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Biwater-Tanzania arbitration

Sewage systemIn August 2005, Biwater Gauff (Tanzania) Ltd. (BGT), a private water company, filed a request for arbitration with the International Centre for Settlement of Investment Disputes (ICSID) regarding a contractual dispute with the United Republic of Tanzania.  The dispute arises out of agreements entered into by BGT and Tanzania for the operation and management of the Dar es Salaam water system.  In May of 2005, Tanzania terminated the contract with BGT for its alleged failure to meet certain performance guarantees set forth in the agreements.  BGT brought the case before the ICSID stating that Tanzania’s termination had breached their agreements and resulted in an illegal expropriation of BGT’s investment. 

Tanzania launched the project to overhaul the water and sewerage infrastructure of Dar es Salaam with funding from the World Bank.  To receive this funding, Tanzania was required to award this work to a private contractor.  In 2003 the project was awarded to BGT.  BGT is a joint venture created by Biwater International Limited and HP Gauff Ingenieure GmbH & Co. for the purposes of the Tanzanian project; Biwater owns 80% of BGT and Gauff owns 20%. 

The proceedings of this arbitration have been kept confidential, and the details of the parties’ legal arguments are not available to the general public.  However, ICSID granted a group of interested parties (Tanzanian and international NGOs) permission to file an amicus curiae brief in support of the Tanzanian Government.  This amicus brief was filed in March 2007; its full text is available via a link below.  The brief argues that BGT’s acts and omissions caused its investment to fail and that investors in the water sector have a heightened level of responsibility because the success of a business venture in this area has a direct impact on the achievement of an essential human right - the right to clean and safe water.  The brief further argues that taking into consideration human rights and sustainable development, termination of the contract by a government, if done in good faith to prevent the worsening or abuse of human rights, should not be found to be a contractual breach, especially when a contract’s purpose was to promote and enhance the achievement of such rights.

On 24 July 2008, the arbitral tribunal issued its final decision in this case.  The tribunal declared that the Tanzanian Government had violated the terms of its bilateral investment treaty with the UK.  However, the tribunal declined to award BGT the monetary damages requested.

- Water: Campaigners cheer defeat of Biwater's £10m Tanzanian claim, Xan Rice, Guardian [UK], 29 Jul 2008
- The Water Margin, Xan Rice, Guardian [UK], 16 Aug 2007
- Flagship water privatisation fails in Tanzania, John Vidal, Guardian [UK], 25 May 2005

- [PDF] Bricks without Straw: the Confidentiality Order in Biwater Gauff, James Chalker, Sustainable Development Legal Assistance, Mar 2007

- Biwater: Biwater Response to Outcome of ICSID Arbitration, 28 Jul 2008
- Biwater: Statement About Biwater Gauff Tanzania, 1 Dec 2005
- World Bank: [PDF] Dar Es Salaam Water Supply and Sanitation Project - proposed amendments to legal agreements 17 Feb 2006
- World Bank: [PDF] Tanzania - Dar es Salaam Water Supply and Sanitation Project, 4 Feb 2003

Biwater Gauff (Tanzania) Limited and United Republic of Tanzania [ICSID proceeding]
- [PDF] Amicus Curiae Submission by Lawyers’ Environmental Action Team, Legal and Human Rights Centre, Tanzania Gender Networking Programme, Center for International Environmental Law, and International Institute for Sustainable Development, 26 Mar 2007

- ICSID: [PDF] Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania - Award, 24 Jul 2008 [final decision of arbitral tribunal declaring that Tanzania had violated the terms of its bilateral investment treaty with UK but declining to award monetary damages to BGT]
- ICSID: [PDF] Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania - Concurring and Dissenting Opinion, 24 Jul 2008
- ICSID: [PDF] Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania - Procedural Order No. 5, 2 Feb 2007 [granting amicus curie status to Lawyers’ Environmental Action Team, Legal and Human Rights Centre, Tanzania Gender Networking Programme, Center for International Environmental Law and International Institute for Sustainable Development]
- ICSID: [PDF] Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania - Procedural Order No. 3, 29 Sep 2006 [imposing certain confidentiality requirements on the parties]
- ICSID: [PDF] Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania - Procedural Order No. 1, 31 March 2006 [partially granting BGT’s request for provisional measures to preserve its rights with regard to certain bank accounts, assets and documents]

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Article
26 March 2007

CIEL and partner NGOs filed an amicus curiae brief in the Biwater-Tanzania case

Author: CIEL

On March 26, 2007, CIEL and partner NGOs filed an amicus curiae brief in the Biwater-Tanzania case. This investment dispute before an ICSID Tribunal is at the heart of the controversy between the Tanzanian Government and a foreign investor concerning the provision of water services in Dar es Salaam from 2003 until 2005.

