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Biwater Gauff Ltd v. United Republic of Tanzania

Country/Territory
Tanzania, Un. Rep. of
Type of court
Others
Date
Jul 24, 2008
Source
UNEP, InforMEA
Court name
International Centre for Settlement of Investment Disputes
Seat of court
Washington D. C.
Reference number
ICSID Case No. ARB/05/22
Language
English
Subject
Water, Legal questions
Abstract

The World Bank funded Tanzania for a project to repair, upgrade and expand the water and sewage infrastructure in Dar es Salaam. A condition of the fund was that Tanzania had to appoint a private company to manage and operate this project.

Biwater Gauff, a British and German company, was chosen to oversee the infrastructure project and entered into subcontracts with local Tanzanian companies. Later, the assets of one such subcontractor, City Water, were seized, new management was installed and the whole business was overtaken by the Tanzanian Government and the Dar el Salaam Water and Sewage Authority.

The plaintiff, Biwater Gauff, claims that in doing so, Tanzania breached the terms of a bilateral investment treaty between the UK and Tanzania for the Promotion and Protection of Investments (BIT) and violated the terms of the Tanzanian Investment Act. They claimed that Tanzania had expropriated its assets, failed to act for a public purpose, acted on a discriminatory basis towards the plaintiff and did not provide adequate compensation. Tanzania argued that retaking possession of City Water’s assets was justified, because the company did not have sufficient funds to perform infrastructure improvements so that it created a risk to public health and welfare.

The Tribunal held that terminating City Water’s management personnel was an expropriation of the plaintiff’s investment under Article 5 of the BIT. Furthermore, it was decided that Tanzania indeed acted in a discriminatory manner towards the plaintiff and that they failed to fulfil the public’s expectation regarding a quick improvement of the water infrastructure, thus violating Article 2(2) of the BIT. All of the plaintiff’s additional claims were rejected.

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