Abstract
In today's socioeconomic activities, the avoidance of disputes is almost impossible. As much as there are different methods used for controlling and preventing disputes in society, the fact that disputes cannot be avoided completely makes it necessary to have mechanisms to resolve the same when they emerge. Mining activities are not immune to conflicts between different stakeholders in the sector. Therefore, there is a need for a dispute resolution mechanism to ensure the prosperity of the sector, which is vital for the global economy. Tanzania, being one of the jurisdictions with significant mining activities, has put in place different modes of dispute settlement. This paper examines various modes of settling mining disputes that different stakeholders in Tanzania's jurisdiction can use.
Introduction
A dispute is a conflict or controversy, especially one that has given rise to a particular lawsuit.1 Different types of dispute affect the mining sector worldwide due to different stakeholders in the industry that might sometimes have conflicting interests. These stakeholders in the mining sector include governments, mining corporations, environmental activists, human rights defenders, service providers, supply chain partners, financial institutions and the local community where the mining is located. The list is not exhaustive.
Various types of dispute exist in the sector, including, but not limited to, disputes related to tax, regulatory compliance, labour, finance and investment, infrastructure, health and safety, the environment and ESG issues. In Tanzania, the mining sector comprises both small and large-scale operations. Tanzania is among the countries with abundant mineral resources. The database indicates that the minerals found in Tanzania are grouped into metallic minerals, such as gold, iron ore, nickel, copper, cobalt and silver, gemstones, such as diamonds, tanzanite, ruby, garnet and pearl, and industrial minerals, such as limestone, soda ash, gypsum and phosphates. Another mineral group found in Tanzania is energy source minerals, such as coal and uranium, and construction minerals, such as aggregates, gravel, sand and dimension stones.2 Given the widespread operation of the mining sector in Tanzania, disputes in the industry are inevitable. This has made it necessary to establish a legal regime within which mining disputes can be resolved. The dispute settlement mechanism depends on the nature of the dispute. This article will therefore give a general overview of dispute settlement mechanisms available in Tanzania based on the nature of the dispute.
Investment Disputes
Investment disputes are disputes between investors and the government. These disputes are based on international treaties and international contracts. In the case of Salini Costruttori S.p.A. v. Jordan (ICSID Case No. ARB/02/13), the Arbitral Tribunal held that for a dispute to be considered an investment dispute, it must arise out of an investment, which typically involves a commitment of capital or other resources, an expectation of gain or profit and a certain degree of risk. Additionally, the dispute must involve a legal obligation, such as a breach of a contract, treaty or domestic law, that directly relates to the investment. In Tanzania, investment disputes are generally governed by the Tanzania Investment Act3 which provides a mechanism for settling investment disputes. The Act provides that if there is a dispute between an investor and the government with respect to business enterprises, efforts will be made to have the matter settled amicably. Section 33 of the Investment Act provides three ways to settle the investment dispute. These mechanisms for settling the dispute are as follows: in accordance with the Arbitration Act of Tanzania; in accordance with the rules of procedure for arbitration of the International Centre for Settlement of Investment Disputes (ICSID); or within the framework of any bilateral or multilateral agreement on investment protection agreed to by the government of the United Republic of Tanzania and the government of the country where the investor originates.
This would mean that if a mining dispute qualifies as an investment dispute, the investor or the government has different options for settling the dispute depending on the agreement between the parties. The dispute can be resolved through arbitration, which can be conducted domestically or outside the country. The Arbitration Act of Tanzania recognises domestic and foreign arbitral awards. It should be noted that Tanzania is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), commonly known as the New York Convention. One of the benefits of being a signatory to the New York Convention is that it facilitates the recognition and enforcement of arbitral awards in member countries. This means that parties to arbitration agreements can have their awards enforced in other member states without undergoing lengthy and complex court procedures. This would mean that enforcement of arbitral awards can be carried out in accordance with the terms of the New York Convention. Also, the Arbitration Act of Tanzania and the rules made under the Act provide for the procedure of enforcing or challenging foreign arbitral awards. When parties fail to settle their dispute amicably, international arbitration appears to be the preferred mode of dispute resolution for most investors, including those who have invested in the mining sector.