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Article
26 March 2007

[PDF] full text: Amicus Curiae Submission

Author: The Lawyers' Environmental Action Team, The Legal and Human Rights Centre, Tanzania Gender Networking Programme, The Center for International Environmental Law, Intl. Institute for Sustainable Development

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Article
16 April 2007

Tanzania: $25 Million At Stake Over Dar Water Contract

Author: Wilfred Edwin, East African [Kenya]

Tanzania may be forced to pay $25 million to a British company [Biwater] whose water management contract it cancelled in 2005...[A] landmark hearing at the International Centre for the Settlement of Investment Disputes (ICSID) may bring into sharp focus how current international dispute settlement mechanisms favour powerful transnationals at the expense of developing countries.

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Article
1 June 2007

Case Studies: City Water Tanzania - Water Partnerships for Dar es Salaam

Author: Oana Branzei - Assistant Professor at Ivey School of Business - Univ. of Western Ontario & Kevin McKague - Senior Research Fellow at York Univ. [Canada]

This case examines how the Tanzania government intends to address a pressing deterioration in the infrastructure and services of Dar es Salaam's Water and Sewage Authority... This multi-part case series is ideally suited for...courses in strategy and sustainability to illustrate the types of ongoing tensions...that influence the formation and performance of public-private partnerships... [It also summarizes] the break up of City Water Tanzania and its aftermath, including litigation and forgone opportunities to meet the needs of the local residents. [also refers to Biwater]

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Article
16 August 2007

The water margin [Tanzania]

Author: Xan Rice, Guardian [UK]

[The June 2005 expulsion from Tanzania of] three...senior managers at City Water, a consortium responsible for managing Dar es Salaam's water supply...signalled the end of a flagship World Bank privatisation deal... And it marked the beginning of a legal action...[by] Biwater plc, the...company that led the consortium...against the government of one of the world's poorest countries... [T]he consortium's other partners were...Gauff and...Superdoll Trailer Manufacturing... [An] unpublished World Bank report said [of City Water], "The primary assumption...was that it would be very hard, if not impossible, for the private operator to perform worse than Dawasa [Dar es Salaam Water and Sewage Authority]. But that is what happened."... [W]ater prices [rose] sharply, yet there had been no discernible improvement in supply, reliability and quality... On May 13 2005, [Tanzania] decided to cancel City Water's contract... The company...[lodged a case] at...[an] affiliate of the World Bank, called the International Centre for Settlement of Investment Disputes... A decade ago, it would have been unusual for a company to launch a formal claim against a foreign government. What has changed that is the explosion in the number of bilateral investment treaties...[which] give commercial companies certain guarantees when they invest overseas...

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Article
17 October 2007

How top London law firms help vulture funds devour their prey

Author: Ashley Seager & James Lewis, Guardian (UK)

…Vulture funds buy up sovereign debt issued by poor countries at a fraction of its face value, then sue the countries in courts…for their full face value plus interest… A paper prepared for the IMF/World Bank meetings this week shows there are now $1.8bn of lawsuits against poor countries… [T]he report…shows that of the 24 countries that have received debt cancellation under the Heavily Indebted Poor Countries initiative, 11 have been targeted for legal action by private creditors… Top London law firms [refers to Allen & Overy (A&O), Weil Gotshal, Dechert] are reaping the benefits from bringing many of the vulture funds' cases to court in London… [includes comments by Allen & Overy, Dechert, and Weil Gotshal; also refers to Donegal International, Elliott Associates, Walker International, Biwater, Kensington International]

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Article
11 January 2008

Tanzania wins £3m damages from Biwater subsidiary

Author: Ashley Seager, Guardian [UK]

Tanzania has won more than £3m from a subsidiary of British company Biwater in a long-running dispute over a controversial contract to run the water system of Dar es Salaam. The Tanzanian government privatised its water system and handed control to Biwater subsidiary City Water Services in 2003. But then problems with the water supply led the government to seize control back from CWS in 2005…. Now a London tribunal has thrown out a case brought by CWS under the rules of the United Nations Commission on International Trade Law…[finding] that water and sewerage services had deteriorated under CWS's management….

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Article
24 July 2008

[PDF] Biwater Gauff (Tanzania) Ltd. v. Republic of Tanzania - Award

Author: International Centre for Settlement of Investment Disputes

[Text of final decision of ICSID arbitral tribunal]

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Article
24 July 2008

[PDF] Biwater Gauff (Tanzania) Ltd. v. Republic of Tanzania - Concurring and Dissenting Opinion

Author: International Centre for the Settlement of Investment Disputes

[Full text of concurring and dissenting opinion of arbitral tribunal.]

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Article
28 July 2008

Biwater Response to Outcome of ICSID Arbitration

Author: Biwater

Biwater is pleased that an ICSID Arbitral Tribunal has upheld its claim that the Government of Tanzania broke the terms of the Bilateral Investment Treaty (BIT) between the UK and Tanzania on four separate counts….However, although the Tribunal awarded declaratory relief in respect of the…violations (in the form of a declaration of wrongdoing), it decided not to award damages on the technical ground that it did not consider that Biwater had proved that the violations in question caused loss…. While the award of declaratory relief is a welcome vindication of Biwater's claim against Tanzania, the Tribunal's failure to provide a remedy through a damages award is frustrating.

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