The tax dispute between the Senegalese government and the oil company Woodside is rekindling calls for investment law reforms to better defend national interests against multinationals.
The dispute between the Senegalese government and the Australian oil company Woodside Energy, now before ICSID, is rekindling debates on the balance to be struck between attracting foreign investors and defending national economic interests.
It was discussed on Thursday, June 19, in Dakar during the first edition of the African International Law Meetings (RADI), which focused on economic sovereignty and international investment law.
At the heart of the dispute: a tax adjustment of 41 billion CFA francs (€62.5 million), which the Senegalese tax authorities have been demanding for nearly two years from the Woodside group, the main operator of the Sangomar oil field, located off the coast of Dakar.
Disputing any tax debt, the Australian giant has filed a complaint with the Washington-based International Centre for Settlement of Investment Disputes (ICSID), paving the way for international
arbitration that is worrying Dakar’s business community.
“There is indeed a dispute (…) according to which Woodside received tax payment orders from Senegal, which the company denies,” said Aboubacar Fall, lawyer, president of the Senegalese Society of International Law (SSDI) and program director of the African Center of International Law Practice (ACILP).
While admitting not being familiar with the details of the case, Mr. Fall sees this affair as an illustration of the imbalances that African states face in their relations with certain investors.
These concerns were at the center of discussions at the RADI, held Thursday at the Dakar Chamber of Commerce, where lawyers, experts, and institutional leaders called for an overhaul of international
investment law.
Dr. Mouhamadou Madana Kane, President of the ACILP, denounced the restrictive clauses in certain bilateral investment treaties (BITs) signed by Senegal, which allegedly limit its regulatory capacity, particularly with regard to local content in strategic sectors such as hydrocarbons.
According to Suzy Nikiema, Director of the Geneva Institute of Investment Law, the current BIT regime “has primarily generated costly litigation and deterred states from pursuing legitimate public
policies,” calling for a thorough overhaul of the system.
For Aboubacar Fall, the objective of the ongoing reforms is clear: “That this type of problem should no longer occur. That the state should be able to manage its relations with investors in a balanced
manner, while preserving the interests of the population, in terms of health, education, and the environment.”
Representing the Senegalese Presidency, Special Advisor Marieme Toure Le recalled that Senegal intends to reconcile “economic openness” and “the ability to conduct its policies according to its own interests,” notably through the revision of the Investment Code and the reform of economic
justice.
ODL/ac/Sf/fss/as/APA