One of the most critical aspects for parties that want their disputes to be resolved by way of investment arbitration is to ensure that there is an agreement in which the state agrees that the dispute will be resolved by way of arbitration. In the case of Salini Costruttori S.p.A. v. Jordan referred to above, the Arbitral Tribunal dismissed the proceedings after a finding that there was no agreement signed between the parties that would give jurisdiction to the Arbitral Tribunal. The burden of proving that there is an agreement to refer the matter to arbitration lies with the claimant. Between 2005 and 2023, at least 13 investment disputes had been referred to ICSID.4
Disputes between Mining Operators and Persons other than the Government
The Tanzania Mining Act5 provides for a particular procedure for settling disputes between persons engaged in prospecting or mining operations and other third parties, except the government or a dispute between mining operators themselves. Section 119 of the Mining Act provides for the settlement of certain disputes related to mining operations. The disputes envisaged under section 119 of the Mining Act are limited to disputes in connection with boundaries of any area subject to mineral rights, claims by any person related to water rights (including water infrastructure) that are connected with the mining activities, assessment and payment of compensation pursuant to the Mining Act and other matters which can be prescribed as a dispute within the meaning of section 119 of the Mining Act. The disputes described under section 119 of the Mining Act are resolved by lodging a complaint before the Mining Commission. The High Court of Tanzania made a finding that the powers of the Commissioner for Mining in dispute settlement are confined to the types of dispute provided under the said section 119 of the Act. The Court stated:
"Reading from the above-cited provision, I agree with the trial court that the Commissioner is vested with powers to inquire and decide disputes between persons engaged in prospecting or mining operations. However, not all disputes pertaining to prospecting or mining operations are inquired and decided by the Commissioner. His mandate is limited to disputes set out in paragraphs (a), (b), (c) and (d) of section 119 (1) of the Mining Act. ...
the provision is crystal clear that the kind of disputes to be entertained by the Commissioner are to be connected with matters enlisted under subsection (1) (a-d), which includes disputes on boundaries or erection, cutting, construction, and use of facilities listed under subsection (1) (b) above." 6
Section 119 of the Mining Act provides:
"119 (1) The Commissioner may inquire into and decide all disputes between persons engaged in prospecting or mining operations, either among themselves or in relation to themselves and third parties other than the Government not so engaged, in connection with-
- the boundaries of any subject to a mineral right;
- the claim by any person to be entitled to erect, cut, construct, or use any pump, line of pipes, flume, race, drain, dam or reservoir for mining purposes, or to have priority of water taken, diverted, used or delivered, as against any other person claiming the same;
(c) the assessment and payment of compensation pursuant to this Act; or
(d) any other matter which may be prescribed.
In interpreting the provision of section 119 quoted above, the Court held that for the Mining Commission to have jurisdiction to entertain the dispute under section 119, one of the parties in the dispute must be engaged in prospecting or mining operations and, secondly, the dispute must involve matters stipulated in section 119 of the Mining Act. What is clear is that the dispute mechanism provided for under section 119 of the Mining Act is limited to special types of dispute and certain parties in dispute. The Courts in Tanzania have categorically stated that the Commissioner for Mining cannot deal with any dispute unless the said dispute has been prescribed.7
Section 119 of the Mining Act discussed above provides substantive jurisdiction for the Commissioner for Mining. The provision does not provide for the procedural aspect of how the prescribed disputes will be resolved. In 2021, the Mining (Dispute Resolution) Rules 2021 were enacted. These Rules articulated procedures for settling mining disputes between persons engaged in prospecting or mining operations and any third parties except the government. The Rules provide for the procedures for filing the dispute, which involve lodging a Memorandum of Complaint and the responding party filing a reply to the Memorandum of Complaint. The dispute is then ready for the hearing, the procedure of which is well provided for under the Rules. The hearing involves the production of evidence and the appearance of witnesses. The High Court of Tanzania, in one of its decisions, held that a hearing by the Mining Commission must be an oral hearing where witnesses will appear and testify before the Commission, as opposed to the filing of statements and submissions narrating facts and the position of the law regarding the matter under dispute.8
The hearing must afford all parties involved an opportunity for oral presentation of their respective cases. In the case of Jephutar Musa Gumbala (supra), the High Court of Tanzania insisted that parties must be heard before a decision is made. The Court said:
"The right to be heard before adverse action is taken against such party has been stated and emphasised by the courts in numerous decisions. That right is so basic that decision which is arrived at in violation of it will be nullified, even if the same decision would have been reached had the party been heard because the violation is considered to be a breach of natural justice."
A person aggrieved by the Mining Commission's decision may appeal to the High Court of Tanzania, and subsequent appeals may lie with the Court of Appeal of Tanzania, which is the apex Court in Tanzania's jurisdiction.
