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Samia Thinks the Idea of Domestic Arbitration Scares Investors Away from Tanzania

She says it is “unjust” to force investors to seek arbitration domestically.

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Dar es Salaam. President Samia Suluhu Hassan on Thursday directed Attorney General Eliezer Feleshi to look into laws and regulations governing foreign investments in Tanzania with the view of reforming them to allow foreign investors to seek arbitration outside the country.

Opening the general meeting of the State Attorneys Association in the capital Dodoma, the Head of State said that it was not “just” to force people who have invested their money in the country to seek arbitration locally.

“Some investors shun [Tanzania] because of that reason,” President Samia revealed. “I have living examples in my hands. There are like three or four big [development] projects that were to be carried out in the country but they were cancelled because of this requirement.”

According to President Samia, the investors demanded that investment-related disputes be resolved by a third party. Because the government could not guarantee that, the investors had to find another place to put their money.

“I think, AG, we need to look at our investment laws very carefully,” President Samia said. “There are disputes that truly could be arbitrated domestically. But there are some disputes, to a serious investor, would not make sense to arbitrate locally. They won’t come. They will run away.”

During the administration of her predecessor John Magufuli, Tanzania revised a number of mining laws and regulations with the view of giving the East African nation more control over its natural resources and also re-establish sovereignty over key areas of economic policy.

For example, in 2020, Tanzania adopted the 2020 Arbitration Act which replaced the Arbitration Act of 2002, which was thought to be inadequate to handle modern international disputes.

A 2020 paper by a Dar es Salaam-based international lawyer Amne Suedi advised the government to review the different dispute settlement options available and which are most appropriate for which types of dispute. 

“With the Africanization of dispute settlement in mind, options could include judicial and non-judicial, regional, and national options,” Suedi, who specializes in international investments and African markets, wrote.

The CEO and founder of shiKana Law Group added that opportunity for Tanzania, as far as dispute settlement is concerned, lies in the East Africa Court of Justice.

“[The EACJ] enacted its arbitration rules in 2004 but to date, none of the member states, including Tanzania, have opted to use it as a mechanism for dispute settlement,” Suedi wrote. “Here lies an opportunity for the future.”

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