Sunlodges Ltd. and Sunlodges (T) Limited v. The United Republic of Tanzania

At a glance

Parties

Sunlodges Ltd and Sunlodges (T) Limited v. the United Republic of Tanzania

Case no.

Ontario Superior Court of Justice (Commercial List), Court File No. CV-20-00648370-00CL; 2020 ONSC 8201

Court

Ontario Superior Court of Justice, Commercial List (Koehnen J.)

Underlying award(s)

UNCITRAL arbitration award against Tanzania under the Italy–Tanzania BIT, seated in Sweden, issued about one year before the judgment

Treaty

Italy–Tanzania BIT; New York Convention

Sector

Tourism (hospitality)

Outcome

The interim Mareva injunction stopping Tanzania from removing a de Havilland aircraft from Ontario was extended until the application to recognise and enforce the award is decided. Costs were awarded to Sunlodges.

Amount

Costs of the motion, including the motion to strike, awarded to the applicants; the amount was left to written submissions.

The dispute

Sunlodges obtained an UNCITRAL arbitral award against Tanzania under the Italy–Tanzania bilateral investment treaty. The arbitration was seated in Sweden. Sunlodges then applied in Ontario to recognise and enforce the award, with the hearing set for 10 December 2020. Tanzania had bought a de Havilland aircraft that was being built in Ontario and was due for delivery in December. On 27 September 2020 Conway J. granted an interim Mareva injunction stopping Tanzania from removing the aircraft. At the comeback hearing Tanzania asked the court to set the injunction aside. It argued that the aircraft belonged to a state agency and not to Tanzania, that Sunlodges had not made full and fair disclosure, that section 11(1) of the State Immunity Act barred the injunction, that the Mareva test was not met, and that Tanzania had not implemented the New York Convention into its domestic law.

Key holdings

1. The aircraft is Tanzania's property. The Tanzanian Government Executive Agency that holds the interest is an executive agency of the transportation ministry, not a separate legal entity. Its assets can therefore be seized to satisfy an award against Tanzania. ¶ 8
2. Sunlodges did not fail to make full and fair disclosure. Its factum discussed the Mareva test before the State Immunity Act, and the court found that this order of argument would not mislead a judge. ¶ 9
3. Sovereign immunity does not bar the injunction. By agreeing in Article 8 of the BIT to arbitration under the UNCITRAL Rules, Tanzania accepted that interim or interlocutory awards could be made against it (Article 32.1). Allowing a tribunal to make such awards while denying the enforcing court that power would be inconsistent with Tanzania's agreement, and would read section 11(1) of the State Immunity Act too narrowly. ¶¶ 10–15
4. Sunlodges did not have to show that Tanzania intended to defeat creditors. Following Borrelli v. Chan and Weiler J.A. in Consolidated Fastfrate, the court treated the Mareva elements as guidelines. Extra caution was not needed because the merits had already been fully decided in the arbitration. ¶¶ 16–19
5. Sunlodges has a strong prima facie case. The October 2020 order of the High Court of Tanzania staying enforcement does not displace it. Article 8.4 of the BIT requires compliance with national law only for enforcement in Italy or Tanzania, and recognition in Ontario turns on Ontario law. ¶¶ 20–28
6. The balance of convenience and irreparable harm favour Sunlodges. Tanzania faced at most a few days' inconvenience. It had paid nothing on the award and had not moved to set it aside in Sweden. The public's loss of the aircraft is in Tanzania's hands, because it can pay the award. ¶¶ 29–32
7. Tanzania's failure to implement the New York Convention into its domestic law has no bearing on enforcement in Ontario. Tanzania has signed the Convention, and the seat of the arbitration, Sweden, is bound by it. The injunction was extended and costs were awarded to Sunlodges. ¶¶ 33–37

Procedural history

1. 27 September 2020Conway J. grants Sunlodges an interim Mareva injunction stopping Tanzania from removing the aircraft from Ontario.
2. October 2020The High Court of Tanzania stays all recognition and enforcement proceedings, inside or outside Tanzania, pending other proceedings in Tanzania.
3. 9 November 2020Comeback hearing on the injunction before Koehnen J.
4. 10 November 2020Judgment: the injunction is extended until the recognition and enforcement application is decided, with costs to Sunlodges.
5. 10 December 2020Date set for the hearing of the recognition and enforcement application. The published documents do not show its outcome.

Tribunal, counsel and experts

For the claimant

Nancy Roberts · Mark Sheeley

For the respondent

Thomas N. T. Sutton · Trevor Courtis · Shayan Kamalie

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Keywords

• Mareva injunction
• enforcement
• recognition
• sovereign immunity
• State Immunity Act
• Italy–Tanzania BIT
• New York Convention
• International Commercial Arbitration Act
• UNCITRAL Rules
• interim measures
• de Havilland aircraft
• state agency assets
• Tanzanian Government Executive Agency
• Ontario
• seat in Sweden
• Tanzania

Summary generated with AI from the published documents — refer to the award for the authoritative text.