A Comparative Analysis of Investment Protection and Regulatory Autonomy in Uganda and Tanzania

The law of international investment is marked by an enduring tension between the protection of foreign investment and the regulatory autonomy of the host State. Investment protection, through constitutional guarantees, investment codes, bilateral investment treaties and investor-State arbitration, secures the investor against uncompensated expropriation and unfair treatment; regulatory autonomy preserves the State's sovereign power to govern in the public interest, to tax, to protect the environment and to ensure that the exploitation of its natural resources benefits its people. This article undertakes a comparative analysis of the way in which Uganda and Tanzania, two neighbouring East African States with comparable constitutional protections of property, have struck the balance between these competing demands. It sets out the concepts of investment protection and regulatory autonomy and the tension between them; it examines the international framework, comprising the ICSID Convention, bilateral investment treaties and the arbitral jurisprudence on fair and equitable treatment and on the right to regulate, including Tecmed v Mexico, Saluka v Czech Republic, Methanex v United States and Philip Morris v Uruguay; and it examines and compares the law of the two States, the Ugandan Constitution and Investment Code and the jurisprudence in Advocates for Natural Resources v Attorney General, Uganda National Roads Authority v Irumba and Tullow v Heritage, and the Tanzanian Constitution, the Tanzania Investment Act Cap 38, the natural-resource legislation of 2017 and the arbitrations in Biwater Gauff v Tanzania and Standard Chartered Bank v Tanzania. It argues that Uganda has retained an approach more open to investment protection and to international arbitration, while Tanzania has asserted a stronger regulatory autonomy, in particular over natural resources, and it recommends for both a balanced approach that secures investment without surrendering the capacity of the State to govern.