arbitration / adr news

Tanzania rubbishes ATCL plane seizure threats by Australian company

APRIL 16, 2023

By: Louis Kalumbia

This week, allegations in the international media claimed that the exploration company had targeted ATCL aeroplanes in an effort to persuade the Tanzanian government to pay close to $100 million in reparations for a failed nickel project. The company claims to have lost millions in a nickel project in the country and is therefore seeking significant compensation from the government. Though the value of ATCL aircraft is not enough to cover the claim, Indiana Resources hopes that the attachment of high-profile national assets may force the government to act accordingly. Indiana Resources is an Australian-based mining company exploring rare earth elements, gold, and base metals. The company is pursuing an arbitration claim against the government of Tanzania for illegal expropriation and the loss of the Ntaka Hill Nickel Project. However, Tanzania’s  Attorney General, Dr Eliezer Feleshi, on Saturday told The Citizen that the circulating information over ATCL seizure threats is “mere speculation because there was an ongoing case that was at the hearing stage. He said the government was not ready to follow the company’s trend of disseminating information. “We have been going on with submissions since January to date. Once these procedures are completed, an appropriate report will be officially communicated,” he said. Furthermore, he said court procedures prohibit discussing issues that are being discussed at the court before the judgement has been issued. “It is better that you contact lawyers representing the company if they can shed light on the reasons behind what is happening. Definitely, they will be against what is happening because they know the taboos,” he said over the phone. In September 2020, Indiana Resources lodged a request for arbitration with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). The arbitration request includes background information on the issue and an estimate of the compensation due for the loss of the project following the actions of the Tanzanian government. They claimed payment of over $95 million in compensation, and if the state fails to pay, Indiana will consider seizing national assets, including aircraft. The company is confident that it presented a clear case for nearly $100 million in compensation. Although the date for the decision was not stated, Indiana hopes it will be before the fourth quarter of 2023. The potential attachment of a state-owned aircraft is a shock to many, but it would not be the first time an external organisation has attached ATCL aircraft. Last year, an Airbus A220-300 was seized in the Netherlands over a land rights dispute between Tanzania and two Swedish investors. Given that aircraft are on the move in airports globally and outside their home countries, it is an easy target for seizure. Indeed, aircraft have been seized globally as a result of outstanding claims, and the threat of seizing millions of aircraft is one routinely used by private companies suing countries. Pakistan International Airlines saw one of its 777s temporarily attached in Malaysia, while Air India was threatened with seizure of its wide-bodies in the US if it did pay out a dispute over billions in taxation before reaching a deal to avoid this. Indiana Resources did not state which aircraft it would target to receive its compensation from Tanzania. According to ch-aviation’s information, the flag carrier currently has a fleet of 12 active and inactive aircraft valued at $345.84 million. The fleet includes four Airbus A220-300s, two Boeing 787-8s, five DHC-8-Q300s, and one DHC-8-Q400, all wholly owned by the Tanzanian government. The value of one aircraft may not be enough to cover the claim, but the seizure of such an asset may force the state into action, as we saw with Pakistan International Airlines (although for a much smaller amount of $7 million). In 2015, the former Tanzanian government made the revival of the national carrier a top priority. Since 2016, Air Tanzania has seen sturdy growth by adding new aircraft to its fleet and new routes to its network. It is currently awaiting delivery of its first Boeing 767 freighter. However, the airline is experiencing challenges with its fleet. Three of its A220s have been grounded since late last year due to technical issues with the Pratt & Whitney engines. Additionally, the delivery of the long-awaited freighter was postponed, and its invoice was inflated by $49 million. Amid these challenges, the attachment of a valuable aircraft is the last thing Air Tanzania needs.

The Source: The Citizen