Looking at section 119 of the Mining Act and the judicial interpretation of the said provision, it is clear that there are some disputes which cannot be resolved by way of arbitration or another form of ADR other than the procedure provided by the law, which is to lodge a complaint with the Mining Commission, which will inquire into the matter and after hearing of the parties make a determination. If the dispute does not fall under the provisions of section 119, parties will have to look for the proper forum to file the dispute. If it is a breach of contract, depending on the dispute resolution clause, the forum may be an Arbitral Tribunal or state courts if there is no arbitration clause. If the matter is adjudicated in court, it will be necessary to consider the nature of the dispute and the value of the subject matter to determine which specific court will be vested with jurisdiction to hear and determine the matter.
Employment Disputes
Employment disputes cannot be avoided in the mining industry. The disputes vary in their nature. The most common employment disputes in Tanzania are disputes regarding terminating employment contracts. Other disputes involve issues of working hours and working hours arrangements. There are also some disputes regarding collective bargaining agreements, and many other types.
Employment disputes in the mining sector are governed by the labour laws of Tanzania, which also govern labour disputes in many other sectors. The central legislation that establishes a legal framework for dispute resolutions on employment matters is the Employment and Labour Relations Act [Cap 366 R.E. 2019], the Labour Institutions Act [Cap 300 R.E. 2029], the Workers' Compensation Act [Cap 263] and the Non-Citizen Act No. 1 of 2015. There are also a number of regulations that govern the employment relationship between the employer and employees and, therefore, affect the dispute resolution process in one way or another.
In Tanzania, unless exempted by law or agreement, all employment disputes are referred to the Commission for Mediation and Arbitration (CMA) for mediation. If mediation fails at the CMA, the referring party may apply for the dispute to be referred to arbitration before the Arbitrator at the CMA or, depending on the nature of the dispute, it can be referred for adjudication to the High Court of Tanzania (Labour Division). If the matter is referred for arbitration at the CMA, an aggrieved party may challenge the CMA Award at the High Court of Tanzania through Revision or Review. The High Court (Labour Division) decision is appealable to the Court of Appeal of Tanzania on point of law only.
The law allows parties to agree to use private arbitrators. Therefore, if there is an arbitration agreement between the employer and the employees, routine arbitration procedures will be used to resolve the employment dispute.
It should also be noted that some labour matters are related to compliance. If the employment dispute is based on the employer's failure to comply with prescribed labour standards, authorities such as the labour commissioner and labour officers are mandated to issue directives or compliance orders. The employer may challenge the compliance order of the labour officers with the labour commissioner and subsequently with the Labour Court.
Tax Disputes in Tanzania
Another common type of dispute in the mining sector is a tax dispute. Tax disputes may arise for a number of reasons, including, but not limited to, incorrect interpretation of tax legislation, issuing tax assessments without the support of material facts, assessments issued out of time, poor record keeping and incompetency in tax matters by either tax officers or taxpayers, transfer pricing, tax audits and VAT refunds, tax treaties and international agreements, to mention but a few.
There is no particular legislation to govern tax disputes in the mining sector. If a tax dispute arises in the mining industry, the usual mechanism for settling the tax dispute in the country will be applied. We shall highlight some of the available options.
Tax disputes in Tanzania are primarily governed by the Tax Administration Act [Cap 438 R.E. 2019] (TAA) and the Tax Revenue Appeals Act [Cap 408 R.E. 2019] (TARAA), which outlines the procedures and mechanisms for resolving tax disputes between taxpayers and the Tanzania Revenue Authority (TRA). Part VII of the TAA provides for the dispute resolution mechanism.
Under section 50 of the TAA, the Commissioner General of TRA is empowered to make decisions and assessments on specific tax matters provided under the tax legislation. A person aggrieved by such a decision may file an objection with the Commissioner General within 30 days. If the objection is admitted, the Commissioner General may determine the objection, call for further evidence or ask for any other information as may be necessary for the determination of the objection. In determining the objection, the Commissioner General may amend the decision subject to the objection or refuse to amend the decision or assessment issued.
A person aggrieved by the Commissioner General's decision may appeal to the Tax Revenue Appeals Board (TRAB). The procedures for appealing to TRAB are provided under the TRAA. The process of appeal is initiated by filing a Notice of Appeal and issuing it to the Commissioner within 30 days following the date of the final determination of assessment or any other decision by the Commissioner General. TRAB is an independent board established under section 4 of the Tax Revenue Appeals Act. A person aggrieved by the decision of TRAB can appeal to the Tax Revenue Appeals Tribunal (TRAT), and the subsequent appeal from TRAT lies with the Court of Appeal of Tanzania, the final court in Tanzania.
