The effect of section 11 of the natural wealth and resources (permanent sovereignty) act no 5 of 2017 on bilateral investment treaty protection in Tanzania

Abstract

In 2017, Tanzania introduced a new legislation in the extractive sector, the Natural Wealth and Resources (Permanent Sovereignty) Act No. 5 of 2017 (‘the Act’). The legislation prohibits the referral of cases to international arbitration forums regardless of the fact the extractive sector in Tanzania largely depends on foreign direct investments for its growth and development. Tanzania is a signatory to 20 bilateral investment treaties, two (2) of which were terminated, eight (8) were not yet in force, and the rest were in force. Bilateral investment treaties are agreements designed to safeguard business operations in the host state against expropriation and unpredictable regulatory regimes. The primary aim of this study is to determine whether there is compatibility between section 11 of the Act and the terms of the selected BIT(s) regarding the adjudication of disputes arising out of the exploitation and extraction of natural wealth resources. The study applies an exhaustive literature review of the state of Tanzania's extractive sector from Internet sources and published academic writings. The primary sources include the Natural Wealth and Resources (Permanent Sovereignty) Act No.5 of 2017 and five (5) selected bilateral investment treaties. The bilateral investment treaties were selected based on the financial investment already invested into Tanzania's extractive sector. The study analysed the five selected BITs to which Tanzania is a signatory against the introduced section 11 of the Act.4 The findings suggest that Section 11 of the Act conflicts with the bilateral investment treaties to which Tanzania is a signatory.