ESQ Legal Practice Magazine JUNE 2014 EDITION | Page 22

TANZANIAN
COURTS INJUNCT ICSID
PROCEEDINGS
On 23 April 2014, the Tanzanian High Court ordered both parties in ongoing ICSID arbitration proceedings, Standard Chartered Bank (Hong
Kong) Limited (SCB HK) and the Tanzania Electric Supply Company
(Tanesco), to refrain from “enforcing, complying with or
operationalising” a decision made by the Tribunal in those ICSID
proceedings on 12 February 2014.

T

his injunction was
granted on an exparte basis. It is a
clear breach of the
ICSID Convention
and of Tanzania's international
law obligations. If it is not
reversed, it will be of
significant concern to other
international investors in
Tanzania, and will likely
discourage new investment.
One of the key advantages of
the ICSID system is that it is
self-contained and is intended
to be insulated from
interference by local courts.
This is made clear throughout
the ICSID Convention, to
which Tanzania is a party. Of
most immediate relevance, the
ICSID Convention provides
that:
 consent to ICSID
arbitration is “… deemed
consent to such arbitration
to the exclusion of any other
remedy” (Article 26); and
 an ICSID Tribunal is “the
judge of its own
competence” (Article
41(1)).

22 I EsQ legal practice

Any attempt by Tanzania to
punish a breach of its
injunction would fall foul of
ICSID Convention Articles 21
and 22 which give immunity
from legal process to parties,
lawyers and witnesses
involved in ICSID
proceedings.
The ICSID proceedings
between SCB HK (represented
by Herbert Smith Freehills)
and Tanesco were commenced
in 2010, and were brought
pursuant to a Power Purchase
Agreement relating to a power
plant at Dar Es Salaam,
Tanzania. SCB HK brought the
ICSID arbitration as assignee
of the agreement. The
arbitration relates to the tariff
payable under that agreement.
In the Power Purchase
Agreement, Tanesco
consented to ICSID
arbitration. In a related
agreement, the Government of
Tanzania itself expressly
approved Tanesco's consent to
ICSID arbitration. After a
lengthy process, in its

“Decision on Jurisdiction and
Liability” of 12 February 2014
the Tribunal (i) concluded that
it had jurisdiction over the
dispute, (ii) made a number of
findings on the merits of the
dispute and (iii) ordered the
parties in the light of its
findings to renegotiate the
disputed tariff.
The ex-parte injunction of 23
April 2014 seeks to prevent the
implementation of this
decision and continuation of
the ICSID proceedings. It is a
clear breach of the provisions
of the ICSID Convention
highlighted above. As such the
actions of the Tanzanian High
Court (which forms part of the
Tanzanian State for the
purposes of international law)
put Tanzania in breach of its
international law obligations.
If the injunction is not lifted,
two potentially serious
consequences arise for
Tanzania:
First, Tanzania would be in
continuing breach of the
ICSID Convention. Tanzania

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