President Robert Mugabe of Zimbabwe, who has been in power since 1980, was re-elected to another term on July 31, 2013. On August 6, 2013, the government announced plans to seize control of foreign-owned mining interests, with no compensation in return, as part of a program to accumulate assets worth US$ 7 billion. Zimbabwe has a high concentration of foreign investment in platinum, gold, diamond and aluminum businesses. The program aims to force foreign companies to cede 51% of their assets to local investors or to the government. On August 7, 2013, Mugabe’s Zanu-PF party announced it will launch a new stock exchange “in which only blacks [would] be able to trade shares in foreign owned companies it plans to seize.”3 Zimbabwe is no stranger to such large-scale expropriations. In 2000, President Mugabe launched the controversial fast-track land reforms, seizing the majority of the country’s 4,500 commercial farms without providing compensation. Faced with this new wave of State-sponsored expropriations, what legal options are available to international mining investors active in Zimbabwe?
Foreign mining companies with investments in Zimbabwe whose assets are seized as a result of Zimbabwe’s actions may be able to bring compensation claims against Zimbabwe before international investment arbitration tribunals. Compensation claims are not restricted to active mining properties as exploration and development properties may also have significant value that can be determined by expert means on an independent basis. Zimbabwe has entered into a number of bilateral investment treaties (“BITs”) and the treaties that are in force may be relied upon by investors to bring claims against Zimbabwe. The bilateral investment treaties that are currently in force include those between Zimbabwe and China, Czech Republic, Denmark, Germany, the Netherlands and Switzerland, respectively. Bilateral investment treaties entitle investors from one State party to submit claims against the other State party to international arbitration. Even if no treaty exists between an investor’s home State and Zimbabwe, the investor may be able to bring claims under a treaty between Zimbabwe and a third country if its investment is held through a subsidiary incorporated in that country.
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Topics: Arbitration, Bilateral Investment Treaties, Foreign Corporations, Foreign Investment, Investors, Metals, Mining, Robert Mugabe, UNCITRAL
Published In: Alternative Dispute Resolution (ADR) Updates, General Business Updates, Energy & Utilities Updates, Finance & Banking Updates, International Trade Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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