“A British water company thrown out of Tanzania over a bungled privatisation deal has failed in its bid to win up to £10m in damages.
Biwater, whose local management team was deported from Dar es Salaam in 2005, took Tanzania’s government to the World Bank’s business tribunal in 2006, arguing that its assets had been expropriated and its contract illegally terminated.
The claim outraged anti-poverty campaigners who say the privatisation contract was forced on Tanzania, and accused the Biwater-led consortium, known as City Water, of performing worse than the state-run utility it replaced.
The International Centre for the Settlement of Investment of Disputes (ICSID) ruled on Friday [25 July 2008] that Tanzania’s government had violated its bilateral investment treaty with the UK by expelling City Water.
But the Hague-based tribunal said there were no damages to award as the company’s value was “nil” at the time of expropriation. Both parties were liable for their own legal costs – running into millions of pounds – and for the cost of arbitration, the judges ruled.
The UK-based World Development Movement [...] described the verdict as “a good day for the people of Tanzania“. In a statement, Biwater director Larry Magor said: “The rationale [not to award damages] is hard to fathom.”
Read more: Xan Rice, The Guardian, 28 July 2008