Tanzania’s New Arbitration Exception: What Investors Must Check

A new exception in Tanzanian law now permits foreign arbitration in natural resources agreements. That is not the same as Tanzania opening its resource sector to foreign tribunals. Tanzanian courts and Tanzanian law remain the default, and the exception applies only to agreements that Cabinet has approved.

The change arrived through Act No. 7 of 2026, gazetted on 2 October 2026. It inserts a new section 11(4) into the Natural Wealth and Resources (Permanent Sovereignty) Act and loosens part of a 2017 regime that investors and lenders struggled to finance against.

The stakes are large. Tanzania’s pipeline includes liquefied natural gas (LNG), nickel, graphite and rare earths, and sponsors, lenders and their counsel all carry exposure to how the dispute clause in each deal is written.

After this, you will know what the amendment changes, what it leaves unresolved, and which checks to run on your own agreements before you rely on it.

From blanket prohibition to conditional exception: what section 11(4) changes

The 2017 regime and its financing cost

The 2017 rules left almost no room. Section 11(1) barred foreign courts and tribunals from hearing proceedings over permanent sovereignty of natural wealth and resources. Section 11(2) required disputes over extraction, exploitation, or acquisition and use of those resources to go to Tanzanian judicial bodies under Tanzanian law.

Section 11(3) then required those Tanzanian forums and laws to be written into the agreements themselves.

The cost fell on financing. Investors could not choose an established arbitral seat with experienced supervisory courts and a deep body of case law. The Government did allow foreign seats in exceptional cases, but that happened deal by deal, with no legislative procedure for investors to invoke.

What the new subsection permits

The amending statute is the Written Laws (Miscellaneous Amendments) (No. 2) Act, 2026, and its sections 18 and 19 make the insertion. FB Attorneys reported the gazettal on 7 October 2026. No separate commencement provision has been identified, and the amendment has been reported as operative on publication, although that has not been independently confirmed.

Under section 11(4), a Cabinet-approved agreement may contain a “special arrangement” covering proceedings, the arbitration seat or jurisdiction. Where both conditions are met, the rest of section 11 does not override that arrangement.

The default has not moved. Where an agreement says nothing about the seat, or Cabinet has not signed it off, sections 11(1) to 11(3) continue to govern.

The amendment sits inside the wider Tanzania mining rights framework, where licensing, tax and local participation rules continue to shape what a foreign investor can realistically secure, whatever the dispute clause says.

Set side by side, the two regimes show how narrow the opening is. The question you face is no longer whether foreign arbitration is banned. It is whether your specific clause was properly drafted and approved, and your deal either sits inside that gateway or it does not.

Why arbitration seat and jurisdiction matter to project finance

Consider what a lender reads on a term sheet for a multibillion-dollar project. Beyond price and tenor, it needs to know what happens if the host government revokes a licence or changes a tax deal ten years in. The answer sits in the dispute clause.

Three terms do different jobs in that clause. Governing law is the body of law used to interpret the contract. Jurisdiction is the authority of a particular court or tribunal to hear the dispute, and the arbitration seat is the legal home of an arbitration, which decides which country’s courts supervise the process and can set an award aside.

A seat in a country with experienced supervisory courts gives lenders more confidence that interim relief will be granted and that the final award will hold up. The investor-side case for the reform comes down to four points:

1. International lenders and insurers need predictable remedies if permits, licences, tax arrangements or state undertakings are disrupted.
2. A recognised foreign seat can strengthen confidence in tribunal independence, interim relief, procedural neutrality and award enforcement.
3. A Cabinet-approved clause lowers the risk that the arbitration provision is later challenged as inconsistent with the 2017 sovereignty law.
4. Capital-intensive LNG, nickel, graphite and rare-earth projects depend on long-duration contracts and political-risk cover, which makes enforceable dispute terms a condition of funding.

The projects in question are large. The proposed Tanzania LNG development is valued at about US$42 billion, and its May 2024 Host Government Agreement set the project’s dispute-resolution architecture without amounting to a final investment decision. Parliament reportedly ratified that agreement in June 2024, although this has not been independently confirmed.

The Tanzania LNG investment agreement is the clearest test of how dispute terms interact with financing, because sponsors and lenders will need enforceable remedies before any final investment decision is taken.

At Kabanga Nickel, the US International Development Finance Corporation (DFC) reportedly signed a retainer letter in August 2024 for political-risk-insurance due diligence. A non-binding financing-interest letter reportedly followed in September 2024; neither item has been independently confirmed.