Tax Amnesty Programs
Although not part of the TAA, tax amnesty programs may be introduced by the government from time to time to encourage voluntary disclosure and settlement of tax liabilities, which can help resolve certain types of tax dispute.
Overall, the TAA provides a comprehensive legal framework for settling tax disputes in Tanzania, ensuring fairness, transparency and access to effective dispute-resolution mechanisms for taxpayers and the TRA.
ADR in Tax Disputes
The Tax Revenue Appeals Act empowers TRAB and TRAT to resolve complaints or appeals by mediation, conciliation and arbitration.9 However, the Act does not provide details on how and when a complaint can be resolved using an ADR mechanism. However, the Finance Act 202110 amended the Tax Revenue Appeals Act to allow a party to appeal at any stage of the proceedings but before delivery of the judgment to apply for amicable settlement through mediation.11 The law does not establish any authority which will conduct mediation or a person who will be the mediator. This would mean that parties to the appeal will determine how the mediation process will take place, and the practice is that taxpayer officers and their council will meet with responsible officers of TRA and discuss settlement proposals as may have been submitted by one of the parties. The law requires TRAT or TRAB to report the outcome of the mediation, and, in the end, it is TRAB or TRAT, as the case may be, that issues the final order regarding the mediation outcome.
Tax Ombudsman
In 2019, through the Finance Act12, established an office known as the Tax Ombudsman by introducing a new provision creating the said Tax Ombudsman Service. Its functions include reviewing complaints and, where necessary, resolving such conflicts amicably. When performing its duties, the office of the Tax Ombudsman may follow informal, fair and cost-effective procedures in resolving the dispute. Generally, the jurisdiction of the Tax Ombudsman is limited to the complaints by a taxpayer regarding the service or procedural or administrative matters arising in the course of administering tax laws by TRA, the Commissioner General or TRA staff. The office has no mandate to deal with matters subject to a tax objection or appeal except if it is an administrative matter related to such tax objection or appeal.
For the purposes of giving effect to the provisions establishing the office of Tax Ombudsman, regulations were enacted in 202213 (the Regulations). The Regulations provided for the procedures of lodging, handling and determining disputes by the Tax Ombudsman. Regulation 5 of the Regulations provides the scope of complaints that can be lodged with the Tax Ombudsman. These are:
(a) non-compliance with procedures or maladministration by TRA in administering tax laws;
(b) delay in the release of documents or assets seized during the investigations of tax affairs;
(c) delay in responding to a complaint submitted by a taxpayer or
(d) non-response to letters or documents sent to TRA.
Upon receiving the complaint, the Tax Ombudsman will determine it and record its findings and recommendations, which should be sent to the minister responsible for finance. After receiving the recommendations, the minister will give directives to TRA.
Conclusion
In Tanzania, there are different mechanisms for settling different types of disputes. Some of these mechanisms are specific to mining disputes, but others are general dispute settlement mechanisms applicable to different sectors. A person with a dispute related to the mining industry has to consider the type of dispute and choose the appropriate procedure for settling it, considering the applicable law and any agreement that may be involved in the matter subject to the dispute.
The dispute mechanism can still be improved in some areas; for example, the procedure for settling tax disputes by mediation or arbitration can be improved by establishing specific rules and authorities responsible for such alternative dispute resolution. The Ombudsman Office can be given more powers in its jurisdiction to conduct or supervise alternative dispute resolutions on substantive tax disputes instead of determining administrative issues only.
Juvenalis Ngowi
Partner
Juvenalis.ngow@dentons.co.tz
Footnotes
1 Black's Law Dictionary, Eighth Edition
2https://www.ke.tzembassy.go.tz/tanzania/natural-resources-and-mining-in-tanzania
3 Act No. 10 of 2022
4 https://investmentpolicy.unctad.org/investment-dispute-settlement/country/222/tanzania-united-republic-of/respondent
5 [Cap 123 R.E. 2019]
6 The High Court of Tanzania at Musoma, Civil Appeal No. 31 of 2020 between Jackson Nyamachoa and Higira Zablon and Others
7 The High Court of Tanzania at Mbeya, Civil Appeal No. 14 of 2019 between Suzana Pius Karani and Godlisten Mbise
8 High Court Civil Appeal No. 29 of 2022 between Jephutar Musa Gumbala & Another and Tanzoz Minerals Limited
9 See section 17(1)(b) of the Tax Revenue Appeals Act
10 Act No. 3 of 2021
11 See section 70 of the Finance Act 2021
12 Act No. 8 of 2019
13 See Government Notice No. 106 of 2022, the Tax Administration (Tax Ombudsman Service Complaint Procedure) Regulations, 2022
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
