Worldwide: Dispute Over Ownership Of Lake Nyasa – How A Colonial Treaty Can Impact Today’s Investor

The Great Lakes region has been the subject of border disputes both prior to and following the independence of East African countries during the 1960s. It is important for international investors to understand the history and context of the region and the potential for disputes when assessing their concessionary rights.

Lake Kivu, which lies between Rwanda and Democratic Republic of Congo, provides an example of the tensions which can arise between states over natural resources in the region though a dispute over demarcating the methane-rich lake (exacerbated by wider geopolitical issues) has now been resolved. Rwanda has since harnessed the lake's naturally high methane content (which has caused several well documented explosions) and closed the Kivu Watt Project, an innovative development sponsored by Contour Global involving a floating barge extracting methane from the lake for power generation.

Another case which may not be resolved easily is the on-going dispute between Malawi and Tanzania over Lake Nyasa. Malawi, one of Africa's poorest nations, has an opportunity to exploit natural resources contained in the lake which sits on the border between the two nations. Malawi claims the whole of Lake Nyasa while Tanzania claims 50% of the lake and its resources.

Malawi's claim is based on the Anglo-German Agreement signed on 1 July 1890 (Agreement). Tanzania has also cited the Agreement as the basis of its claim.

The Agreement temporarily settled colonial disputes between Germany and Great Britain and also included an agreement for Great Britain to cede Heligoland, an island off the coast of Schleswig-Holstein in the North Sea to Germany. Once Tanzania and Malawi had gained independence, much of the demarcation of their border was based on information in the Agreement.

The main issue in contention is drafting at Article I of the Agreement:

Article I (2):

In East Africa, Germany's sphere of influence is demarcated thus:

To the south by the line that starts on the coast of the northern border of Mozambique Province and follows the course of the Rovuma River to the point where the Messinge flows into the Rovuma. From here the line runs westwards on the parallel of latitude to the shore of Lake Nyasa.

It is the final line of these provisions which creates the uncertainty, with Malawi claiming that Tanzania's traditional border is at the shore of Lake Nyasa. Tanzania however contends that its border goes half way into the lake.

Malawi is in discussions with several oil and gas companies in order to demarcate blocks for exploration. Some of these prospective blocks sit on what Tanzania interprets as its side of the border. Tensions have heightened recently as two light geological survey aircraft working on behalf of Malawi were picked up by Tanzanian security forces on the â€ÜTanzanian' side of Lake Nyasa.

Both governments are in discussions in order to diffuse a potential military escalation and both nations are members of the African Union (AU). The AU has tried to mediate and issued two resolutions calling for diplomatic settlement of the dispute. Such efforts have thus far proved unsuccessful. The most likely outcome in order to resolve the dispute is a move to international arbitration by both countries approaching the United Nations. The UN Charter envisions that disputes of a legal nature involving states would normally be referred to the International Court of Justice (ICJ).

Malawi's Foreign Affairs Minister Ephraim Mganda Chiume recently said that Malawi had been negotiating in "good faith" and wanted to "exhaust all channels" before referring the matter to the ICJ for arbitration.

"We want to see whether negotiations will add value and give time to legal experts to interpret the 1890 treaty which determined that the lake border is on the eastern shore of Tanzania." He said the two countries want to "give mediation and diplomacy a chance. In Malawi, we feel the issue has taken too long to be concluded and we want to put it to rest for our people to live in peace. We want to expedite the resolution once for all because we have been talking for 50 years."

International investors in the area are advised to monitor the ongoing dispute in their discussions with authorities in the relevant jurisdiction.

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.