The dispute

Nachingwea v Tanzania concerned the Ntaka Hill Nickel Project in south-eastern Tanzania. The claimants’ group had developed the project over many years and held rights associated with mining licences and retention rights over the project area. The dispute arose following legislative and regulatory reforms to Tanzania’s mining framework, including the abolition of the legal basis for retention licences, cancellation of the relevant licence and the subsequent tendering of the affected area.¹ The case therefore raised a central question in natural-resource investment law:

When does a State’s restructuring of its mining regime become an expropriation of existing investment rights?

The State’s regulatory argument

Tanzania argued that it was entitled to reform its mining legislation as a sovereign State. The Tribunal accepted the starting proposition: States retain legislative and regulatory powers. But it emphasised that sovereignty does not eliminate international obligations. Once Tanzania had undertaken treaty commitments under the UK–Tanzania BIT, those commitments formed part of the legal framework governing its relationship with protected investors.² The Tribunal consequently distinguished between the validity of Tanzanian legislation under domestic law and its compatibility with international obligations.

That distinction is fundamental.The arbitral tribunal was not sitting as a Tanzanian constitutional court. It was deciding whether Tanzania’s conduct complied with the BIT.³

The expropriation analysis

The parties agreed that an expropriation required substantial and permanent deprivation and that the State could rely, where applicable, upon the police-powers doctrine.⁴ The Tribunal found that the relevant investment was permanently deprived when the 2018 Regulations took effect and the retention licence had been cancelled and the underlying area reverted to the State.⁵ The significance lies in the Tribunal’s treatment of legal rights as the investment. The investor did not need to demonstrate that Tanzania had physically seized machinery or occupied a mine.The deprivation of legally protected mining rights could itself constitute the relevant economic interference.

Regulation versus expropriation

The Tribunal considered Tanzania’s arguments concerning public purpose, mining-sector reform and the desire to ensure that mineral resources generated greater economic benefits. Those objectives were treated as relevant to the analysis, but a public purpose did not automatically prevent a finding of expropriation. The decisive question remained whether the State’s measures substantially and permanently deprived the claimants of their investment without satisfying the applicable requirements of the BIT.⁶ This distinction makes Nachingwea especially important for natural-resource governance. A State may restructure a mining regime, but where existing rights are extinguished and the investor loses the ability to participate in the project, treaty protection may become engaged.

The award

The Tribunal ultimately found that Tanzania had unlawfully expropriated the claimants’ investment in breach of Article 5 of the UK–Tanzania BIT. It awarded approximately US$76.7 million in damages, together with compound interest and specified costs.⁷ The Tribunal did not find breaches of every treaty standard pleaded by the claimants. The published case record identifies indirect expropriation as the treaty breach established by the Tribunal.⁸ This is important analytically because it prevents Nachingwea from being reduced to the proposition that every controversial mining reform violates FET or other investment standards. The award was more specific. The decisive legal finding was expropriation.

The deeper question

Nachingwea therefore presents a more difficult regulatory-space problem than a simple “State versus investor” narrative suggests. The question is not whether governments may reform natural-resource legislation. They plainly can. The question is how far legislative reform can go before existing investment rights become sufficiently deprived to engage the treaty’s expropriation standard. That distinction is central to contemporary investment governance.

Mining regulation is inherently dynamic. Governments may alter licensing systems, redesign concession structures, increase public participation, revise environmental standards or change the distribution of economic benefits. The challenge for investment law is determining when such reform remains regulation and when the legal and economic consequences for existing investors become compensable expropriation.

Case takeaway

Nachingwea demonstrates that the international-law scrutiny of mining reform may centre not on the State’s power to legislate, but on the effect of legislative and regulatory measures on legally protected investment rights.

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FOOTNOTES

1. Nachingwea UK Limited, Ntaka Nickel Holdings Limited and Nachingwea Nickel Limited v United Republic of Tanzania (ICSID Case No ARB/20/38), Award, 14 July 2023, paras 51–53, 102–04. ↩︎
2. ibid, paras 177–79. ↩︎
3. ibid, para 178. ↩︎
4. ibid, paras 190–91. ↩︎
5. ibid, paras 190–91. ↩︎
6. ibid, paras 239, 271–72. ↩︎
7. ibid, para 413. ↩︎
8. UNCTAD, Investment Dispute Settlement Navigator, Nachingwea and others v Tanzania, recording indirect expropriation as the breach found and the award of US$76.70 million. ↩︎