The real shift The amendment does not remove enforceability risk. It changes the central question from whether foreign proceedings are categorically prohibited to whether a particular arrangement was properly drafted and approved by Cabinet.

That makes the dispute clause a financing term, not boilerplate. Treat its drafting as a gating item for funding rather than a legal tidy-up left until the week before closing.

What the record of recent disputes shows about the problem being solved

The case for reform is clearest in what Tanzania has already paid. Indiana Resources won an ICSID award (from the World Bank’s International Centre for Settlement of Investment Disputes) of more than US$109.5 million including interest over the revocation of its Ntaka Hill retention licence. In July 2024 Tanzania agreed to settle for US$90 million, or 82.5% of the award.

Others followed. Montero Mining settled its Wigu Hill rare-earths claim for US$27 million against about US$70 million claimed, and Winshear Gold reportedly settled for US$30 million. Rive & Co estimated on 9 September 2025 that four disputes, including Symbion Power, cost Tanzania about US$284 million in settlements or awards.

The pressure has not eased. PanAfrican Energy is claiming more than US$1.2 billion, with three ICSID proceedings registered on 28 August 2025 and the contractual proceedings consolidated in December 2025.

These matters have not been independently confirmed and are drawn from secondary reporting.

Contract design also varies. According to The Chanzo, Kabanga is governed by Tanzanian law with UNCITRAL-style international arbitration, while the Mwadui diamond and Mahenge graphite concessions are governed exclusively by Tanzanian law.

Read in sequence, the reform looks preventive: a way to give future contracts clearer, more controllable dispute mechanisms. Indiana carries the warning, though, because its settlement deed later ran into payment and tax-assessment problems.

An award is not the same as being paid.

Arbitration access reduces one category of risk. Licensing, tax and payment risk remain, so you should not price section 11(4) as a full risk removal.

The open questions and what investors should do now

What remains unsettled

The amendment leaves three gaps that make it risky to assume protection:

• What “special arrangement” covers. It may extend only to a foreign seat, or it may also reach foreign governing law, institutional arbitration, investor-state claims, emergency relief, sovereign-immunity waivers and enforcement mechanics.
• How Cabinet approval works. Its form, timing and evidence are undefined, including whether approval must come before signing and whether unpublished criteria apply.
• Agreements made before 2 October 2026. Retrospective approval raises questions about statutory retrospectivity, vested rights, the legality of state consent at signing, and whether restated framework agreements are caught.

Enforcement adds another layer. A foreign award could still be challenged on public policy, mandatory resource laws, sovereign immunity, non-arbitrability or inadequate approval. Critics may also argue that executive approval should not override legislation in which Parliament required Tanzanian adjudication, and confidential Cabinet exceptions could make public scrutiny of contracts harder.

No lender or political-risk institution appears to have published a view on section 11(4).

Steps to take now

Bowmans partner Evarist Kameja recommends a set of precautions that convert into a working sequence:

1. Compare the dispute clauses in current and upcoming agreements with the wording of section 11(4).
2. Check your files to see whether Cabinet approval was obtained and what form it took.
3. For deals still being negotiated, write Cabinet approval in as an express condition precedent and a deliverable at closing.
4. Where existing agreements already contain special arrangements, think about applying for Cabinet approval after the fact, as a safeguard.

Drafting precision matters at every step. A clause that refers loosely to “international arbitration” without naming the seat, institution, governing law and scope may fail.

The neighbours show what kind of reform this is. Zambia commissioned the Lusaka International Arbitration Centre in April 2024, and Kenya’s Arbitration (Amendment) Bill 2025 modernises procedure. Neither reform is identical to Tanzania’s, which is a controlled exception rather than a general arbitration statute, so waiting for clarity carries its own cost: documenting approvals now is cheaper than defending validity later.

Readers interested in regional comparisons can use our deep-dive into international mining arbitration in West Africa to see how another African sovereign faces a very large claim.

Reading the reform as a signal, not a guarantee

Act No. 7 of 2026 makes Tanzania’s resource-dispute regime more flexible, but only conditionally. It is likely to strengthen the position of sponsors, lenders and insurers on future LNG and critical-minerals financings without dismantling the 2017 sovereignty rules.

Four variables will decide its value: the meaning of “special arrangement”, Cabinet procedure, the treatment of pre-existing agreements, and enforcement.

Until official guidance appears or the first clauses are tested, treat the exception as available but unproven. Make Cabinet approval a documented deliverable rather than an assumption.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Statements about the amendment’s future effect are speculative and subject to change based on regulatory, legal and market developments.