The Biwater - Tanzania Dispute

Arbitration of international investment disputes is one of the fastest growing areas of international dispute resolution.  Based on UNCTAD estimates of March 2005, investors have launched what is believed to be over 220 arbitrations against host states.  Exact numbers cannot be known as many arbitrations take place in complete secrecy.  Over two-thirds of these known disputes have been filed since 2003, the great majority against developing states and states in transition.  Several awards against developing countries have now reached into the hundreds of million dollar range.  Many stakeholders are apprehensive about the approximately 2,400 Bilateral Investment Treaties (BITs) and their integrated arbitration mechanisms, which allow investors to sue host states.  A number of cases have involved investments in the area of essential services, such as water delivery and sewage.  The Cochabamba, Bolivia case and a suit by the French water company Générale des Eaux against the Argentine Republic are among the best known.

This presentation will address the international investment arbitration process involving water cases, specifically focusing on the current Biwater-Tanzania dispute pending at the International Center for Settlement of Investment Disputes (ICSID), which functions under the auspices of the World Bank.  In that dispute the British water company Biwater is suing the United Republic of Tanzania alleging that its investment has been expropriated.  The Tanzanian government, on the other hand, announced in May 2005 that it had terminated its contract with Biwater because the company had failed in its promise to provide clean drinking water to millions of people in Dar es Salaam.  In particular, Tanzania accused the company of failing to install domestic pipework, not spending the money the company had promised, declining water quality, and decreased revenues.  The presentation will introduce a discussion about the appropriateness of deciding major public policy issues relating to water services in a secretive arbitration mechanism as well as the need for responsible behavior of investors in sectors that directly affect the ability of millions of people to access water and sanitation services, and thus to exercise the right to an adequate standard of living and other fundamental human rights such as health, food, housing and education.