard Chartered Bank (Hong Kong) filed a second claim, this time against the United Republic of Tanzania under the Implementation Agreement ^5,6. ICSID registered it on 30 September 2015 ⁵. Tanzania proposed the disqualification of the claimant's appointee, Stanley Burnton, on 29 June 2016, and he resigned on 7 July 2016 ⁵. The tribunal that decided the case was Lawrence Boo (President), David Unterhalter and Kamal Hossain ⁵.

In its post-hearing brief the bank sought US$352,514,258, or in the alternative the balance of the facility agreement, stated as US$187,269,605 ⁶. Tanzania argued the assignments to the bank lacked its prior written consent and were invalid under Tanzanian law, and asked the tribunal to decline jurisdiction and dismiss the claims ⁶. The tribunal found that the government had given express written consent to the assignment ⁶.

The award was rendered on 11 October 2019 ⁵. The amount awarded, if any, is not confirmed in the portion of the award text that could be opened for this page ⁶. The ICSID case page lists no annulment proceeding ⁵.