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Tanzania, British developer head back to ICSID after stalled talks
What you need to know:
- The Citizen has reliably learned that no agreement had been reached by the expiry of the ICSID deadline, with no new offers put forward to resolve the ongoing investment issue.
Dar es Salaam. Tanzania and British developer Pennyroyal Limited could find themselves back to the International Centre for Settlement of Investment Disputes (ICSID) after talks between the two parties failed to yield an agreement.
Although the specifics of Pennyroyal’s demands remain unclear, the project in question, was originally valued at $1.6 billion (approximately Sh4 trillion) upon completion.
The Citizen has reliably learned that no agreement had been reached by the expiry of the ICSID deadline, with no new offers put forward to resolve the ongoing investment issue.
In July 2024, ICSID extended the suspension of proceedings between Pennyroyal and the Tanzanian government to allow both sides to pursue negotiations for an out-of-court settlement.
This extension expired on January 12, 2025, but it appears the negotiations did not reach a resolution.
Attempts to reach officials from both the Attorney General’s office and the law firm representing Pennyroyal for comments on the status of the talks were unsuccessful.
The dispute stems from the Tanzanian government’s appropriation of 411 hectares of land in Matemwe, Zanzibar, which was originally leased to Pennyroyal for its Blue Amber Resort project. The case was registered in July 2023, with the tribunal’s first session held on December 14, 2023.
Details on the ICSID website reveal that the first suspension of proceedings was agreed upon by both parties from April 29 to July 16, 2024.
In July 2024, Tanzania’s then Solicitor General confirmed that talks were ongoing but withheld further details on the status of the arbitration process confirming that Government Negotiation Team (GNT) was established to handle the matter.
If a settlement is eventually reached, it would mark Tanzania’s third out-of-court resolution in under a year.
In October 2023, Tanzania settled a dispute with Canadian mining company Winshear Gold Corp, agreeing to pay $30 million (Sh75 billion) over the expropriation of its SMP Gold Project in southwest Tanzania. Winshear had initially sought over Sh250 billion in compensation. In November 2024, Tanzania reached an agreement to amicably settle its dispute with Canadian mining company Montero Mining & Exploration Ltd.
Under the settlement, Montero will receive a total of $27 million, which is 39 percent of the $70 million initially demanded by the company.
The settlement brought to a close a nearly seven-year-long legal battle over the expropriation of the Wigu Hill rare earth element project.
Blue Amber Resort development suspended
The dispute traces back to August 2022, when Pennyroyal announced the suspension of its Blue Amber Resort development after the Zanzibar authorities revoked its building permit. A notice from the Zanzibar Investment Promotion Authority (ZIPA), dated July 25, 2022, informed the developer that its building permit could not be renewed due to the termination of the Land Lease Agreement by the Ministry of Lands in January 2022. Initial reports indicated that buyers who had invested in villas were expecting to receive their units by December 2022, but the cancellation of the building permit disrupted the project’s timeline.
Read: Tanzania and British developer to continue with out-of-court negotiations
At the time of suspension, Pennyroyal had reportedly invested $55 million in the Blue Amber development, according to audited reports presented to ZIPA.
In 2014, Pennyroyal had acquired a 411-hectare land lease from the Zanzibar government to develop the Blue Amber Resort. A project design was submitted to ZIPA in 2017, which subsequently granted the developer Strategic Investor status.
This was followed by the issuance of an environmental certificate by the Zanzibar Environmental Management Council (ZEMC) later that year. All of these approvals were granted before any construction work began.
The ambitious project included plans for five-star hotels, thousands of villas and apartments, a private airport, an international school, an underwater nightclub, and a golf course.
However, in November 2021, Pennyroyal received notice that two plots, 1107 and 1118, should be returned to their original owners, despite being part of the land already under development.
In February 2022, a court order instructed that the status quo be maintained, allowing the project to proceed. Pennyroyal, however, claims that these two plots were part of its original lease, which was approved by ZIPA.
The company also stated that the government failed to appear in court during the proceedings, resulting in a one-sided court decision. As the dispute continues, the fate of the Blue Amber Resort and the land in question remains uncertain.
Both parties could now face the prospect of returning to ICSID to resolve the issue, with the potential for a prolonged legal battle ahead.
