Critical Examination of Investor-State Dispute Settlement: Its Application and Implications in Tanzania

The proliferation of international investment treaties (IIAs) has introduced a specific mechanism for resolving investment disputes globally. Most IIAs in force today have embraced investor-state dispute settlement (ISDS), through which many host States are sued in international arbitral institutions. One of the critical aspects of the operationalisation of the ISDS system is that many host states, like Tanzania, have been slapped with excessive arbitral awards that have, in some cases, threatened such countries’ sovereign debts, resulting in both ‘regulatory chill’ and ‘compensation chill’. To create a balance between investor protections and obligations at the domestic level, Tanzania should create a conducive domestic environment to manage IIAs. Such positive and effective management of IIAs can be realised by Tanzania adopting effective policy, legislative, administrative and institutional reform measures, including adopting positive policy options on IIAs; harmonising and strengthening legal frameworks with IIAs; creating effective coordination, monitoring and evaluation mechanisms for IIAs.